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COMMENCEMENT OF BUSINESS

 

The Companies Act, 2013, under Section 11, added the concept of a "Certificate of Commencement of Business," which was present in the previous Companies Act, 1956. The Companies (Amendment) Act, 2015, took effect on May 29, 2015, and it removed (omitted) section 11. By way of an ordinance signed by India's President, Sh. Ram Nath Kovind, on November 2, 2018, the Companies Act of 2013 was most recently altered once more. By adding a new Section 10A to the Companies Act of 2013, the Declaration for Commencement of Business is once again made available. Following are the exact words of Section 10A:

• A company formed after the start of the Companies (Amendment) Ordinance, 2018, that has a share capital is not permitted to start a business or use any borrowing authority unless a director files a declaration with the Registrar within one hundred eighty days of the date of the company's incorporation confirming that each subscriber to the memorandum has the value of the shares in the specified manner.

 

• The corporation will be subject to a penalty of 50,000 rupees for any violation of this section's provisions, and any officer who is in violation will be subject to a penalty of 1,000 rupees per day that the violation persists, up to a maximum of one lakh rupees.

• If, after a period of one hundred and eighty days from the date of incorporation of the company, no declaration has been submitted to the Registrar pursuant to clause (a) of sub-section (1), and the Registrar has reason to believe that the company is not conducting any business or operations, he may, without prejudice to the provisions of sub-section (2), take action to have the company's name removed from the register of companies maintained under Chapter XVIII.

 

Following the aforementioned modification, the Ministry of Corporate Affairs further modified the Companies (Incorporation) Rules, 2014 by issuing the Companies (Incorporation) Fourth Amendment Rules, 2018 on December 18, 2018. A new Rule 23A will be introduced by the Ministry in accordance with the Companies (Incorporation) Fourth Amendment Rules of 2018, which is also copied below: "23A" Declaration at the beginning of business - The declaration made by a director pursuant to Section 10A must be made on Form No. lNC-20A and filed in accordance with the Companies [Registration Offices and Fees] Rules, 2014; the information on the form must be attested to by the company secretary, a chartered accountant, or a cost accountant in practise.

As long as a company is pursuing objectives that necessitate registration with or approval from any sectoral regulators, such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration with or approval from that regulator must also be obtained and attached to the declaration, as applicable. The ordinance's provisions were effective on November 2, 2018; therefore they are all relevant as of that day. Every firm with share capital that was incorporated after November 2, 2018, therefore, must submit Form 20A within 180 days, or by May 1, 2019. The form 20A has been released and is accessible on the Ministry of Corporate Affairs website.

 

How do you start a business?

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It is a declaration that must be made by the directors within 180 days of the company's incorporation, together with confirmation of the registered office address of the company, confirming that the signatories to the company's memorandum have paid the value of the shares as agreed upon. This declaration must be submitted in Form 20A to the Registrar of Companies together with documentation showing the firm received subscription funds.

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WHO IS REQUIRED TO FILE A DECLARATION FOR THE START OF BUSINESS? 

All companies with share capital formed after November 2, 2018, including Section 8 Form 20A must be filed by companies with share capital.

 

WHO DOESN'T NEED TO FILE?

Organizations without a share capital and organizations founded before November 2, 2018, with or without a share capital.

Penalty for failing to file

• 50,000 rupees for the company and

• A maximum of 1,00,000 rupees per day for directors who are in default.

• The name of the corporation may be changed by the registrar.

 

PERIOD OF TIME TO FILE

 

Within 180 days after incorporation, a company must submit Form 20A.

 

 DOES COMPANY HAVE ACCESS TO THE "CERTIFICATE OF COMMENCEMENT OF BUSINESS"?

 

No, the form 20A is in STP mode, meaning that no certificate will be issued by the Ministry for Corporate Affairs and the E-Form will be automatically accepted (STP).

 

WHICH FORM IS RECOMMENDED?

Form 20A

 

Attaching Form 20A to Form 20A

• Subscribers' evidence of payment for share value

• The RBI's (only in the case of non-banking financial companies) or another regulator's Certificate of Registration. If "Yes" is chosen in field 3, you must attach this document (a).

 

WHO IS SUPPOSED TO CERTIFY THE FORM 20A?

 

A practising professional, such as a CS, CA, or CWA, must verify this e-form 20A. According to the penalties of sections 448 and 449 of the Companies Act of 2013, practicing professionals who are negligent or fail to maintain their certification will be held accountable.