Can a Public Company Commence Business Immediately After Incorporation in India?

1. A copy of prospectus.

2. A statutory declaration in the prescribed form duly verified by any one of the directors or the secretary of the company or where the company has not appointed a secretary, a secretary in whole-time practice to the effect that:

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

(a) The directors have taken up and paid for the qualification shares in cash an amount equal to the amount payable by other subscribers on application and allotment;

(b) The shares payable in cash have been allotted equal to an amount not less than the minimum subscription; and

(c) No money is liable to become refundable to applicants by reason of failure to apply for, or to obtain permission for the shares or debentures to be dealt on the recognised stock exchange. [Sec. 149 (2)]

Companies which do not issue a Prospectus:

A company, which has not issued a prospectus, must file the following documents with the Registrar:

1. A statement in lieu of prospectus.

2. A statutory declaration in the prescribed form duly verified by any one of the directors or secretary of the company or where the company has not appointed a secretary in whole-time practice that the directors have taken up and paid for their qualification shares in cash an amount equal to the amount payable by other subscribers on application and allotment. [Sec. 149 (2)]

The steps to obtain Commencement of Business Certificate are:

i. File a declaration in e Form 20 and attach the statement in lieu of the prospectus (Schedule III) OR

ii. File a declaration in e Form 19 and attach the prospectus (Schedule II) to it.

Commencement of New Business:

(1) Section 149(2A) provides that a public company having share capital formed before the commencement of the Companies (Amendment) Act, 1965 shall not

commence any new business i.e., a business which is not germane to the business which it is carrying on at the commencement of the Companies (Amendment) Act, 1965] falling within its objects clause unless the commencement of such business has been approved by a special resolution of the shareholders in a general meeting and a copy of such resolution has been duly filed with the Registrar.

(2) A public company having share capital formed after such commencement shall not commence any business which falls in the category of “Other Objects” stated in the company’s memorandum unless the starting of such a business has been similarly approved by a special resolution and a copy of the special resolution has been filed by the company with the Registrar.

However, passing of special resolution as required by section 149(2/1) may not be necessary if an ordinary resolution is passed by the company and the consent of the Central Government is obtained for taking up the new business. [Section 149(2B)]

The Registrar on satisfaction that above conditions have been fulfilled will grant a certificate of commencement of business to the company.