Certificate of commencement of business

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Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2013 Hi,

Can anybody guide as to the formalities for obtaining certificate of commencement of business of a public company.

What else needs to be filed other than Form 20 and statement in lieu of prospectus.

Ajay Mishra

Ajay Mishra (Expert)

27 April 2013 Hi

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)].

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