POST-INCORPORATION REQUIREMENTS: COMMENCEMENT OF BUSINESS (COB)

Why COB is required?

Upon incorporation of an Indian Company and Opening of its Bank Account, a Declaration is required to be filed by the Directors in prescribed e-form within 180 days from date of Incorporation of Company with the ROC along with a proof that every subscriber to the Memorandum of Association has paid the value of the shares agreed to be taken by him/her.

Ministry of Corporate Affairs has inserted Section 10 via Companies (Amendment) Ordinance, 2018 dated 02/11/2018 and same has been included in Companies (Amendment) Act, 2019 later.
 

When is it required to file?

Upon incorporation of an Indian Company and Opening of its Bank Account, a Declaration is required to be filed by the Directors in prescribed e-form within 180 days from date of Incorporation of Company with the ROC along with a proof that every subscriber to the Memorandum of Association has paid the value of the shares agreed to be taken by him/her.

Whether a company can accept loan from Directors, Shareholders or from any other person before filing of Commencement of Business with the ROC?

As per the law, a company having SHARE CAPITAL incorporated after 02.11.2018, shall not commence its business or exercise any borrowing powers unless; a Declaration of Commencement of Business is filed by the Directors.

Accordingly, it is very clear that no company can accept loan from anyone before filing of Commencement of Business, even not for the purpose of opening of bank account.

Documents required to be filed with the Registrar for Commencement of Business.

Since Commencement of Business can be filed only upon receipt of initial investment from the shareholders, therefore, it is required to attach the proof of transfer of money by the subscribers of the Memorandum of Association.

Attachments shall be the copy of Bank Statement of an Indian Company reflecting the receipt of money in the Bank Account and where the subscription money is received in cash, attachment can be a Declaration from the Directors along with the copy of Books of Accounts of the Company reflecting receipt of money in cash.

How AKM Global helps?

AKM Global provides end-to-end services to a lot of Multi-National Companies starting from incorporation of a Company in India, assisting them to complete post-incorporation compliances and other services required to operate business in India.