law: Companies Act, 1956
  Sec 149    -    
  
  Restrictions on commencement of business. 
  (1) Where a company having a share capital has
  
  issued a prospectus inviting the public to subscribe for its shares, the
  
  company shall not commence any business or exercise any borrowing powers,
  
  unless
  (a) shares held subject to the payment of the
  
  whole amount thereof in cash have been allotted to an amount not less in the
  
  whole than the minimum subscription ;
  (b) every director of the company has paid to
  
  the company, on each of the shares taken or contracted to be taken by him and
  
  for which he is liable to pay in cash, a proportion equal to the proportion
  
  payable on application and allotment on the shares offered for public
  
  subscription ;
  (c) no money is, or may become, liable to be
  
  repaid to applicants for any shares or debentures which have been offered for
  
  public subscription by reason of any failure to apply for, or to obtain,
  
  permission for the shares or debentures to be dealt in on any recognized stock
  
  exchange ; and
  (d) there has been filed with the Registrar a
  
  duly verified declaration by one of the directors or the secretary or, where
  
  the company has not appointed a secretary, a secretary in whole-time practice,
  
  in the prescribed form, that clauses (a), (b) and (c) of this sub-section, have
  
  been complied with.
  (2) Where a company having a share capital has
  
  not issued a prospectus inviting the public to subscribe for its shares, the
  
  company shall not commence any business or exercise any borrowing powers,
  
  unless
  (a) there has been filed with the Registrar a
  
  statement in lieu of the prospectus ;
  (b) every director of the company has paid to
  
  the company, on each of the shares taken or contracted to be taken by him and
  
  for which he is liable to pay in cash, a proportion equal to the proportion
  
  payable on application and allotment on the shares payable in cash ; and
  (c) there has been filed with Registrar a duly
  
  verified declaration by one of the directors or the secretary or, where the
  
  company has not appointed a secretary, a secretary in whole-time practice, in
  
  the prescribed form, that clause (b) of this sub-section has been complied with.
  (2A) Without prejudice to the provisions of
  
  sub-section (1) and sub-section (2) a company having a share capital, whether
  
  or not it has issued a prospectus inviting the public to subscribe for its
  
  shares, shall not at any time commence any business
  (a) if such company is a company in existence
  
  immediately before the commencement of the Companies (Amendment) Act, 1965 (31
  
  of 1965) in relation to any of the objects stated in its memorandum in
  
  pursuance of clause (c) of sub-section (1) of section 13 ;
  (b) if such company is a company formed after
  
  such commencement, in relation to any of the objects stated in its memorandum
  
  in pursuance of sub-clause (ii) of clause (d) of sub-section (1) of the said
  
  section, unless
  (i) the company has approved of the commencement
  
  of any such business by a special resolution passed in that behalf by it in
  
  general meeting ; and
  (ii) there has been filed with Registrar a
  
  duly verified declaration by one of the directors or the secretary or, where
  
  the company has not appointed a secretary, a secretary in whole-time practice,
  
  in the prescribed form, that clause (i) or as the case may be, sub-section (2B)
  
  has been complied with ;
  and if the company commences any such business
  
  in contravention of this sub-section, every person who is responsible for the
  
  contravention shall, without prejudice to any other liability, be punishable
  
  with fine which may extend to five thousand rupees for every day during which
  
  the contravention continues.
   Explanation .-  A company shall be
  
  deemed to commence any business within the meaning of clause (a) if and only if
  
  it commences any new business which is not germane to the business which it is
  
  carrying on at the commencement of the Companies (Amendment) Act, 1965 (31 of
  
  1965), in relation to any of the objects referred to in the said clause.
  (2B) Notwithstanding anything contained in
  
  sub-section (2A) where no such special resolution as is referred to in that
  
  sub-section is passed but the votes cast (whether on a show of hands or, as the
  
  case may be, on a poll) in favor of the proposal to commence any business
  
  contained in the resolution moved in that general meeting (including the
  
  casting vote, if any, of the chairman) by members who, being entitled so to do,
  
  vote in person, or where proxies are allowed, by proxy, exceed the votes, if
  
  any, cast against the proposal by members so entitled and voting, the Central
  
  Government may on an application made to it by the Board of Directors in this
  
  behalf allow the company to commence such business as if the proposal had been
  
  passed by a special resolution by the company in general meeting.
  (3) The Registrar shall, on the filing of a
  
  duly verified declaration in accordance with the provisions of sub-section (1)
  
  or sub-section (2), as the case may be, and, in the case of a company which is
  
  required by sub-section (2) to file a statement in lieu of prospectus, also of
  
  such a statement, certify that the company is entitled to commence business,
  
  and that certificate shall be conclusive evidence that the company is so
  
  entitled.
  (4) Any contract made by a company before the
  
  date at which it is entitled to commence business shall be provisional only,
  
  and shall not be binding on the company until that date, and on that date it
  
  shall become binding.
  (5) Nothing in this section shall prevent the
  
  simultaneous offer for subscription or allotment of any shares and debentures
  
  or the receipt of any money payable on application for debentures.
  (6) If any company commences business or
  
  exercises borrowing powers in contravention of this section, every person who
  
  is responsible for the contravention shall, without prejudice to any other
  
  liability, be punishable with fine which may extend to five thousand rupees for
  
  every day during which the contravention continues.
  (7) Nothing in this section shall apply to
  (a) a private company ; or
  (b) a company registered before the first day
  
  of April, 1914, which has not issued a prospectus inviting the public to
  
  subscribe for its shares.