Q.What is meant by "Commencement of Business"?

Being registered and being allowed to actually trade are two different milestones in a company's life.

Commencement of Business is the last of the four stages in forming a company. Even after a company has been incorporated and holds its Certificate of Incorporation, it is not automatically free to start trading or to borrow money if it has a share capital. Under Section 10A of the Companies Act, 2013, such a company must first file, generally within 180 days of incorporation, a declaration by one of its directors confirming that every subscriber to the Memorandum has actually paid for the shares he agreed to take, along with proof that the registered office has been verified as required under Section 12(2). Only after this declaration is filed with the Registrar of Companies is the company entitled to commence its business operations and to exercise its powers of borrowing. Failure to comply exposes the company a …

A common mix-up is treating incorporation and commencement of business as the same event. Incorporation only creates the company as a legal person; commencement of business is a separate, later comp …