Tag Archives: Commencement of Business


We firstly ignore negative news going to effects us. Secondly, we undermine the impact. Third, we start fighting. Humanity since 2017 knew and ignored about 73 corona viruses waiting to affect humanity. It is changing our life and law. I wrote a post on initial restrictions going to impact corporate compliances on 13th March 2020 which I considered now outdated. Here are measures the Ministry of Corporate Affairs announced:

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The Government of India promulgated a temporary law called the Companies (Amendment) ordinance 2018 on 2nd November 2018 to by parachute landing of few more reform measure. Constitution of India mandate that Government needs to get it approved by Parliament within 6 months.

Readers may read this post as a law applicable with effect from 2nd November 2018 till passing a law by the Parliament, a bill for which was introduced before Loksabha on 20th December 2018. These provisions may continue in force after parliamentary approval. In this post, we will discuss, the reintroduction of Commencement of Business.

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Commencement of Business Suspended

Yes, you rightly read. Commencement of business suspended. One of fellow professional colleague told me with exclamation!!

Ministry of Corporate affairs few days ago announced about launch of updated versions of few forms including Form INC – 21 which is a declaration required to be filed before commencement of business or exercising borrowing powers. But suddenly stakeholders found that while updated version of all other forms is there, there was no Form INC – 21 on the portal.

A statement issued just said that due to deletion of Section 11 of the Companies Act, 2013 by relevant section of the Companies (Amendment) Act, 2015, which came into force on or before there is no requirement of Form INC – 21 remain. Earlier, the companies (Incorporation) Second Amendment Rules 2015 were also notified.  The Form was removed from MCA 21 Portal on date 4th June 2015. By virtue of commencement of the Companies (Amendment) Act, 2015, this date legally is 29th May 2015.

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The Ministry of Corporate Affairs placed here on its website a draft of the Companies (Incorporation) Second Amendment Rules, 2015. These amendment Rules will come into force from the date of its publication in Official Gazette.

These amendment rules proposed to amend:

  1. Insert a proviso in Rule 12 of principal Rules,
  2. Omit Rule 24 of the Principal Rules,
  3. Substitute Form INC – 13 and INC – 16 with new Forms, and
  4. Omit form INC – 21.

Application for incorporation of companies:

The Amendment Rules introduce a proviso to Rule 12. After this amendment, Rule 12 of the Companies (Incorporation) Rules 2014 shall read:

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UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

In last Blog Post, I discussed formation and incorporation of company and its effects. What next? Business, but comply certain legal provisions. Here, we will discuss provision related to present companies Bill, 2012 Act, 2013.


[Update: Section 11 is no longer relevant after the Companies (Amendment) Act, 2015]

Before starting any business or borrow any money, every company having share capital, shall have to comply two requirements.

Firstly, A Director of company shall file a declaration with Registrar of companies, that:

(i)           Every subscriber to the memorandum has paid the value of shares agreed to be taken by him,

(ii)          The paid up capital of company is not less than one lakh in case of private company or five lakh in case of public company on date of declaration.

Any commencement of business or borrowing before complying above requirement, the company shall liable five thousand rupees (one time) and every officer who is in default shall be punishable with fine up to rupees one thousand for every day during which the default continues.

If no declaration has filed within one hundred and eighty day of the date of incorporation, the registrar may initiate action for removal of name of company from register of companies.

This simply means company should receive from their subscribers all the money value of shares subscribed by them before commencing the business. The company should take that money value into its book of accounts.  After receiving all this money value from subscribers and other shareholders, the paid up capital of the company should be in conformity of minimum paid up share capital requirement. At this point, please, recall Section 10 (2), all monies payable by any member to the company under the memorandum or articles shall be a debt due from him to the company. That Section 10 (2) may not help company to commence its business but act against subscriber only. Effectively, all subscribers must pay their subscription money in total within one hundred and eighty days from the date of incorporation.


The company shall have on and from fifteenth day of its incorporation and all time thereafter a registered office for all communication purpose. When we read all other provision under Companied Bill, 2012 the registered office is office of company is a hub connecting the company and outside world.

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