Running a business is not for the faint of heart. To ensure a smooth start for your business, it is crucial that you understand all the documents that the government requires from your company.
The Commencement of Business Certificate is one such essential document allowing companies to operate their businesses legally.
This article explains the application process and fees required to obtain a certificate of Commencement of Business.
What is the Commencement of Business Certificate?
A Commencement of Business Certificate (COB) is a mandatory declaration that confirms that a company is legally permitted to commence business operations. It highlights your company’s adherence to legal regulations and allows you to start business activities and secure funds.
The declaration must be made within 180 days of incorporation of the company to avoid penalties and legal consequences.
Form INC 20A
Form INC 20A is the declaration form that must be filed to obtain a certificate to commence business. It ensures that your company meets all statutory requirements, which is essential to maintaining its legal status and avoiding penalties.
Timely and accurate filing of Form INC 20A ensures a smooth start for your company.
Eligibility for Commencement of Business Certificate
According to the Companies Act of 2013, it is mandatory for the following companies to obtain a commencement certificate of company before commencing business operations:
Public and private companies incorporated after November 2nd, 2018
All companies operating with a share capital framework
Companies that do not meet the criteria above are not required to file Form 20A.
Documents Required for a Commencement of Business Certificate
The following documents are required to obtain a certificate of business commencement:
Digital Signature Certificate (DSC)
Registered Company’s Proof of Address
Company Bank Statement as evidence of payments done by shareholders or subscribers
(If applicable) Registration Certificate issued by RBI
Consent Letter or Confirmation Letter from all directors of the company
Details of the board resolution of the company
Application Process for Commencement of Business Certificate
You must fill out Form INC 20A in order to apply for a certificate of commencement of business for a private limited company.
The application process is as follows:
Log in to the official Ministry of Corporate Affairs (MCA) website.
Go to “MCA services” and choose the “E-filing” option, then select “Company Forms Download”.
Find the form titled Form No. INC-20A.
Enter the required information regarding your company. Optionally, select CIN from the drop-down menu and complete the form.
Submit the form. After submission, a serial request number (SRN) will be generated, which can used for correspondence with the MCA.
Attach the Digital Signature Certificate form on the MCA website.
Pay the required fees through the portal.
Once verification is complete, you will receive an acknowledgment email.
Fee Structure for Companies with Nominal Share Capital
The fee payable by your company will be based on its nominal share capital:
Nominal share capital of the company
Fee
Less than 1,00,000
₹200
1,00,000 to 4,99,999
₹300
5,00,000 to 24,99,999
₹400
25,00,000 to 99,99,999
₹500
1,00,00,000 or more
₹600
Additional fees will be required if the form is not filed within 180 days. The additional fees will depend on the duration of the delay:
Delay period
Additional fee
Up to 30 days
2 times of regular fees
More than 30 days but less than 60 days
4 times of regular fees
More than 60 days but less than 90 days
6 times of regular fees
More than 90 days but less than 180 days
10 times of regular fees
More than 180 days
12 times of regular fees
Consequences for Non-compliance in Filing Form INC 20A
It is essential for your company to submit the required form within the stipulated time, as non-compliance may have severe consequences for your business.
These consequences can include:
Penalties imposed on the company: If your company fails to acquire a Commencement of Business Certificate within 180 days of incorporation, the company can face a penalty of ₹50,000.
Penalty imposed on the directors: Directors of the defaulting company can face individual penalties of ₹1,000 per day of default, up to a maximum penalty of ₹1 Lakh.
Striking off of the company: Your company’s name may be removed from the Registrar of Companies if there are reasonable grounds to believe that the company is not engaged in business operations even after 180 days from the date of incorporation.
Wrapping up
Obtaining a Commencement of Business Certificate is essential for ensuring a smooth start for your company. It not only helps you avoid various penalties but also helps build trust with shareholders.
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To get a certificate of business, you must obtain a Digital Signature Certificate (DSC) and apply for a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA). Use your DSC and DIN to register as a new user on the MCA portal and submit the required forms, documents, and fees. Lastly, obtain a Certificate of Incorporation and establish your company legally.
What is a business proof certificate?
A business proof certificate is a legal document that legally establishes an organisation's identity and existence. It serves as proof that the company is registered with the Registrar of Companies (RoC).
How to apply for business proof?
To obtain business proof, you must apply and submit the required documents to the relevant government office or website based on the type and jurisdiction of your business. These documents include identification proof, business address, and the company's structure details. Once the authorities verify these documents, the government will issue the business proof certificate.
13 February 2025
4 mins read
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