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WWW.LEGALRAASTA.COMWHAT IS THE CERTIFICATE OF COMMENCEMENT OF BUSINESS

Hi, In this video the Legalraasta team will teach our all about the Certificate of Commencement of Business its definition, minimum requirement and advantages.

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CERTIFICATE OF COMMENCEMENT OF BUSINESSCERTIFICATE OF COMMENCEMENT OF BUSINESSCertificate of Commencement of Business is covered under theCompanies Act, 2013. Certificate of Commencement of Business (COB) refers to a document required under the company act before a business can initiate its operations.This is an important update: As per theCompanies Amendment Act, 2015, there is no longer requirement of Certificate of Commencement of Business. However, for the knowledge of readers, we have gone ahead and explained the certificate of commencement of Business. In this video, we will discuss the procedure for obtaining the certificate of commencement of Business under Companies Act, 2013.Following sources can be referred for the statutory provisions related to commencement of Business:1.Section 11 of Companies Act, 20132.Rule 24 of Companies (Incorporation) Rules, 2014

CERTIFICATE OF COMMENCEMENT OF BUSINESSCertificate of Commencement of Business is covered under theCompanies Act, 2013. Certificate of Commencement of Business (COB) refers to a document required under the company act before a business can initiate its operations.This is an important update: As per theCompanies Amendment Act, 2015, there is no longer requirement of Certificate of Commencement of Business. However, for the knowledge of readers, we have gone ahead and explained the certificate of commencement of Business. In this video, we will discuss the procedure for obtaining the certificate of commencement of Business under Companies Act, 2013.Following sources can be referred for the statutory provisions related to commencement of Business:1.Section 11 of Companies Act, 20132.Rule 24 of Companies (Incorporation) Rules, 2014

COMPANIES ACT 1956Position under Erstwhile Companies Act, 1956Under the erstwhile Companies Act, 1956, as soon as aprivate companyreceives the certificate of incorporation, it could start its business. Private companies were not required to obtain a certificate of commencement of business from concernedRegistrar of Companiesunder section 149 ofCompanies Act, 1956.COB FormatsA Board resolution and Directors declaration must be prepared and filed for obtaining Certificate of Commencement of Business. Formats of the board resolution and Directors declaration are as follows: Commencement of Business Board Resolution Format Commencement of Business Certificate Director Declaration

BUSINESS UNDER COMPANIES ACT 2013

Certificate of Commencement of Business under Companies Act, 2013If a Public and Private Limited company which have share capital do not have the certificate of commencement of business (COB) from the concerned Registrar of Companies cannot commence any business. After the formation, a new company will comply with the important formalities and obtain the certificate of commencement of business (COB) from the Registrar as it cannot commence any business activities or exercise its borrowing powers without it.Now underSection 11 of Companies Act, 2013, a company cannot commence business or exercise any borrowing powers, unless1.A declaration is filed by a director with the Registrar, to make sure that every subscriber to thememorandumhas paid the value of the shares agreed to be received by him and the paid-up share capital of the company is not less than five lakh rupees in case of a public company and not less than one lakh rupees in case of a private company on the date of making of this declaration; and2.A verification of its registered office is filed by the company to the Registrar as provided in sub-section (2) of section 12.

COMMENCEMENT OF BUSINESSConsequences of Not Filing Certificate of Commencement of Business1.Penal Provision: As persection 11(2), in complying with the requirements of this section if any default is made, the company shall be liable to a penalty which may extend to five thousand rupees and every officer who is found default shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues.2.Removal of name from the registrarof companies: As per section 11(3), the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, if there no declaration has been filed with the Registrar within a period of 180 days of the date of incorporation of the company. Without any prejudice to the provisions ofsection 11(2), the Registrar may initiate an action for the removal of the name of the company from the register of companies under Chapter XVIII.

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