Amendment in Companies Act, 2013 regarding Certificate for Commencement of Business, and Delegation of Powers to Regional Directors

A. Requirements regarding certification of commencement of business The Government of India has inserted Section 10A of the Companies Act, 2013. This provision has become effective from 19 December 2018. The provisions of Section 10A requires the filing of a declaration by a director of the company in respect of receipt of share capital into the company and allotment of shares. The declaration shall be filed within 180 days of the incorporation. The company cannot commence its business or exercises borrowing power until the declaration is filed. The registrar of companies shall issue a certificate of commencement of business after the declaration is aptly filed. A new rule is notified that specifies that the declaration shall be filed in Form No. INC-20A. In furtherance to the insertion of Section 10A in Companies Act, 2013 (“Act”) vide the Companies (Amendment) Ordinance, 2019, MCA has come up with the consequent amendment in the Companies (Incorporation) Rules, 2018 dated December 18, 2018, thus notifying new Rule 23A which requires filing of declaration by a director of the company at the time of commencement of business in Form No. INC-20A. The contents of the form shall be verified by a company secretary or a chartered accountant or a cost accountant in practice. The declaration above shall be accompanied with approval from the sectoral regulator in case the business activities of the Company require registration/approval from the regulator. B. Transfer of powers to Regional Director concerning the change in   A recent amendment has transferred certain powers from National Company Law Board to Regional Directors for ease of business. The following powers shall be exercised by the Regional Directors appointed by the Ministry of Corporate Affairs:

• Approval for the change of financial year from April 1 – March 31 to another form;
• An approval to convert a public company into a private company;

  Last Updated: 23rd January 2019 This article is contributed by: Luv Malhotra Senior Manager, Legal Puneet Bhatia Corporate Lawyer

Tag: Amendments, Commencement of Business, Companies Act, Transfer of Powers