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1. Requirement for obtaining commencement of business certificate


A public limited company having share capital cannot commence business until it has obtained the certificate to commence business from the Registrar of Companies. Normally, when a public company is incorporated, it may take sometime before it decides to make a public offer and issue a prospectus. However, a new company will have to comply with the required formalities and obtain the commencement of business certificate from the Registrar as soon as possible after formation because it cannot commence any business activities or exercise its borrowing powers without it.




(I) In case of Statement in Lieu of Prospectus.


For obtaining a certificate to commence business, the following actions are required to be taken:—


(i) the company shall file with the Registrar a statement in lieu of prospectus electronically in the form given in Schedule III to Act together with the e-Form 62.

 This will be signed by every director of the company. [See sections 70, 149(2)(b)]


(ii) the directors should pay the value of the shares to the extent money is payable in cash with application/allotment;


(iii) a duly signed declaration shall be filed in the e-Form 20 and an original duly filled in and signed stamped copy shall be simultaneously filed with the Registrar signed by a director/secretary or by secretary in practice where there is no secretary, to the effect that the requirements of section 149(2) have been complied with, failing which the filing will not be considered;


(iv) the company shall not allot any share or debenture at least for three days after filing of statement in lieu of prospectus with the Registrar. [Section 70(1)];


The Registrar of Companies shall then issue the requisite certificate of commencement of business.


A certificate of commencement of business cannot be issued if the company has not complied with the provisions of section 149(1), even though it has issued a statement in lieu of prospectus under section 70.

[Malabar Iron & Steel Works Ltd. Registrar of Companies (1963) 33 Comp Cas 813 (Ker)]


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Published by

CS Ankur Srivastava
(Company Secretary & Compliance Officer)
Category Corporate Law   Report

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