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The Tax Publishers Commencement of New Business Provided in Other Objects Clause or MoA A. INTRODUCTORY NOTE A public limited company with share capital is required to obtain certificate of commencement of business. Usually, the RoC after being satisfied that the company has fulfilled the conditions precedent to the issue of certificate of commencement of business, issue a certificate to enable the company to start business. However, this certificate entitles the company to commence business as per the object clause of the memorandum of association of the company. Now when the company intends to do certain new business as per 'other clause' of the memorandum of association of the company, it has to obtain a certificate of New Business provided in the other objects clause of the memorandum of association, from the RoC by following the procedure as laid down in the present Chapter. The procedure as being explained in this Chapter is applicable to the public companies with share capital, whether or not, they have issued a prospectus inviting public to subscribe to the shares. B. NEW BUSINESS EXPLAINED A business is deemed to be a new business if, -- (i) in case of company in existence on or before 15-10-1965; the business is not germane to the objects as specified in object clause of the company; (ii) in case of any other company (i.e., new company formed on or after 15-10-1965) in relation to any other objects and objects incidental to or ancillary thereto, of the object clause of the memorandum of association of the company. C. PROVISIONS NOT APPLICABLE The provisions shall not be applicable to a private company or to a company registered before 1-4-1914 which has not issued a prospectus inviting the public to subscribe to its shares. Such companies by passing suitable resolution can commence business. D. BOARD RESOLUTION A Board Resolution approving the following, should be passed : (i) for obtaining certificate of commencement of new business from RoC; (ii) for convening a general meeting to pass a special resolution; (iii) for filing of e-Form 20A to RoC; and (iv) for complying with all other formalities with regards to obtaining certificate of commencement of new business by authorised person; (v) for authorising a director or secretary to comply with the formalities as per (iv) above. E. ISSUE OF NOTICE OF GENERAL MEETING A notice of the general meeting together with explanatory statement should be sent to all the eligible members and auditors of the company. F. CONVENING GENERAL MEETING AND PASSING SPECIAL RESOLUTION On the appointed date, general meeting should be convened and special resolution should be passed authorising the company to obtain certificate of commencement of new business. G. PREPARATION OF MINUTES OF THE GENERAL MEETING Within 30 days of the general meeting, and passing of special resolution the minutes of the meeting should be prepared and recorded. H. ELECTRONIC FILING OF e-FORM 65 In case of failure to pass Special Resolution In case the company fails to pass special resolution by not getting three-fourth majority in favour of the resolution, but the special resolution is passed by simple majority, than the Board of director is under obligation to submit an application to the Ministry of Company Affairs in e-Form 65 through MCA portal, www.mca.gov.in for seeking permission for commencing new business. 1. Who can file ? The e-Form 65 is to be filed by a person who has been authroised by the Board of directors, through a resolution, such as managing director, director, manager, secretary, and has a valid Digital Signature Certificate. 2. Time Limit to file The e-Form 65 shall be filed before filing of e-Form 20A. 3. Attachments The following documents should be filed electronically alongwith e-Form 65 : (i) Detailed application seeking approval from the Ministry of Company Affairs (Central Government), (ii) Copy of resolution, (iii) Copy of minutes of the minutes of the general meeting. 4. How to attach documents ? The attachment shall be in PDF format. A physical document can be changed into an electronic document by scanning. A soft copy may also be converted into PDF format and used as an attachment to e-Form 65. 5. Digital Signatures The e-Form 65 and other documents must be digitally signed by an authorised director or secretary of the company under authority obtained through Board resolution. 6. Filing Fee Filing fee shall be as per Companies (Fees on Applications) Rules, 1999. I. MODE OF PAYMENT 1. The fee can be paid through one of the specified modes, viz., remittance in authorised banks, credit cards or through internet banking. In case of online payment, filing process shall be complete immediately. 2. When payment is tendered through authorised bank (Punjab National Bank, State Bank of India, Indian Bank, ICICI Bank and HDFC Bank), a pre-filled challan (GAR-7) containing SRN, date of challan, expiry date, name and designation of user by whom challan is tendered, name and address of the company, particulars of remittance, total amount and head of account shall be generated by the system. The challan should be used for making payment before the date of expiry mentioned therein and the transaction shall be completed by the concerned banks. J. EFFECT OF NON-PAYMENT BEFORE DUE DATE Note, if payment is not made by the date mentioned on the challan, the submission of form shall be treated as incomplete and message through e-mail will be received that form cannot be regarded as filed due to non-payment. Status of application and payment can be verified through MCA portal. K. PHYSICAL SUBMISSION OF DOCUMENTS Immediately after filing of e-Form 65 and other relevant documents through MCA, portal, the original and duly stamped and digitally signed e-Form 65 together with other relevant documents should be physically submitted to the Ministry of Company Affairs with a query letter quoting the Service Request Number (SRN) of e-Form 65 filed electronically. L. APPROVAL FROM MINISTRY OF COMPANY AFFAIRS (CENTRAL GOVERNMENT) The Ministry of Company Affairs (Central Government) on receipt of e-Forms alongwith documents shall grant permission as if special resolution had been filed by the company. M. ELECTRONIC FILING OF e-FORM 23 AND e-FORM 20A 1. Within 30 days of passing of the special resolution, e-Form 23 should be filed with RoC through MCA portal, www.mca.gov.in. 2. A declaration in e-Form 20A should be field with RoC through MCA portal, www.mca.gov.in. 3. Who can file ? e-Forms 23 and 20A can be filed by a director or secretary duly authorised by the Board. 4. Time Limit Any time before commencing new business. Since, no business can be commenced, unless certificate of commencement of new business is obtained from RoC. 5. Attachments The following documents should accompany the e-Forms : (i) Copy of special resolution, or approval letter of Ministry of Company Affairs, (Where the special resolution failed and the resolution is passed by simple majority.) (ii) Copy of minutes of the general meeting. 6. How to attach documents ? The documents should be attached in PDF format. A physical document can be converted into an electronic document through scanning. A soft copy may also be converted into PDF format and used as an attachment. 7. Digital Signature The e-Forms should be digitally signed and stamped by a director or secretary duly authorised by the Board. 8. Filing Fee The filing fee shall relate to the authorised capital of the company in accordance with Schedule X of the Companies Act, 1956. N. MODE OF PAYMENT 1. The fee can be paid through one of the specified modes, viz., remittance in authorised banks, credit cards or through internet banking. In case of online payment, filing process shall be complete immediately. 2. When payment is tendered through authorised bank (Punjab National Bank, State Bank of India, Indian Bank, ICICI Bank and HDFC Bank), a pre-filled challan (GAR-7) containing SRN, date of challan, expiry date, name and designation of user by whom challan is tendered, name and address of the company, particulars of remittance, total amount and head of account shall be generated by the system. The challan should be used for making payment before the date of expiry mentioned therein and the transaction shall be completed by the concerned banks. O. EFFECT OF NON-PAYMENT BEFORE DUE DATE Note, if payment is not made by the date mentioned on the challan, the submission of form shall be treated as incomplete and message through e-mail will be received that form cannot be regarded as filed due to non-payment. Status of application and payment can be verified through MCA portal. P. PHYSICAL SUBMISSION OF e-FORMS AND DOCUMENTS Immediately after the electronic filing is over through MCA portal. The relevant documents, viz., e-Form 23 and 20A, Board resolution and statement in lieu of prospectus should be sent in original alongwith a forwarding letter quoting the Service Request Number (SRN) of filing e-Forms, to the RoC. Unless the documents and e-Forms are submitted in original to the RoC, filing shall be treated as incomplete and certificate of commencement of business will not be granted by the RoC and company shall be subject to legal action. Q. ISSUE OF CERTIFICATE OF COMMENCEMENT OF NEW BUSINESS BY RoC On completion of above formalities, the RoC shall issue certificate to the company to commence new business as per other objects clause. R. SAFE CUSTODY OF CERTIFICATE Since the certificate of commencement of new business in a conclusive evidence that the company is authorised to commence new business and exercise borrowing powers, the same should be kept in lock and key. S. EFFECT OF OBTAINING CERTIFICATE OF COMMENCEMENT OF NEW BUSINESS No public limited company with shares can commence new business without obtaining certificate from the RoC to commence business. On obtaining the said certificate, the company is authorised to commence business and to exercise borrowing powers. T. LIABILITIES INCURRED BEFORE COMMENCEMENT No company, before obtaining the certificate of new business from the RoC is authorised to enter into any contract with any body in respect of new business. In case, it does so, the shareholders cannot be compelled to contribute to the assets of the company in case of winding up of the company. U. LIABILITY TOWARDS CONTRACTS ENTERED BEFORE OBTAINING CERTIFICATE OF COMMENCEMENT OF NEW BUSINESS A contract made before obtaining the certificate of commencement of new business are not valid until ratified by obtaining certificate of new business. In the event, a company fails to obtain certificate of commencement of new business, all the officers, who were responsible for contravention of the provision of the Act shall be liable to be punishable with a fine, which may extend to five thousand rupees for every day during which such contravention continues. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers Commencement of New Business Provided in Other Objects Clause or MoA
A. INTRODUCTORY NOTE

A public limited company with share capital is required to obtain certificate of commencement of business. Usually, the RoC after being satisfied that the company has fulfilled the conditions precedent to the issue of certificate of commencement of business, issue a certificate to enable the company to start business. However, this certificate entitles the company to commence business as per the object clause of the memorandum of association of the company. Now when the company intends to do certain new business as per 'other clause' of the memorandum of association of the company, it has to obtain a certificate of New Business provided in the other objects clause of the memorandum of association, from the RoC by following the procedure as laid down in the present Chapter. The procedure as being explained in this Chapter is applicable to the public companies with share capital, whether or not, they have issued a prospectus inviting public to subscribe to the shares.

B. NEW BUSINESS EXPLAINED

A business is deemed to be a new business if, --

(i) in case of company in existence on or before 15-10-1965; the business is not germane to the objects as specified in object clause of the company;

(ii) in case of any other company (i.e., new company formed on or after 15-10-1965) in relation to any other objects and objects incidental to or ancillary thereto, of the object clause of the memorandum of association of the company.

C. PROVISIONS NOT APPLICABLE

The provisions shall not be applicable to a private company or to a company registered before 1-4-1914 which has not issued a prospectus inviting the public to subscribe to its shares. Such companies by passing suitable resolution can commence business.

D. BOARD RESOLUTION

A Board Resolution approving the following, should be passed :

(i) for obtaining certificate of commencement of new business from RoC;

(ii) for convening a general meeting to pass a special resolution;

(iii) for filing of e-Form 20A to RoC; and

(iv) for complying with all other formalities with regards to obtaining certificate of commencement of new business by authorised person;

(v) for authorising a director or secretary to comply with the formalities as per (iv) above.

E. ISSUE OF NOTICE OF GENERAL MEETING

A notice of the general meeting together with explanatory statement should be sent to all the eligible members and auditors of the company.

F. CONVENING GENERAL MEETING AND PASSING SPECIAL RESOLUTION

On the appointed date, general meeting should be convened and special resolution should be passed authorising the company to obtain certificate of commencement of new business.

G. PREPARATION OF MINUTES OF THE GENERAL MEETING

Within 30 days of the general meeting, and passing of special resolution the minutes of the meeting should be prepared and recorded.

H. ELECTRONIC FILING OF e-FORM 65
In case of failure to pass Special Resolution

In case the company fails to pass special resolution by not getting three-fourth majority in favour of the resolution, but the special resolution is passed by simple majority, than the Board of director is under obligation to submit an application to the Ministry of Company Affairs in e-Form 65 through MCA portal, www.mca.gov.in for seeking permission for commencing new business.

1. Who can file ?

The e-Form 65 is to be filed by a person who has been authroised by the Board of directors, through a resolution, such as managing director, director, manager, secretary, and has a valid Digital Signature Certificate.

2. Time Limit to file

The e-Form 65 shall be filed before filing of e-Form 20A.

3. Attachments

The following documents should be filed electronically alongwith e-Form 65 :

(i) Detailed application seeking approval from the Ministry of Company Affairs (Central Government),

(ii) Copy of resolution,

(iii) Copy of minutes of the minutes of the general meeting.

4. How to attach documents ?

The attachment shall be in PDF format. A physical document can be changed into an electronic document by scanning. A soft copy may also be converted into PDF format and used as an attachment to e-Form 65.

5. Digital Signatures

The e-Form 65 and other documents must be digitally signed by an authorised director or secretary of the company under authority obtained through Board resolution.

6. Filing Fee

Filing fee shall be as per Companies (Fees on Applications) Rules, 1999.

I. MODE OF PAYMENT

1. The fee can be paid through one of the specified modes, viz., remittance in authorised banks, credit cards or through internet banking. In case of online payment, filing process shall be complete immediately.

2. When payment is tendered through authorised bank (Punjab National Bank, State Bank of India, Indian Bank, ICICI Bank and HDFC Bank), a pre-filled challan (GAR-7) containing SRN, date of challan, expiry date, name and designation of user by whom challan is tendered, name and address of the company, particulars of remittance, total amount and head of account shall be generated by the system. The challan should be used for making payment before the date of expiry mentioned therein and the transaction shall be completed by the concerned banks.

J. EFFECT OF NON-PAYMENT BEFORE DUE DATE

Note, if payment is not made by the date mentioned on the challan, the submission of form shall be treated as incomplete and message through e-mail will be received that form cannot be regarded as filed due to non-payment. Status of application and payment can be verified through MCA portal.

K. PHYSICAL SUBMISSION OF DOCUMENTS

Immediately after filing of e-Form 65 and other relevant documents through MCA, portal, the original and duly stamped and digitally signed e-Form 65 together with other relevant documents should be physically submitted to the Ministry of Company Affairs with a query letter quoting the Service Request Number (SRN) of e-Form 65 filed electronically.

L. APPROVAL FROM MINISTRY OF COMPANY AFFAIRS (CENTRAL GOVERNMENT)

The Ministry of Company Affairs (Central Government) on receipt of e-Forms alongwith documents shall grant permission as if special resolution had been filed by the company.

M. ELECTRONIC FILING OF e-FORM 23 AND e-FORM 20A

1. Within 30 days of passing of the special resolution, e-Form 23 should be filed with RoC through MCA portal, www.mca.gov.in.

2. A declaration in e-Form 20A should be field with RoC through MCA portal, www.mca.gov.in.

3. Who can file ?

e-Forms 23 and 20A can be filed by a director or secretary duly authorised by the Board.

4. Time Limit

Any time before commencing new business. Since, no business can be commenced, unless certificate of commencement of new business is obtained from RoC.

5. Attachments

The following documents should accompany the e-Forms :

(i) Copy of special resolution, or approval letter of Ministry of Company Affairs, (Where the special resolution failed and the resolution is passed by simple majority.)

(ii) Copy of minutes of the general meeting.

6. How to attach documents ?

The documents should be attached in PDF format. A physical document can be converted into an electronic document through scanning. A soft copy may also be converted into PDF format and used as an attachment.

7. Digital Signature

The e-Forms should be digitally signed and stamped by a director or secretary duly authorised by the Board.

8. Filing Fee

The filing fee shall relate to the authorised capital of the company in accordance with Schedule X of the Companies Act, 1956.

N. MODE OF PAYMENT

O. EFFECT OF NON-PAYMENT BEFORE DUE DATE

P. PHYSICAL SUBMISSION OF e-FORMS AND DOCUMENTS

Immediately after the electronic filing is over through MCA portal. The relevant documents, viz., e-Form 23 and 20A, Board resolution and statement in lieu of prospectus should be sent in original alongwith a forwarding letter quoting the Service Request Number (SRN) of filing e-Forms, to the RoC.

Unless the documents and e-Forms are submitted in original to the RoC, filing shall be treated as incomplete and certificate of commencement of business will not be granted by the RoC and company shall be subject to legal action.

Q. ISSUE OF CERTIFICATE OF COMMENCEMENT OF
NEW BUSINESS BY RoC

On completion of above formalities, the RoC shall issue certificate to the company to commence new business as per other objects clause.

R. SAFE CUSTODY OF CERTIFICATE

Since the certificate of commencement of new business in a conclusive evidence that the company is authorised to commence new business and exercise borrowing powers, the same should be kept in lock and key.

S. EFFECT OF OBTAINING CERTIFICATE OF COMMENCEMENT OF NEW BUSINESS

No public limited company with shares can commence new business without obtaining certificate from the RoC to commence business. On obtaining the said certificate, the company is authorised to commence business and to exercise borrowing powers.

T. LIABILITIES INCURRED BEFORE COMMENCEMENT

No company, before obtaining the certificate of new business from the RoC is authorised to enter into any contract with any body in respect of new business. In case, it does so, the shareholders cannot be compelled to contribute to the assets of the company in case of winding up of the company.

U. LIABILITY TOWARDS CONTRACTS ENTERED BEFORE OBTAINING CERTIFICATE OF COMMENCEMENT OF NEW BUSINESS

A contract made before obtaining the certificate of commencement of new business are not valid until ratified by obtaining certificate of new business. In the event, a company fails to obtain certificate of commencement of new business, all the officers, who were responsible for contravention of the provision of the Act shall be liable to be punishable with a fine, which may extend to five thousand rupees for every day during which such contravention continues.