Originally posted by : nihit dalmia
i have incorporated a limited co. today certificate of incorporation is obtained. now i want to know the process for obtaining the certificate of commencement of business and the minimum time required to obtain it.
pls reply as soon as possible its urgent.
A public limited company having share capital cannot commence business until it has obtained the certificate to commence business (COB) from the concerned Registrar of Companies.
Normally a new company will comply with the required formalities and obtain the commencement of business certificate (COB) from the Registrar as soon as possible after formation because it cannot commence any business activities or exercise its borrowing powerswithout it.
Action required on the part of the company to obtain commencement of business certificate (Refer Section 149)
1. Where A Company Not Issues Prospectus For Public Subscripttion
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 (SLP) (signed by every director) electronically at the MCA portal 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 as per Schedule X of the Companies Act, 1956.
(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 MCA portal 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 under Schedule X on SLP and on e-Form 20 to the Registrar of Companies.
The Registrar of Companies shall then issue the requisite certificate of commencement of business.
Note: It was decided in the case of Malabar Iron & Steel Works Ltd. V Registrar of Companies (1963) that COB cannot be issued if the company has not complied with the provisions of section 149(1), even though it has issued a SLP u/s 70.
2. Where A Company Issues Prospectus For Public Subscripttion
Where a company issues a prospectus immediately after its formation, it need not file a statement in lieu of prospectus. The following points have to be ensured in this connection:—
(i) shares arranging the amount at least equal to the amount of minimum subscripttion under section 69 have been allotted. [Section 149(1)(a)]
(ii) every director has paid to the company, in respect of shares taken or contracted to be taken by them subject to payment in cash, a sum equal to at least the amount payable on application and allotment on the shares offered to public for subscripttion. [Section 149(1)(b)];
(iii) application has to be made to the recognised stock exchange for obtaining permission for dealing in shares/debentures;
(iv) filing of following documents electronically with the ROC is necessary:–
(b) E-Form 19 duly certified by a director/secretary or by secretary in whole time practice where there is no secretary declaring that all the conditions as stated in (i) to (iii), above have been duly fulfilled and stamped copy shall be physically delivered simultaneously to the Registrar.
(v) payment of 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.
Certificate to commence business is conclusive evidence
The Registrar, on perusal of the declaration in e-Form 19 or 20 and the statement in lieu of prospectus, as may be applicable, shall certify that the company is entitled to commence business and to exercise borrowing powers. The certificate shall be the conclusive evidence that the company is entitled to commence its business. [ Refer Section 149(6)].