A Certificate of Commencement of Business is a legal document that certain companies in India must obtain before starting their business operations. This certificate serves as proof that a company has fulfilled the legal requirements to begin commercial activities. Issued by the Registrar of Companies (ROC), it is mandatory for companies registered under the Companies Act, 2013.

Importance of a Certificate of Commencement of Business

The certificate plays a crucial role in ensuring companies comply with legal frameworks before commencing their business operations. Without this certificate, a company cannot start its business activities or borrow funds.

Legal Requirement

According to the Companies (Amendment) Ordinance, 2018, companies registered after November 2, 2018, must file a declaration in Form INC-20A within 180 days of incorporation to obtain the Certificate of Commencement of Business. This declaration confirms that the shareholders have paid the initial share capital.

Who Needs a Certificate of Commencement of Business?

The requirement applies primarily to private limited companies and public limited companies registered after November 2, 2018. However, it is not mandatory for companies registered before this date or companies limited by guarantee without share capital.

How to Obtain a Certificate of Commencement of Business

Step 1: File Form INC-20A

The company must submit Form INC-20A to the Registrar of Companies within 180 days of incorporation. This form requires the following information:

• Corporate Identification Number (CIN)
• Bank statement as proof of initial capital deposit
• Digital signatures of directors

Step 2: Verification and Approval

The ROC reviews the submitted documents. Upon successful verification, the Certificate of Commencement of Business is issued, granting legal permission to start business operations.

Conclusion

Understanding what is a Certificate of Commencement of Business is essential for newly registered companies in India. This certificate not only legitimizes business operations but also helps companies avoid legal complications. By complying with the legal requirement and obtaining the certificate on time, companies can ensure smooth and lawful business functioning.