Naming of a company – Running of RUN


Seemingly, ease of doing business become a childish target for the Government of India. There is a practical gap of only 60 days between the Companies (Incorporation) Amendment Rules, 2018  and the Companies (Incorporation) 2nd Amendment Rules, 2018. The hardship caused by the earlier amendment is not attempted to cure by this amendment. Once again, there is a half-hearted effort lacking full automation of name approval. We discuss Rule 9 of the Companies (Incorporation) Rules, 2014 amended twice in a single calendar quarter.

The Companies (Incorporation) Amendment Rules, 2018 with effect from 26th January 2018 substituted original[i] Rule 9 of the Companies (Incorporation) Rules, 2014:

“Reservation of Name: An application for reservation of name shall be made through the web-service available at ww.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”

Form RUN was easier to fill and use. In a fully automated environment, this might have been the best possible suggestion. However, bureaucratic mannerism prevailed over the half-hearted political will and political ignorance for ease of doing business. This became the worst attempt of ease of doing business since the year 2014 if not since 2000.

Only one name was possible to apply and there is no resubmission or appeal against any rejection. In earlier ‘hardship’ regime applicants might apply up to 6 names in one form and one resubmission was possible against a rejection (total 12 names).

Rule 9 in the above form thankfully had a short life. The Companies (Incorporation) 2nd Amendment Rules, 2018 with effect from 27th March 2018 substituted it as under:

Reservation of name.- An application for reservation of name shall be made through the web service available at http://www.mca.gov.in by using form 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 after allowing re-submission of such application within fifteen days for rectification of the defects, if any.

Amendment in Form RUN

  1. One resubmission is possible. Earlier no resubmission was possible.
  2. Up to 2 names may be proposed/ applied in one attempt.
  3. Now, total 4 names may be proposed against each SRN against earlier 1 name against each SRN. Each SRN (Service Request Number) in name approval form costs Rs. 1,000/-.

Company name approval system needs full automation. This form RUN has limited automation support. The automation standard should be improved for name applications. Software should check the name against all existing names (similarities including phonetic) and registered trademarks. Section 16(1)(b) is sufficient to take care of all other possible cases. This will be the risk of promoters of companies not of the government.

In a fully automated environment, rule 9 version 2018-01-20 would be the most suitable rule.

[i] “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.” – from 26th January 2016 till 25th January 2018.

AND

“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.”- From  1st April 2014 to25th January 2016.

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