Companies Act - Reservation of Name for Company (Section 4(4))

Introduction

Can you reserve the name of the company ? For how long you can reserve the name of the company ?
What gives you right to reserve the name of the company? What's the procedure ?

We will answer some of these questions here.

Reservation of Name

What gives you right to reserve a name?

Section 4 clause 4 states that you can go for reservation of name. You just have to state to registrar the name of the proposed company.
 

For what period you can reserve the name ?

Registrar will go through documents and will reserve the name.
For up to 60 days you can reserve the name. If Company is not incorporated in those days the reserved name will be cancelled.  And fees you paid will also be gone.

Consequences of giving wrong information

If in application you state something wrong, then there are two scenario

If Company is not incorporated ,then Registrar would do following thing
  • Cancel the reserved name
  • Impose fine up to 1 Lakh
If Company is incorporated ,then registrar may ask you to change a name. Registrar should give company a chance for hearing their side. After hearing, registrar may direct the company to pass a resolution to change the name. Registrar also can strike of the name of company from register of companies. Registrar can also file a petition for winding up of company. Don't lie to registrar

Form, Fees and Procedure

Fees is decided by government from time to time by rules. Form is INC1. 

The whole procedure is easy now as you can apply online also.

You can read about RUN, a government initiative about this.

Conclusion

Yes, you can reserve a name for your company in advance. But don't do it with wrong information. However due care should be taken, if registrar gets angry, you could be fined, could be forced to change name.




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