Which of the following statements are false? Indicate the correct code.
1. No company has to file any prescribed declaration before the commencement of business.
2. A company can ratify the contract entered into by the promoters with third parties on behalf of the company before its formation.
3. The date mentioned in the certificate for commencement of business is taken as the date of birth of a public company.
4. A private company has to file a “Settlement in lieu of prospectus” with the registrar.
Choose the correct answer from the options given below:

Correct option is C

1. No company has to file any prescribed declaration before the commencement of business.: True, after the 2014 Amendment, the requirement for filing a declaration before the commencement of business was removed under the Companies (Amendment) Bill, 2014. Thus, this statement is true after the amendment.
2. A company can ratify the contract entered into by the promoters with third parties on behalf of the company before its formation: False, a company cannot ratify a contract made by its promoters before its incorporation, as the company does not exist legally at the time the contract is entered into. These contracts need novation or fresh execution.
3. The date mentioned in the certificate for commencement of business is taken as the date of birth of a public company: False,  after the 2014 Amendment, since the requirement to file for a Certificate of Commencement of Business was abolished in 2014, this statement is no longer applicable. Therefore, it is false in the post-amendment scenario.
   
4. A private company has to file a “Settlement in lieu of prospectus” with the registrar: False, only public companies need to file a Statement in Lieu of Prospectus when they do not issue a prospectus. This is not applicable to private companies.
   

Information Booster:

1. No Declaration Before Commencement of Business:

   • Prior to the Companies (Amendment) Bill, 2014, all companies (both private and public) were required to file a declaration and obtain a Certificate of Commencement of Business before starting operations. The amendment eliminated this requirement, reducing compliance obligations. This reform aimed at improving India's ranking in ease of doing business and facilitating faster commencement of operations for startups and new ventures.

2. Pre-Incorporation Contracts:

   • Contracts entered into by promoters before the company is incorporated cannot be ratified by the company later, as the company does not legally exist at the time of contract formation. Promoters remain personally liable unless the contract is novated or replaced with a fresh agreement post-incorporation.

Additional Knowledge:

Statement 2: Pre-Incorporation Contracts

• A company does not have legal status or capacity to enter into contracts before its incorporation. For such contracts to bind the company later, they must be:
  • Adopted through a new contract after incorporation.
  • Made in accordance with the provisions of Section 15(h) of the Specific Relief Act, 1963, which allows a company to enforce specific performance of a pre-incorporation contract if:
    1. The contract was for the purposes of the company.
    2. The company adopts the contract after incorporation.

Statement 3: Date of Birth of a Public Company

• ​Earlier, public companies were required to obtain a Certificate of Commencement of Business, and the date mentioned in this certificate was considered the "date of birth" for operational purposes. However, the 2014 amendment abolished this requirement. Now, the "date of incorporation" is effectively the operational starting point.

Statement 4: Statement in Lieu of Prospectus

• A Statement in Lieu of Prospectus is required only for public companies that do not issue a prospectus to raise funds from the public. Private companies are exempt because they are not permitted to raise capital from the public and operate through private funding.