Question

Write short notes on the Commencement of Business Stage.

Answer 1

After getting the certificate of incorporation, a private company can start its business. A public company can start its business only after getting a Certificate of Commencement of Business.

After getting the Certificate of Incorporation:

(i) A public company issues a prospectus of inviting the public to subscribe to its share capital,

(ii) A minimum subscription is fixed, and

(iii) The company is required to sell a minimum number of shares mentioned in the prospectus.

After making the sale of the required number of shares a certificate is sent to the Registrar stating this fact, along-with a letter from the banks, that it has received application money for such shares.

The Registrar scrutinizes the documents. If he is satisfied, then issues a certificate known as Certificate of Commencement of Business. This is the conclusive evidence of the commencement of the business.

However, as per the Companies Amendment Act, 2015, Certificate of Commencement of Business is no longer required.