Ministry of corporate affairs has required all new businesses formed on or after November 2nd, 2018 to file a new form as confirmation that the company has moved and subscribers/shareholders have deposited the number of shares subscribed in the company's current account. This certificate of commencement of business declaration is filed prior to the start of the business, and the borrowing powers are activated. When the company director completes the E-form, it declares that the verification of the business's registration office is complete. Along with the statement, proof of clearance from the Exchange Board of India, Reserve Bank of India, and Securities and Exchange Board of India, among others, is required if the firm plans to project objects that require their consent.
Did you know that Companies that were formed on November 2, 2018, but did not have a share capital, do not have to file the COB. If they decide to submit it, their fees will be around ₹200/-
Meaning of Certificate of Commencement of Business
It is a declaration made by the directors within 180 days of the company's creation declaring that the subscribers to the Memorandum of Association have paid the agreed-upon value of shares. This statement, coupled with a Bank Statement (evidence of subscription money received by the business), must be filed with the Registrar of Companies in form 20A.
Chartered accountants, the Company Secretary, or cost accountants also verify this form. If the errors remain in the form after the verification procedure, these practicing professionals will be held accountable. They are subject to all of the undesirable repercussions.
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Which Companies need the Certificate of Commencement?
According to the Companies Act of 2013, all public companies with share capital requires to have the CC (Commencement of Business Certificate) in order to conduct business. Without it for more than 180 days, your commercial operations come to a screeching end. The respective declarations from the directors must be included in the Board Resolution form.
All newly created firms, whether public or private, must receive the COB - certificate at the start of business. According to the Firms Act of 2018, all companies registered must file a business certificate after November 2, 2018. Directors must submit Form 20A within 180 days of the company's formation. Failure to do so results in severe consequences. The type of subsequent payments is determined by the amount of share capital held by the familiar. Companies with the following share capital amounts must pay the following price:
Less than ₹1 Lakh
Range from ₹1 Lakh to Rs. 4,99,999
Range from ₹5 Lakhs to Rs. 24,99,999
Range from ₹25 Lakhs to Rs. 99,99,999
₹1,00,00,000 or more
How to Get a Certificate of Commencement of Business
If you are willing to obtain a certificate of commencement for your business then you must follow some legal steps to get one. To know about the procedure read ahead.
The MCA Portal
The first step requires you to go directly to the MCA portal.
Once on the site, the 'MCA Services' choice will be at the top line on the fifth number. You must select the @Company forms download option under this title. To proceed, click on it.
When you select the above option, you will be sent to a new page that contains all of the forms. All you have to do on this page is scroll down until you reach the 'Form INC-20A' tab. This option is intended to complete the procedures associated with the declaration of the Commencement of Business.
Download the form
All you have to do now is download the company by clicking the download button in the next step. Then you must complete the downloading procedure, including or excluding the Instruction Kit as desired.
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Fill out the Form
It is now time to open the form that you have successfully downloaded in PDF format. After opening the paper, attentively read it from top to bottom. The moving filter then begins to fill it. To completely fill out the full state, begin by correctly filling out the data listed below.
- The company's valid email address, where all official contact will take place.
- The company's CIN
- Indicates if the company's affairs are governed by a Sectoral Regulator.
- The full address of the registered office of the firm
- The company's full name
- Many documents are also required to be attached along with the form. These have been given below.
Documents required for the form
As an individual, you must prepare ahead of time with the documentation listed below. You must pay a modest fee as stipulated by the relevant authorities when submitting these documents. It will be required at all times during the process of acquiring a business advent certificate.
- Subscribers' evidence of payment for the value of the shares, i.e., the company's bank statement with all credit entries for receipt of subscription money received from all subscribers to the MOA.
- When filing the application for a start, each of the company's Directors must state that each subscriber to the memorandum has paid the value of the shares agreed to be accepted by him/her on the day such declaration is made.
- Certificates of Registration provided by the RBI are also required for Non-Banking Financial Companies) from other regulators.
- Certificate of digital signature
- Address and valid Email of the registered company
- Identity and address records such as pan card, voter ID card, aadhar card, ration card, passport, etc.
Certification and Declaration
The next step will be to fill the declaration and provide the DIN. Apart from this it is also required to enter the details of the practicing professional who will certify the form.
Certificate of Digital Signature
It is the third and last stage in the form-filling procedure. Along with the DSE of the director, you must include the DSE - Digital Signature Certificate for the certifying professional.
Go through proofreading when you have completed the form completely. Check for any potential mistakes. If you notice any, please rectify them before reporting them. You may also choose 'Check'. This manner, the systems will complete all of the analytical steps and thoroughly evaluate your form for validation reasons. When the system has successfully inspected the condition and the findings are satisfactory, select the Pre scrutiny option.
Fill out the form and pay
In the last steps, you must visit the MCA portal. Once on the official website of the MCA, you must log into the orbital using your valid and approved login credentials. In addition, you must now upload the MCA forms. Go to the MCA Services page to complete this step. Then select the upload e-form option.
After you have uploaded all of the required certifications, you must proceed to the final processing procedures, which include fee payment. Please keep in mind that if you do not pay the costs, your form will not be deemed completed. In addition, the portal allows you to quickly determine whether or not your payments were successfully processed.
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Consequences if the form is not completed on time
A corporation cannot begin operations and cannot borrow money if the form is not completed on time . Moreover, the company has to face the following consequences:
- Penalty to be imposed on the company.
- Any firm that does not get a start of the business certificate within 180 days of the establishment will be fined fifty thousand rupees.
- Penalty to be imposed on Directors
- Each officer of the company who has defaulted will be subject to a penalty of one thousand rupees per day of default, up to a maximum of one lakh rupees.
Strike-Off in Business
If no declaration is filed with the Registrar within 180 days of the company's incorporation date and the Registrar of Companies has reasonable cause to believe that the company is not carrying on any business or operations, he may initiate action to remove the company's name from the register of companies (i.e. Company Strike-Off).
Private limited corporations and public limited firms with share capital are unable to begin operations unless they have a COB - certificate of the beginning of a business. In case they do not obtain a certificate penalty will be levied. Thus, as soon as the company is constituted, they obtain the COB.
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