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11 Commencement of business, etc.

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CHAPTER II

Section 11 of Companies Act 2013

1.     A company having a share capital shall not commence any business or exercise any borrowing powers unless—

a.     a declaration is filed by a director in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him and the paid-up share capital of the company is not less than five lakh rupees in case of a public company and not less than one lakh rupees in case of a private company on the date of making of this declaration; and

b.    the company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.

2.     If any default is made in complying with the requirements of this section, the company shall be liable to a penalty which may extend to five thousand rupees and every officer who is in default shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues.

3.     Where no declaration has been filed with the Registrar under clause (a) of subsection (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.


1. Omitted with effect from 25th may, 2015.

Short Notes:

  • This section came into force from April 1, 2014.
  • It seeks to provide that the company having a share capital shall not commence business or exercise any borrowing powers unless a declaration is filed with Registrar by a Director or subscriber that every subscriber to the memorandum has paid the value of shares taken by him and the company has file with the Registrar the verification of its registered office.
  • The Registrar of Companies may remove the name of the company from the Register, if a company has not filed declaration within a period of 180 days of the date of incorporation and if he has reasonable cause to believe that the company is not carrying on any business or operations.

 

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