Saturday, January 30, 2016

MCA Establishes Central Registration Centre for Reservation of Names

[The following guest post is contributed by Nikita Snehil of Vinod Kothari & Co.]

By way of a Notification dated 22nd January 2016 and in order to encourage incorporation of companies, the MCA has established a Central Registration Centre (CRC) having territorial jurisdiction all over India for discharging or carrying out the function of processing and disposal of applications for reservation of names under the provisions of the Companies Act, 2013. The CRC shall be located at Indian Institute of Corporate Affairs (IICA)[1]. The CRC has been established to facilitate smoother functioning and fastening the processing of incorporation applications, it is expected to look into the applications for name availability (INC-1 e-forms) submitted online across the country and to process the same by the end of the very next working day. Thus, CRC not only promotes uniformity in application of incorporation rules but also encourages incorporation of companies.
The CRC shall function under the administrative control of Registrar of Companies, Delhi (ROC Delhi), who shall act as the Registrar of the CRC until a separate Registrar is appointed to the CRC. The CRC shall process applications for reservation of name i.e., e-Form No. INC-1 filed along with the prescribed fee as provided in the Companies (Registration of Offices and Fees) Rules, 2014. Processing and approval of name or names proposed in e-Form No. lNC-29 shall continue to be done by the respective Registrar of Companies having jurisdiction over incorporation of companies under the Companies Act, 2013 in accordance with the provisions of the Act and the rules made thereunder.
Further, in order to facilitate the incorporation of companies, MCA on the same day has amended the Companies (Incorporation) Rules, 2014, through the Companies (Incorporation) Amendment Rules, 2016. Both the circular and the amended rules shall be effective from January 26, 2016. In this regard, set out below is a tabular comparison between the erstwhile Incorporation Rules and the amendment brought therein: 

Tabular presentation showing the changes brought through the Companies (Incorporation) Amendment Rules, 2016

Rule  no. of  the Companies (Incorporation) Rules, 2014
The Companies (Incorporation) Rules, 2014
The Companies (Incorporation) Amendment Rules, 2016
Remarks
8(2)(b)(ii)
it is not in consonance with the principal objects of the company as set out in the memorandum of association;

Provided that every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum

Omitted
Now​ ​the proposed name of the company shall be considered desirable even if it is not in harmony or compatible with the principal objects of the Company.
8(2)(b)(x)
the proposed name is vague or an abbreviated name such as ‘ABC limited’ or ‘23K limited’ or ‘DJMO’ Ltd: abbreviated name based on the name of the promoters will not be allowed. For example:- BMCD Limited representing first alphabet of the name of the promoter like Bharat, Mahesh, Chandan and David:

Provided that existing company may use its abbreviated name as part of the name for formation of a new company as subsidiary or joint venture or associate company but such joint venture or associated company shall not have an abbreviated name only e.g. Delhi Paper Mills Limited can get a joint venture or associated company as DPM Papers Limited and not as DPM Limited.

Omitted
The restrictions on the use of abbreviated name based on promoters are done away with. Therefore, now the abbreviated name of company based on the name of the promoter will be allowed.
8(2)(b)(xvii)
it is intended or likely to produce a misleading impression regarding the scope or scale of its activities which would be beyond the resources at its disposal

Omitted
​Now there is no need to show the scope or scale of activities in the proposed name of Company.
8(3)
If any company has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities after complying with all the provisions as applicable to change of name.
Omitted
The need to realign the name of the company, in case of change of its activities is done away with. Therefore, now there is no need to reflect the change in its name in line with its activities undertaken by the company.

8(4)
In case the key word used in the name proposed is the name of a person other than the name(s) of the promoters or their close blood relatives, No objection from such other person(s) shall be attached with the application for name. In case the name includes the name of relatives, the proof of relation shall be attached and it shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the name of the promoters or their relatives.
Omitted
The requirement of furnishing the No Objection Certificate (NOC) in case where the proposed name is of a person other than the name(s) of the promoters or their close blood and  proof of relationship, where the name includes the name of relatives, have been done away with. Therefore, such documents are not needed to be submitted henceforth.

9
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
An application for the reservation of a name shall be made in Form No. INC-I 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 (CRC).

Introduction of CRC for facilitating incorporation process and approval of incorporation applications.

36(12)(b)

Insertion after 36(12)(b):

(ba) After the resubmission of the documents and on completion of second opportunity, if the registrar still finds that the documents are defective or incomplete, he shall give third opportunity to remove such defects or deficiencies;'

Provided that the total period for re-submission of documents shal1 not exceed a total period of thirty days.



Though the opportunities for re-submitting the documents have been increased, the total period for re-submission of documents has been limited to a period of 30 days.
36(12)(c)
In case, the Registrar is of the opinion that the document is defective or incomplete in any respect after giving such two opportunities, the e-form INC-29 of the proposed company shall be rejected.
In case, the Registrar is of the opinion that the document is defective or incomplete in any respect after giving such three opportunities, the e-form INC-29 of the proposed company shall be rejected.
Now there are three re-submission opportunities instead of two chances, which will indeed help the applicant and increase the scope of furnishing the documents as required by the Registrar.


- Nikita Snehil




[1] IICA has been established by the Indian Ministry of Corporate Affairs for capacity building and training in various subjects and matters relevant to corporate regulation and governance such as corporate and competition law, accounting and auditing issues, compliance management, corporate governance, business sustainability through environmental sensitivity and social responsibility, e-governance and enforcement.

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