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27 June 2013 WHAT IS THE PROCEDURE FOR OBTAINING CERTIFICATE OF COMMENCEMENT OF BUSSINES.

Ajay Mishra

Ajay Mishra (Expert)
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27 June 2013 Hi

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 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.
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 at the portal of the MCA in the form given in Schedule III to Act together with the E-Form 62 and shall pay the prescribed fee by online or offline procedure as per the requirement of Schedule X of the Companies Act, 1956. This will be signed by every director of the company. [See section 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 certified declaration shall be filed electronically at the portal of the MCA in the E-Form 20 and a 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.;
(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)];
(v) the company shall pay the prescribed filing fee by online or offline procedure as applicable under Schedule X on statement in lieu of prospectus and on e-Form 20 to the Registrar of Companies.
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. v Registrar of Companies (1963) 33 Comp Cas 813 (Ker)].

Ajay Mishra

Ajay Mishra (Expert)
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27 June 2013 Procedure for obtaining certificate of commencement of business:

In order to obtain certificate of commencement of business, a public limited company shall file the following documents with the Registrar of Companies according to section 149:—
(1) A prospectus/statement in lieu of prospectus as the casemay be to be supported with the following documents:—
(a) list of the members of the company with their shareholdings;
(b) confirmation for paid up share capital to the extent of Rs. 5,00,000 and proof thereof, viz copy of bank statement etc.;
(c) list of Directors, Manager, Secretary, Auditors and changes among them, if any;
(d) consent of the Auditors to include their name in the Prospectus/Statement in lieu of Prospectus;
(e) copy of the agreements for appointment of Managing Director, Underwriters, contracts entered into by the promoters before incorporation of the company, etc. if any;
(f) printed and certified copy of the Memorandum and Articles of Association of the company;
(g) details of the preliminary expenses incurred by the company;
(h) power of attorney to make corrections in the Prospectus/Statement in lieu of prospectus and to obtain certificate for commencement of business from the Registrar of Companies;
(i) certified copy of the resolution passed by the Board for approval of prospectus /statement in lieu of prospectus for filing with the Registrar.
(2) A duly verified declaration on non-judicial stamp paper that provisions of section 149 of the Act have been complied with, by one of the directors or the secretary or, where the company has not appointed a secretary, a secretary in whole time practice, in form prescribed in Companies (Central Government's) General Rules and Forms, 1956 (e-Form 19/20, in case company has filed prospectus/statement in lieu of prospectus).

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