Certificate of Commencement of Business
What is Certificate of Commencement of Business
The certificate of commencement of business is the declaration filed by the company’s directors with the registrars. After the company is incorporated, it is provided with a sufficient one hundred and eighty days to file the proclamation in Form INC-20A. The Ministry of Corporate affairs launches Form 20 A & which can be directly seen in their official website portal.
The form 20-A further is verified by the chartered accountants, Company Secretary, or the cost accountants. If, after the verification process, the faults remain in the form, then these practicing professionals will be responsible for it. They are liable to face all the negative consequences as stated under the section 448 and 449 of the Companies Act, 2013.
This declaration is filed before the business starts, and the borrowing powers are implemented. Once the statement is wholly made in the E-form INC-20A by the company director, it states that the verification of the company’s registertion office is completely done. The importance that the commencement of a business certificate carries for your business is unexplainable in words.
Without treating it as your priority, also, you can become the least priority for the registrars that shall remove your name from the front he registered using for companies. The statutes meant for the company incorporation need to follows the company officials.
Along with this, adherence to Section 10A(1)(a) of the companies act 2013 is also mandatory. The company establishment is not a one-day process. It would be best if you abode by a lot of rules and regulations. All of these formalities are meant to form a strong foundation for your new business in the beginning stage itself. It saves you from a lot of litigation activities further in the future.
Following such rules and regulations will provide your company with a legal entity making it eligible for various benefits. COB is such one underline mandatory law set by the government that. With Jo’s second choice, it was to be followed between the process of your company’s registration and its smooth running. Although, with the upcoming footprints of the Companies Act, 2015, this particular step has become entirely optional to follow. Yes, it is consider as mandatory under the Companies Act, 2013.
Which Companies Need a Certificate of Commencement of Business?
According to the Companies Act, 2013, all public companies with sth share capital need to have the COB to operate their businesses. Without having it for more than one hundred and eighty days of timeframe, your business activities are put at a big full stop or a halting stage. The respective declarations from the directors need to be put forward in the Board Resolution form itself.
Along with the statement, the proof of approval from the Exchange Board of India, Reserve Bank of India and Securities, etc., is mandatorily essential if the company projects objects that require approval from them. Also, these companies can’t exercise or take full advantage of the windfalls that come along the way if the startup’s registration has the COB.
The same common act also states that all the newly incorporated companies must have the COB – certificate of commencement of business, whether public or private. According to the Companies Act, 2018, different companies registered after the 2nd of November 2018 need to file a business certificate. Directors news to file the form 20A within 180 days from the company commencement. Failing to do so indeed leads to high penalties.
There is also one condition here. All those companies incorporated on the 2nd of November 2018 without the share capital don’t necessarily require filing the COB. If they decide to file it, their fees are around INR 200/-. Based on the share capital the familiar holds, their form following payments are decided. The companies with the following share capital amount have to pay the price as mentioned below:
1. Companies who have a share capital of less than 1,00,000 need to pay only INR 200/-.
2. Companies who have a share capital between INT 1,00,000 to INR 4,99,999 need to pay only INR 300/-.
3. Companies who have a share capital between 5,00,000 to 24,99,999 need to pay only INR 400/-.
4. Companies who have a share capital between 25,00,000 to 99,99,999 need to pay only INR 500/-.
5. Companies who have the share capital of 1,00,00,000 or exceeding it need to pay only INR 600/-.
Steps to Obtain Certificate Of Commencement
The company needs to stick to the procedure provided below to file for the declaration of Commencement of Business.
1. MCA Portal
The first step demands you to visit the MCA portal directly. The dire t link to see the MCA portal is@https://www.mca.gov.in/content/mca/global/en/home.HTML
2. Company forms
Once you are on the portal, you will have the ‘MCA Services’ option at the top line on the fifth number. Under this title, you need to choose the option of @Company forms download. Click on it to move further.
3. Form INC-20A
Once you hit the above option, it will redirect you to a new page consisting of all the forms. Under this page itself, all you need to do is scroll down till the tick you find the tab of ‘Form INC-20A.’ This option is meant for completing the formalities relates to the declaration of Commencement of Business.
4. Download the form
All you necessitate to do is download the firm by hitting the download button in the next step. Then, you shall complete the downloading process, including or not including the Instruction Kit as per your wish.
5. Open & Fill the Form
Once you have successfully downloaded the form in PDF format, it is time now to open it. After opening the document, read it from top to bottom carefully. Then, the moving filter starts filling it. To correctly fill the entire state, you need to start filling in the below-mentioned details correctly.
1. Valid email address of the company where all formal communication shall take place
2. CIN of the company
3. Specify if any Sectoral Regulator governs the company’s affairs
4. Full address of the company’s registered office
5. Full name of the company
In this particular step, you can ask to attach a lot of valid proof. You need to connect the following documents:
1. Proof of payment by subscribers for share values
2. RBI issued registration. The certificate is meant for non-banking financial companies.
3. Any additional attachments you want to attach.
You are required to click on the attached button to upload all the necessary documents. Also, all the documents attached by you I have this platform can be seen from the ‘List of Attachments sections. You can also remove the unsecured attachments at your convenience.
7. Declaration and Certification
This step is meant to compete for the declaration. Fill it as well as provide the DIN there. Apart from this, it would be best to inform the nation about the professional responsible for certifying your form.
8. Digital Signature Certificate
It is the last third step that will complete your form-filling process. Here, you need to add on the DSE – Digital Signature Certificate for the certifying professional along with the DSE of the director.
9. Check form
Once you have filled in the complete details on the form, go for proofreading. Check if there are any possible errors. If you find them, then correct them before submitting them. Also, you can click on the ‘Check’ option. This way, the systems will perform all the analysis parts and deeply check your form for validation purposes. Once the condition is successfully inspected by the system and the results are okay, go ahead and hit the Pre scrutiny option.
10. Upload Form and Make payment
In the last steps, you need to go to the MCA portal. Once you are on the MCA’s official website, Require to log into the orbital using your valid and authorized login credentials. Furthermore, you need to upload the MCA forms now. For fulfilling this step, go to the MCA Services tab. Afterward, hit the upload e-form option.
Once you have uploaded all the essential certificates, you need to go with the last processing steps, i.e., payment of the fees. Please note that without paying the fees, your form is not considered wholly filled. Also, you can check if your payments have been successfully processing or not by the portal in a straightforward step. If, after paying the fees, SRN gets generated, fees are paid to the exit without any hindrance.
Make sure that you have a good internet connection for filling the form smoothly without any internet interruption. Check your network and internet speed before initiating the form-filling process. It is because the form filling requires all logs for document uploading steps. An internet breakdown can hinder this process and won’t allow you to upload the necessary documents. Once you are sure about the speed, then smoothly go ahead and complete the entire process.
Documents Required Certificate of Commencement of Business
As an individual, you need to get prepare in advance with the documents mention below. While submitting these documents, you need to pay a nominal fee as specified by the concerned authorities. It will require throughout the process of obtaining a business advent certificate.
1. DSC – Digital Signature Certificate.
2. Registration certificate issued by RBI for financial companies who are not in the banking domain.
3. Full address of the registered company
4. Proof of payment done by subscribers
5. Identity verification and address records like aadhar card, pan card, voter ID, ration card, passport, etc.
6. Full name of the company
7. RBI issued a registration certificate
8. You need to have a confirmation letter from all the directors.
9. Registered company’s valid email address
Certificate of Commencement of Business Under Companies Act, 2013
Without having the COB – certificate of commencement of business, the private limited companies and the public limited companies that possess the share capital are not eligible to start their business. A newly established commoner who is well aware of the consequences of not having the COB will ideally not make this mistake. They go to the register and get the COB as soon as the company is formed.
They do all the formalities spontaneously at the beginning itself to save themselves from the ill repercussions. Please note that your borrowing power is vague without having the COB and cannot be exercised further. Additionally, you can’t perform any business operations without having it as proof.
According to the Companies Act, 2013, one section talks about the terms of commencing your business. Section 11 of this act states that a newly formed commonly is not qualified enough to practice its borrowing power or start all of its business operations until and unless it follows the two cases stated below:
1. As per sub-section (2) under section 12, the register office’s verification process is filed or completed by the newly establish business registrar.
2. The director of the company requires to file the proclamation with the registrar. This declaration should state that the value of the shares agreed initially is paid by each subscriber to the memorandum. Additionally, in the case of a private company, the company’s overall paid share capital is not less than INR 1 lakhs in total. In the case of the public company, the paid-up share capital of the business should be at least INR 5 lakh.
Consequences resulting from not filing the Certificate of Commencement of Business within the given timeframe can be harsh! It could be extremely tough for you to handle. You may find yourself entrapped in going through the back and forth process of the legal formalities and also, paying up genealogies, which can be hard to take to a certain point.
Before committing such faults and shaving your name under r defaulters, I advise you to read all the expected results or consequences. After remaining clear as to how far this fault can damage you and your visits, you will be thinking twice before committing such faults. You might even end up losing your company’s name under the list of registered companies forever.
Be cautious with this scenario, as it won’t bring good fortune for your newly established business. In case of non-adherence to the government defined company laws like ‘Not filing the business inaugurating certificate’ is directly going to lead to the following consequences:
1. Company Name Removal
As a company owner, you need to file a declaration with the registrar. The statement needs to be filed within a timeline of one hundred and eighty days which starts counting from the exact date of business incorporation. According to section 11(3), if you fail to file this declaration with her registrar, then in such a case, he holds all the right to deactivate everything.
He shall consider that your company is not showing interest in proceeding forward with the business; it is inoperative or in an inactive working state. Following this, the registrar can straightaway proceed with the actions of removing your company’s name from the list of registered companies. It shall be done under Chapter XVII without any prejudice to the section 11(2) prerequisites.
2. Penal Provision
The company is accountable for paying the penalty fees according to section 11(2) if any of the defaults acknowledge the need of this particular section. And also this fee can go up to INR 5, 000/-. Apart from this, each defaulter officer is liable to pay the fine as a part of his punishable offense. This punishable fee can go up to INR 1000/- as an extended amount meant for all the officers at the default stage.
The defaulter needs to continue paying this amount till the last date he continues with this blunder. If he needs to waive this fee that he is paying daily, he needs to do the settlement as soon as possible.
The solution to keeping your company’s operational activities moving on is simply getting the Certificate of Commencement of Business. Then, you get enough time to sit with the registrar and get the COB. I prefer having it at the starting of your business – within one hundred and eighty days. The best is that it will let your company’s daily operations go on smoothly with no outer hindrance or litigation.
You shall reach to us for all your business needs. Wholeheartedly welcomes budding entrepreneurs and small business owners.
Throughout their journey, we guide them to grow and gain the market reputation. All of our core team members are highly skills as well as experienced. They shall provide you with complete guidance over the typical litigation terminologies. No company wants to have its business operations interrupted by email or terminated in the middle of the process.
At Smart Business Box, we guide you throughout the process to avoid such actions taken upon your organization. Our primary services include helping you with the commencement certificate of business to keep you on a safer side. Also, you can connect with us through an email or a toll-free number and get more insights into how the COB process works.