Recently
Ministry of Corporate Affairs has amended Companies Incorporation Rules so as
to facilitate name of Companies using the new web portal RUN (Reserve Unique Name)
Service and Zero Fee Incorporation.
It
was supposed to be welcome move by Ministry to introduce certain changes in the
name of “ease of doing business” and to promote “startup company” as it
introduced zero fee Incorporation.
Now
let’s analyze these two important changes and its impact in real terms.
1: RUN – A WELCOME MOVE OR FLOP SHOW ?
NAME
is a precious matter for all individuals, entities and corporate, ease of doing
business can only come if an applicant of Company gets his desired NAME based
upon apparent availability of record of Ministry.
Ministry
has introduced this service in place of “Form INC-1” in pursuance of Rule 9 of Companies
Incorporation Amendment Rules, 2018 in relation to reservation of name of the
Company, it will be easier to apply and reserve the name without taking DIN
(Director Identification Number) and Digital Signature which was mandatory in
Form INC-1, cost of DSC is reduced only for the time being up to the level of name
application and approval and cost of DIN a is definitely reduced although there
is no change in cost of Form INC-1 and RUN Service as ministry charges Rupees one thousand and to be incurred by an
Applicant.
In
RUN Service, one can’t get the name of
the Company which is apparently available, it is to be checked in line with so
called rules and regulations, Ministry
has played a very smart move to remove an opportunity of “One Resubmission” which was earlier allowed in “Form INC-1”,
meaning thereby applicant is not granted an opportunity to explain and present
his case for the second time although name may be genuinely applied and becomes
eligible to get approved after pure compliance of name guidelines and companies
incorporation as well as trademark
rules, it indirectly gives supreme power to CRC (Central Registration Centre)
officials to approve or reject particular name in the way they may deem fit.
Companies
Incorporation as well as Trademark Rules
are framed in such a complex way that process of applying and approving Company
names becomes like court cases where justice can finally be given after giving
reasonable opportunity of being heard by both the parties, in the present
scenario, an applicant is not given an opportunity of being heard even after
spending a cost of one thousand rupees behind name, in short an applicant is
completely prejudiced by the Ministry, so even “One Resubmission” opportunity
which was given earlier was not enough and Ministry was expected to work on it
for the sake of “ease of doing business”, however it again turned out in
complete favor of Ministry, rules
of RUN Service also seems to
violate Article No. 14 of the
Constitution of India which is Right
of Equality before law, equal protection of law should be given to an applicant
of name and CRC (Ministry).
Time
has indeed come to make the Companies Incorporation Rules and Trademark Rules
more flexible, especially a complex term of “Resemblance of Name”, so that process can’t be like Court Cases and
name becomes easily approved if apparently available on record, otherwise an
equal opportunity of protection of law must be given to both the parties.
2: ZERO FEE INCORPORATION
Incorporation
of Company starts from taking Digital Signature to the level of printing of MOA
and AOA and may be many more so zero Fee Incorporation as envisaged by the
Ministry is not actually a zero fee, it may reduce or enhance your earlier
incorporation cost subject to proper name application and its availability.
Cost
of Company Formation after Name Approval will be reduced to great extent and
will be limited to paying of relevant stamp duties, PAN, TAN and Professional
Fees, however, cost of applying a name of the Company may increase as No
Resubmission opportunity is granted, rigid or particular name of an applicant
may also change or vanish plan, idea and motive to form a Company.
