Certificate of Commencement of Business under Companies Act, 2013, Companies Act 1956. To know more About What is the Certificate of Commencement of Business, visit https://www.legalraasta.com/

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WHAT IS THE CERTIFICATE OF
COMMENCEMENT OF BUSINESS

2. CERTIFICATEOFCOMMENCEMENTOFBUSINESS
CERTIFICATE OF COMMENCEMENT OF BUSINESS
Certificate of Commencement of Business is covered under the Companies Act, 2013. Certificate of
Commencement of Business (COB) refers to a document required under the company act before a business
can initiate its operations.
This is an important update: As per the Companies Amendment Act, 2015, there is no longer requirement
of Certificate of Commencement of Business. However, for the knowledge of readers, we have gone ahead
and explained the certificate of commencement of Business. In this video, we will discuss the procedure for
obtaining the certificate of commencement of Business under Companies Act, 2013.Following sources can
be referred for the statutory provisions related to commencement of Business:
1. Section 11 of Companies Act, 2013
2. Rule 24 of Companies (Incorporation) Rules, 2014

3. COMPANIESACT1956
• Under the erstwhile Companies Act, 1956, as soon as a private
company receives the certificate of incorporation, it could start
its business. Private companies were not required to obtain a
certificate of commencement of business from
concerned Registrar of Companies under section 149
of Companies Act, 1956.
Position
under
Erstwhile
Companies
Act, 1956
• A Board resolution and Director’s declaration must
be prepared and filed for obtaining Certificate of
Commencement of Business. Formats of the board
resolution and Director’s declaration are as follows:
• Commencement of Business Board Resolution
Format
• Commencement of Business Certificate Director
Declaration
COB Formats

4. • If a Public and Private Limited company which have share capital do
not have the certificate of commencement of business (COB) from the
concerned Registrar of Companies cannot commence any business.
After the formation, a new company will comply with the important
formalities and obtain the certificate of commencement of business
(COB) from the Registrar as it cannot commence any business
activities or exercise its borrowing powers without it.
Now under Section 11 of Companies Act, 2013, a company cannot
commence business or exercise any borrowing powers, unless
1. A declaration is filed by a director with the Registrar, to make sure
that every subscriber to the memorandum has paid the value of the
shares agreed to be received by him and the paid-up share capital of
the company is not less than five lakh rupees in case of a public
company and not less than one lakh rupees in case of a private
company on the date of making of this declaration; and
2. A verification of its registered office is filed by the company to the
Registrar as provided in sub-section (2) of section 12.
Certificate of
Commencement
of Business
under
Companies Act,
2013
BUSINESSUNDERCOMPANIESACT2013

5. COMMENCEMENTOFBUSINESS
Consequences of Not Filing
Certificate of Commencement of
Business
1. Penal Provision: As per section 11(2), in complying with the requirements of this section if any default is
made, the company shall be liable to a penalty which may extend to five thousand rupees and every officer
who is found default shall be punishable with fine which may extend to one thousand rupees for every day
during which the default continues.
2. Removal of name from the registrar of companies: As per section 11(3), the Registrar has reasonable cause
to believe that the company is not carrying on any business or operations, if there no declaration has been
filed with the Registrar within a period of 180 days of the date of incorporation of the company. Without any
prejudice to the provisions of section 11(2), the Registrar may initiate an action for the removal of the name of
the company from the register of companies under Chapter XVIII.

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