Companies which has been incorporated on or after 2 November 2018 and having share capital must file the certificate of commencement of business to ROC (Registrar of Company) within 180 days from the date of incorporation of the company in form 20A by the director before the commencement of business or exercise its borrowing powers. This is a mandatory form that you have to file because in case of non-filing of this form you have to pay a heavy penalty.
But, some companies did not have to file form 20A, which are as follows:
- Companies who are incorporated before 2 November 2018 and;
- Companies are incorporated after 2 November 2018 but without share capital.
Step 1: The Company first has to obtain a certificate of commencement of business within 180 days of the incorporation and then has to file e-form 20A with the Registrar of Companies (ROC).
Step 2: Now in Form 20A the director of the company has to provide the declaration of a Board resolution within the given area.
Step 3: Also Proof of deposit of the paid-up share capital by the subscriber is compulsory to provide along with the form.
Step 4: If a company is in business in which its sectoral regulator has some regulations (like Securities and Exchange Board of India or The Reserve Bank of India etc.) then they must have to obtain certification or approval from them and attach it with the declaration provided by the company.
The e-form 20A after completion of all the above steps must be verified and certified by a practicing Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant before filing it with the Registrar of Companies (ROC).
Penalty if you do not obtain a certificate of commencement of business:
The penalty for not obtaining this certificate within 180 days from the commencement of business levied on the companies is liable to pay the penalty of Rs.50,000 and each director who has defaulted will be liable to pay the penalty of Rs. 1000/day which extends up to a maximum of Rs.1,00,000. Also, if the company does not do the needful even after 180 days of incorporation the registrar has all the reasonable cause to believe that company is not active means the company is not carrying on business or operations then he may take the step towards removal of the name of the company from the register of companies.
Fees for obtaining commencement of business certificate:
The fees for obtaining the certificate depend on Nominal share capital and the company which does not have share capital than a fee of Rs. 200 is applicable otherwise for the company having the share capital, the fees are as follows:
|Nominal Share Capital (Rs)||Fee applicable (Rs)|
|Less than 1,00,000||200|
|More than 1,00,000 but Less than 5,00,000||300|
|More than 5,00,000 but Less than 25,00,000||400|
|More than 25,00,000 but Less than 1,00,00,000||500|
|1,00,00,000 or more||600|
In case you did not file this certificate on time then further late filing fees are applicable which are as follows:
|Period of delays||Fee Applicable on the normal fees|
|Up to 30 days||2 times|
|More than 30 days and up to 60 days||4 times|
|More than 60 days and up to 90 days||6 times|
|More than 90 days and up to 180 days||10 times|
|More than 180 days||12 times|