The commencement of business is a crucial phase for a company. It marks the beginning of the company’s operations, once all legal formalities have been completed. After the registration of the company and obtaining the Certificate of Incorporation, a company can only begin its actual operations after complying with certain conditions.
In India, under the Companies Act, 2013, a company must obtain the Certificate of Commencement of Business for it to begin operations, and this applies to companies that are required to do so, such as public companies (other than One Person Company and Private Company). This stage ensures that the company has completed all necessary formalities, including the necessary funding or capital, and is ready to start its activities.
Documents to Be Filed for Commencement:
To commence business, a company must file the following documents with the Registrar of Companies (RoC):
- Declaration of Compliance:
A declaration signed by the directors that all requirements for the commencement of business have been met. This includes compliance with capital subscription, the filing of the necessary documents, and compliance with the rules prescribed under the Companies Act.
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Proof of Capital Subscription:
Evidence showing that the company has received the required amount of capital from the shareholders. This may include the bank statements showing the deposited amount from shareholders into the company’s bank account.
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Form INC-21:
A company is required to file Form INC-21 to the Registrar of Companies (RoC), requesting the Certificate of Commencement of Business. This form must be filed within 180 days of incorporation.
- Board Resolution:
A resolution passed by the board of directors confirming that the company is ready to commence its business.
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Registered Office Proof:
Proof that the company has a registered office, such as a rental agreement or a utility bill (e.g., electricity or water bill) in the name of the company’s registered office address.
- Certificate of Incorporation:
A copy of the Certificate of Incorporation issued by the RoC, which serves as proof that the company has been officially registered.
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Details of Directors and KMP (Key Managerial Personnel):
Information about the directors, including their identification details, address, and proof of identity.
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Subscribers’ Bank Account Statement:
A statement showing the capital that has been deposited into the company’s bank account.
Once these documents are filed and verified by the Registrar, the company will be issued a Certificate of Commencement of Business, which officially allows the company to begin its commercial operations.
E-Filing of Documents:
With the advent of digitalization and the Government’s push for ease of doing business, many of the processes for company registration and commencement can now be completed online through the Ministry of Corporate Affairs (MCA) portal.
The MCA e-filing system allows for efficient and transparent filing of documents required for the commencement of business.
- MCA Portal: Companies can submit their documents through the official MCA portal (https://www.mca.gov.in/), which is the central platform for filing all company-related forms in India.
- Form Filing: Companies can file forms such as INC-21, INC-22, and other necessary documents electronically, along with attaching scanned copies of required documents like the board resolution, proof of capital, registered office proof, and more.
- Digital Signature: All documents must be signed digitally by the company’s directors or authorized representatives, ensuring security and authenticity.
- Payment of Fees: The required filing fee can be paid online using various payment methods, including debit cards, credit cards, or online banking.
- Verification and Acknowledgment: After submission, the MCA portal generates an acknowledgment and the documents will be verified by the Registrar. Once verified, the Certificate of Commencement of Business will be issued electronically.
- Easy Access: The e-filing system allows company directors to track the status of their filings and receive updates or notifications regarding the approval or rejection of their documents.
The introduction of e-filing has simplified the procedure, saving time, and making it more convenient for businesses to comply with the statutory requirements. Furthermore, it has enhanced transparency and reduced the chances of human error.