The Ordinance states that a company may not commence a business, unless it-

  1. files a declaration within 180 days of incorporation, confirming that every subscriber to the Memorandum of the company has paid the value of shares agreed to be taken by him, and
  2. files a verification of its registered office address with the Registrar of Companies within 30 days of incorporation. If a company fails to comply with these provisions and is found not to be carrying out any business, the name of the Company may be removed from the Register of Companies.

 Consequences for Not Filing Certificate of Commencement of Business

  1. Non-filling of form INC 20A allows Registrar of Companies one additional ground to strike off the name of your Company from its Register.
  2. The company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding the number of one lakh rupees.
  3. On non-filling of form INC 20A ROC may strike off your Company which shall adversely affect all the Sectoral Approval taken after the incorporation by the Company.

Accordingly, the concept of a certificate of commencement of business is another welcome in ease of doing business and run the business in a more legally and a transparent manner.

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