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Certificate of Commencement of Business (Meaning & Procedure)

As per the new mandate by the Ministry of Corporate Affairs, Government of India, all the new businesses which are formed on or after 2nd November 2018 have to file a new form which would confirm that the company has moved and its shareholders, subscribers have deposited the number of shares subscribed in the current account of the company. This application or declaration is to be filed before the start of the business and also before the borrowing powers are activated.

Hence, any company planning to register in the country must file this declaration, also known as the Certificate of Commencement of Business. Hence, if you want to know more about this declaration, what it is, who can apply, how to apply, etc. Then following this article will provide you with more knowledge about the Certificate of Commencement of Business.

What is a Certificate of Commencement of Business?

The Certificate of Commencement of Business declares that the Director of the Company must file with the Registrar of Companies before commencing the business. This declaration needs to be filed within 180 days from the date of creation of the company, declaring that the subscribers to the Memorandum of Association have paid the agreed value for the shares. This statement must be coupled with the bank statement and then filed with the Registrar of Companies in form 20A. The company must comply with Section 10A(1)(a) of the Companies Act 2013 and Companies Incorporation Rules 2014 while filing this Certificate of Commencement of Business.

Which companies need a certificate of commencement of business?

According to the mandates set forth by the Companies Act of 2013, to conduct business, all public and private companies formed after 2nd November 2018, having a share capital, must have a certificate of commencement of business. Without a certificate of commencement of business for more than 180 days, a company’s commercial operations will end. Any freshly created enterprise, whether public or private, must obtain a certificate of commencement of business at the start of their business. The respective declarations given by the directors of the concerned company need to be included in the Board Resolution Form. The directors of a company must fill and submit Form 20A within 180 days of the company’s formation. Any failure to submit this crucial form might result in severe consequences. The typology of subsequent payments is determined by the amount of share capital held by the company. Companies with the following share capital amount need to pay the following rates:

Less than 1 lakhRs 200/-
Range from 1 lakh to Rs. 4,99,999Rs. 300/-
Range from Rs. 5 lakh to Rs. 24,99,999  Rs. 400/-
Range from Rs. 25 lakhs to Rs. 99,99,999  Rs. 500/-
Rs 1,00,0000 or moreRs. 600/-

How to get a certificate of commencement of business?

If you are looking forward to obtaining the certificate of commencement of business for your newly set up company, it is crucial to follow certain legal steps. Below mentioned are the procedures to obtain the certificate of commencement of business. 

The MCA Portal– In the first step, you are required to visit the MCA portal directly 

Business/ Company Forms– On the MCA portal, you will find the MCA services option at the top line on the fifth number. Under this option, you must now click on the option @Company forms download. You need to click on it to proceed further. 

INC 20A Form– After you click the above option, you will be redirected to a new web page comprising all the forms. On this page opens, you now need to do is scroll down this page till you reach the Form 20A option. This option is meant to complete all the formalities and procedures related to the declaration of Commencement of Business. 

Downloading the form– After completing the above steps, you are now required to download the form by clicking on the download option. 

Filling out the form– After completing and downloading it in pdf format, you must open it. After opening the PDF, you must carefully read all the instructions, after which the moving filter fills it. To fill out the entire state of the form, you must begin by filing the below-mentioned important details. 

> Valid email address of the company, where all the official communication will take place 

> The CIN of the firm

> Mention if the Sectoral Regulator governs the affairs of the company 

> Complete the detailed address of the form’s registered office 

> The full name of the company 

Attachments/ Documents– In this step, you are required to provide certain essential documents those mentioned below: 

> Subscribers’ proof of payment for the value of shares

>Certificate of Registration issued by the RBI ( this is required only in case of non-banking financial companies) or other regulators

>Address and valid email address

Certification and Declaration– After the above step, you must fill out the declaration and provide the DIN. Moreover, also enter the details of the practicing Professional who shall certify the form.

Check form– In this step, after filling the form, you need to click on check, and the system shall subsequently start the form level validation once you click on the check button. After the check form procedure is successful, you need to click on pre-scrutiny.

Add the digital signature certificate– In this step, you need to add the digital signature certificate ( DSC) of the Directors and Certifying Professional in the form.

Upload the form– After completing the above step, you need to again go to the MCA portal and log in with your credentials, and there under the MCA services tab, you need to click on upload e-forms 

Make payment– Once you have successfully uploaded the form, you need to proceed towards making payment of the fees, and an SRN will be generated upon successful payment.

Documents required for certificate of commencement of business

While uploading the forms for the Certificate of Commencement of Business, you need to produce some documents. Below is a list of documents that are required for the Certificate of Commencement of Business:

● Subscribers’ evidence of payment for the value of the shares is the company’s bank statement with all the credit entries for the receipt of subscription money received from all the subscribers.

●Certificate of digital signature

● Identity and address records as per the PAN, Voter Card, Aadhar Card, Passport, etc

●Address and email of the registered company

●Certificate of registration provided by the RBI ( only in case of non-banking financial companies) or from other regular

Penalties if form is not completed on time

If the Certificate of Commencement of Business and its application procedure are not completed in time, then neither the corporation can begin its operation nor borrow money. Apart from this, the company has to face the following consequences:

●The company shall be liable for a penalty of Rs 50,000

●Every officer in default shall be liable to the penalty of Rs 1,000/day till the default continues. But the penalty shall not exceed the amount of Rs 100,000

● In case the company fails to file the declaration and the Registrar has reasonable cause to believe that the company is not carrying on any business, then the Registrar may initiate an action for the removal of the name of the company from the Register of Companies


Hence, above, we have discussed the Certificate of Commencement of Business in detail. All the private limited corporation and public limited firms with shared capital cannot begin their operation unless they have the Certificate of Commencement of Business. All the companies should file for this certificate within 180 days from the registration date and thereby start the operation and borrow money hassle-free.

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