Commencement of Business

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This query is : Resolved

PSETHI (Querist)

09 July 2009 How a public company(closely held) can get the certificate of commencement of business. What are the procedure and forms required to be filed with ROC?

Ankur Garg

Ankur Garg (Expert)

09 July 2009 Hi Pankaj,

Find below the desired detailes:

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)].

Regards

Ankur Garg

Ankur Garg (Expert)

09 July 2009 But where a company issues prospectus for public subscription the procedure would be as under:

Where a company issues a prospectus immediately after its formation, it need not file a statement in lieu of prospectus.

It has to filed the following documents electronically with the Registrar of Companies;—
(a) prospectus;
(b) E-Form 19 declaring that all the conditions as stated in (i) to (iii), supra have been duly fulfilled. This form is required to be verified and signed by a director/secretary or by secretary in whole time practice where there is no secretary and stamped copy shall be physically delivered simultaneously to the Registrar.
(c) shall pay the prescribed filing fee under Schedule X on prospectus and E-Form 19 by online or off line system.

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

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