All companies registered in India on or after November 2nd 2018 and having a share capital is required to obtain commencement of business certificate before commencing any business or exercising any borrowing powers.
The commencement of business certificate must be obtained within 180 days of incorporation of the company. While filing the application for commencement, each of the Directors of the company must declare that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him/her on the date of the making of such declaration.
CONSEQUENCES IF FORM IS NOT FILED WITHIN TIME –
- Company cannot start his business
- Company cannot borrow money
- Company will be closed by the Registrar of Companies.
- Department will remove of name of the company from the Registrar of Companies.
Penalty – Any company that does not obtain commencement of business certificate within 180 days of incorporation will be liable for payment of a penalty of Rs.50,000. Each of the Directors who have defaulted would be liable for payment of a penalty of Rs.1000 per day of default upto a maximum of Rs.1 lakh.