The Ministry of Corporate Affairs has re-introduced the concept of commencement of business certificate. Under the newly introduced The Companies (Amendment) Ordinance 2018, all companies registered in India after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital is required to obtain commencement of business certificate before commencing any business or exercising any borrowing powers. Since The Companies (Amendment) Ordinance 2018 was introduced in November 2nd 2018, any company incorporated after November 2018 would be required to obtain Commencement of Business Certificate.
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.
The penalty for non-compliance is very high as under:
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.
Also, after 180 days of incorporation, if the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he/she may initiate action for the removal of the name of the company from the register of companies (i.e. Company Strike-off).
Private Limited Company registration is the most popular legal structure option for businesses in India. Private limited company can have a minimum of two members and a maximum of fifty members. The directors of a private limited company have limited liability to creditors. In a case of default, banks / creditors can only sell company’s assets but not personal assets of directors.
Start-ups and growing companies prefer private limited company as it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to pull in top talent.
First of all, the partners have to apply for Digital signature and DPIN. Digital signature is an online signature used for filing and DPIN refer to Directors PIN number issued by MCA. If the directors already have DSC and DPIN, then this step can be skipped.
You need to provide 3 different options for your company name to MCA of which one will be selected. Names provided should ideally be unique and suggestive of company business
Once name is approved, one needs to draft Memorandum of association and Articles of Associate. Both MOA and AOA are filed with the MCA with the subscription statement.
It typically takes 15- 25 days to form a Private limited company and get the incorporation certificate. Incorporation certification is a proof that company has been created. It also includes your CIN number.
Then you need to apply for PAN and TAN. PAN and TAN are received in 7 working days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN with a bank to open your bank account.
Business Formation, Routine Compliances, Financial, Secretarial, Direct & Indirect Taxation