A private limited company can start its business immediately after getting the certificate of incorporation from the Registrar of Companies

A private limited company, which has converted into limited company, is not required to obtain any certificate for commencement of business from the Registrar of Companies before starting a business.

Private company and a public company not having share capital, can start their business, immediately after obtaining the certificate of incorporation from Registrar of Companies.

A public limited company having share capital, can not commence its business unless it obtains the certificate of commencement of business from the Registrar of Companies.

Procedure for Obtaining the Certificate of Commencement of Business by a Public Limited Company, Having Share Capital

a)  WHERE A COMPANY ISSUES THE PROSPECTUS FOR PUBLIC SUBSCRIPTION:- When a company issues the prospectus for subscription of its shares then it must follow the following procedure for obtaining the certificate of commencement of business:-

  1. Shares equal to the amount of minimum subscription have been allotted.
  2. The directors must pay the amount of the shares taken by them in cash.
  3. An application must be submitted to the recognized stock exchange for permission for dealing in shares or debentures.
  4. A copy of prospectus must be filed with Registrar of Companies.
  5. A duly certified declaration should be given to the Registrar of Companies on a prescribed form by a director or secretory declaring that all the conditions as mentioned from S.No. 1 to S.No. 4, as mentioned above, have been duly fulfilled and a stamped copy should be delivered to the Registrar.
  6. Payment of prescribed filing fees, also should be made.

On completion of the said formalities, the Registrar issues the Certificate of commencement of business to the company. Thereafter, a public company can start its business.

b) WHERE COMPANY DOES NOT ISSUES PROSPECTUS FOR PUBLIC SUBSCRIPTION:- When a company does not issue any prospectus for subscription of shares, then it has to follow the following procedure to get the certificate of commencement of business:-

  1. The company must file with the Registrar of Companies a statement in lieu of prospectus, signed by each and every director
  2. The company must pay the prescribed fee according to the companies act.
  3. The director must pay the value of shares, taken by them, in cash.
  4. A duly certified declaration should be given to the Registrar of Companies on a prescribed form by a director or secretory declaring that all the conditions as mentioned from S.No. 1 to S.No. 4, as mentioned above, have been duly fulfilled and a stamped copy should be delivered to the Registrar.
  5. The company must not allot any shares or debentures at least for three days after filing of statement in lieu of prospectus with the Registrar of Companies.

On completion of the said formalities, the Registrar issues the Certificate of commencement of business to the company. Thereafter, a public company can start its business.

RELATED TERMS: