COMMENCEMENT OF BUSINESS STAGE

In case of a private limited company, it can immediately start its business as soon as it is registered. However, in case of public limited company a certificate, known as ‘certificate of commencement of business’, must be obtained from the Registrar of Companies before starting its operation. For this purpose it has to file a statement with the following declarations to the Registrar of Companies.

(a) That a prospectus has been filed with the Registrar of Companies.

(b) That the shares have been allotted upto the amount of the minimum subscription.

(c) That the Directors have taken up or purchased the minimum number of shares required to qualify themselves to be Director.

(d) That no money is liable to become refundable to the applicants by reason of failure to obtain permission for shares to be traded in a recognised stock exchange.

(e) A statutory declaration by a Director or the Secretary of the company stating that the requirements relating to the commencement of business have been duly complied with.

The Registrar of Companies will scrutinise all these documents and if he is satisfied that the process of securing the minimum prescribed capital has been done honestly and efficiently and the minimum prescribed capital has been obtained from the public, then he shall issue a Certificate of Commencement of Business.