Commencement of Business Certificate, the new amendment by Companies Act 2013 was a little confusing for the registered companies. There were quite a few questions raised like; I have registered my company in the year 2018 and do I need the certificate? My company has been registered few years back and do I have to get the certificate? Are Commencement of Business Certificate and Certificate of Incorporation the same?
Let me clarify your doubts and before this let’s understand what is Commencement of Certificate and its applicability.
Is it mandatory that a Company/ Business registered on or after 2nd November 2018 to procure the Commencement of Business Certificate? Yes, you heard right, within 180 days from getting the Incorporation Certificate you atleast need to file the declaration for Commencement of Business Certificate.
This Commencement of Business Certificate was introduced in the year 2018 and all the companies registered after the Commencement of the Companies (Amendment) Ordinance 2018 and having a share capital must acquire this certificate. These companies atleast need to file a declaration of Commencement of Business Certificate with the Registrar of Companies within 180 days of the Company being incorporated.
So it goes to say that Commencement of Business Certificate basically is required to start your company operations and Certificate of Incorporation for just registering it.
Basic requirements of Commencement of Business Certificate:
- Declaration of the Commencement of Business Certificate to be filed 180 days from the period of incorporation which is before 1st May 2019
- A company being registered on or after 2nd November 2018 with a share capital needs to file for the Certificate of Commencement of Business
- Without share capital there will be a minimum penalty to be borne for filing
- E-Form 20A has to be filed by all the registered companies and has to be certified by a practising Chartered Accountant / Company Secretary / Cost Accountant
- Verification of registered office address and documents pertaining to the same have to be filed with E-Form INC 22A
Repercussion of non filing of the Commencement of Business Certificate:
- The company cannot start its business operations without the commencement certificate
- In case of default in filing within 180 days the company needs to pay fifty thousand as penalty
- Every officer who is in default needs to pay thousand rupees everyday during which a default continues up to an amount exceeding not more than one lakh
- If the registrar is sure that the company is not carrying out any business or operations than he has all the rights to remove the company name from the Registrar of Companies.
What are the required documents?
- Identity proof
- Address proof
- Consent letter from the Directors ie. A declaration from Directors and Board resolution
- Signed bank statement copies of the company showing credit entries of subscription money.
The Commencement of Business Certificate has a fee structure for company with share capital and without share capital and also for late filing after the stipulated time.
Companies with share capital:
|Capital less than 1,00,000||200/-|
|Capital from 1,00,000 – 4,99,999||300/-|
|Capital from 5,00,000 – 24,99,999||400/-|
|Capital from 25,00,000 – 99,99,999||500/-|
|Capital from 1CR and above||600/-|
|Without Share Capital||200/-|
Late Filing Fees:
|Upto 30 days||Two times of normal fees|
|More than 30 days and up to 60 days||Four times of normal fees|
|More than 60 days and up to 90 days||Six times of normal fees|
|More than 90 days and up to 180 days||Ten times of normal fees|
|More than 180 days||Twelve times of normal fees|
With this we get an understanding that the Commencement of Business Certificate is required only for companies registered on or after November 2nd, 2018 and not the ones registered prior to that.
This is enough for any Director to understand the importance of getting Commencement of Business Certificate especially if the company is registered on or before 2nd November 2018. This certificate will be authentic proof and also raise funds for your business. Mark your dates as 1st May 2019 a deadline for getting the certificate and avoid penalties.
Aavana Corporate Solutions global business consultants will keep you updated with the new and upcoming amendments as per the Companies Act 2013 and we offer expert help on all such amendments.