Reservation of name
Section 4 of the Companies Act, 2013 (‘Act’ for short) deals with the procedure of preparing the memorandum of the company. For incorporation of a company a name has to be selected and got approved. Section 4(2) provides that the name stated in the memorandum shall not-
- be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or
- be such that its use by the company-
- will constitute an offence under any law for the time being in force; or
- is undesirable in the opinion of the Central Government.
Section 4(3) provides that without prejudice to the provisions of sub-section (2), a company shall not be registered with a name which contains-
- any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or
- such word or expression, as may be prescribed,
Section 4(4) provides that a person may make an application, in such form and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out in the application as-
- the name of the proposed company; or
- the name to which the company proposes to change its name.
Section 4(5) provides that upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of sixty days from the date of the application.
Companies (Amendment) Act, 2017
The Central Government amended the Companies Act vide Companies (Amendment) Act, 2017 which got the assent of the President of India on 03.01.2018.
Section 4 of the amended Act substituted section 4(5) of the Act. The newly substituted section 4(5) provides that upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of twenty days from the date of approval or such other period as may be prescribed.
In case of an application for reservation of name or for change of its name by an existing company, the Registrar may reserve the name for a period of sixty days from the date of approval.
The new amendment Act reduces the validity period of reservation of name in respect of a new company for twenty days from sixty days and retain the validity period in respect of name selected in the case of change of name of an existing company.
The amended section 4(5) came into effect from 26.01.2018.
Reserve Unique Name (RUN)
The Central Government also make amendment to the Companies (Incorporation) Rules vide Notification dated 20.01.2018 which came into effect from 26.01.2018.
Rule 9 of Companies (Incorporation) Rules, 2014 provides that an application for the reservation of a name shall be made in Form No. INC.1 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 which may be approved or rejected, as the case may be, by the Registrar, Central Registration Centre.
The Companies (Incorporation) Amendment Rules, 2018 substituted the above Rule 9 for a new one. The newly substituted Rule 9 provides that an application for reservation of name shall be made through the web service available at www.mca.gov.in by using RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre (CRC).
RUN form
The new form introduced by the amendment Rules is the simple one than INC – 1 used for reservation of name. This is one of the Government Process Re-Engineering initiatives for making the incorporation process speedy, smooth, simple and reducing number of procedures involved in starting a business.
This is a post-login service and existing users would need to login into their account using their credentials. New users are required to create a login account first before using the service. After login, they may click on the icon RUN (Reserve Unique Name) under the head ‘MCA Services’.
The following is the procedure to be adopted in filling the form and to get the name approved by the CRC:
- Entity type (This field is to be entered if a person is reserving the name for a company to be incorporated);
- CIN – This field is to be entered if a person is applying for change of name for an existing company);
- Proposed name – In this field the name selected for reservation is to be entered. In INC – 1, one may opt for 6 names of the proposed company in the order of preference. In RUN form only one option is available. User has to enter the name he wants to reserve, for incorporation of a new company or for changing the name of an existing company. Users are requested to ensure that the proposed name selected does not contain any word which is prohibited under Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014. Users are also requested to read and understand Rule 8 of the Companies (Incorporation) Rules, 2014 in respect of any proposed name before applying for the same.
Name search can be made in the website http://www.mca.gov.in/mcafoportal/ShowCheckCompanyName.do.
- Comments - In this field the objects of the proposed company and any other relevant comments are to be mentioned. If the proposed company is subject to get the approval of a regulator, the permission obtained from such regulator shall be attached. NOCs or any other requirement documents are to be attached.
- Choose file/No file chosen – If any file is to be attached click the tool bar ‘Choose file’ and then attach the required file(s).If no file is to be attached click the ‘No file chosen’;
- After entering all these, then the ‘submit’ button is to be clicked.
- Upon successful submission of the proposed name and the payment, challan will be generated depicting the details of the fees paid by the user.
- Users may please note that the name applied for will either be approved or rejected and no resubmission is allowed. A fresh payment of ₹ 1000 has to be made for every application submitted using the RUN service.
- Name applications will be processed by Central Registration Centre (CRC) under Non-STP mode. The name applied for will be subjected to a comprehensive check by the Central Registration (CRC) and thereafter approval or rejection, as the case may be, shall be communicated by e-mail to the applicant.
- To avoid rejection of the name applied for, users are advised to be familiar with the Companies (Incorporation) Rules 2014, as amended, and conduct their own Name and Trade Mark search, the links for which are available separately on the portal, prior to submission of applications.
- When a proposed name is approved/ rejected, an email communication containing confirmation of approval/rejection (as the case may be) with related documents, if any, is sent to the email id of the applicant. Name approval/ rejection letter upon approval/ rejection of the eForm is system generated and shall be digitally signed by the Registrar and sent to the email id of the applicant. Rejection letter is generated on the basis of rejection codes defined by the Ministry.
Entity type
Entity Type represents the Type/Class/Category of the proposed company in case name is being reserved for incorporating a new company. It has the following options along with the suffixes which shall be allowed based on the type of entity selected:
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Entity type
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Suffixes allowed
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Example
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New Company (Others)/Part I Company
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Limited/Private Limited
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ABC Limited; DEF Private Limited
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Producer company
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Producer company Limited
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GHI Producer Company Limited
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Unlimited company
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Unlimited
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JKL Unlimited
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Private (OPC)
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(OPC) Private Limited
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MNO (OPC) Private Limited
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IFSC company
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(IFSC) Limited/(IFSC) Private Limited/IFSC Limited/IFSC Private Limited
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PQR (IFSC) Limited/PQR IFSC Limited
STU IFSC Private Limited/STU (IFSC) Private Limited
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Section 8 company
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Other than ‘Private Limited/Limited/(OPC) Private Limited
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VWX Electoral Trust
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Nidhi company
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Nidhi Limited
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MNO Nidhi Limited
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Other features
The following are the other features in filing RUN form-
- No requirement of DSC but a person can be able to apply for name reservation only after login.
- The sameID is to be used filing SPICe form, INC – 12, INC – 24
- After successful submission in RUN, SRN will be generated and the applicant is to remit the fee of ₹ 1000/-.Then only the application will be considered by the system;
- In this form there is no requirement of providing numbers and details of proposed directors;
- In this form it is not required to provide the number of promoters, with DIN/PAN/passport number/CIN/FCRN or any other registration number.
- For using RUN, a person is not required to obtain DIN of the proposed director and Din of the proposed directors (not having DIN) shall be allotted only through SPICe (maximum 3 DINs) from which will bring cost reduction in gettinga company incorporate.
The new form RUN is introduced for ease of doing business for starting a new business.
