Rules to select Company Name to avoid rejection on MCA

You can easily reserve a name for your new company using RUN service of MCA. However, MCA has provided rules to keep in mind while selecting a name of company. The following are some basic rules to keep in mind:

  • Name must be unique,
  • The name shall not be identical or resemble too nearly to the name of any existing company or LLP, you can check the company name from the MCA portal,
  • The name shall not be a registered trademark, you can check out the registered trademark from here.

Rules to select Company Name on MCA

  1. The name shall not include the words indicative of a separate type of business constitution. For example, the name should not contain co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF, Inc., PLC, etc. in the name.
  2. The proposed name shall not contain the words ‘British India’
  3. The name shall not imply association or connection with the embassy or consulate or a foreign government.
  4. The name shall not imply association or connection with or patronage of a national hero or any person held in a high esteem position in Government.
  5. The proposed name shall not include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual Fund’ etc. To include such words in the name, the applicant must submit a declaration based on the requirement of different regulators such as IRDA, RBI, SEBI, MCA, etc.
  6. The name shall not include the name of a continent, country, state, city. For example, an applicant cannot choose names like Asia Limited or Germany Limited or Haryana Limited.
  7. The proposed name shall not imply any connection with the Central Government, State Government, or any local authority. For the use of such words, a previous approval from the authority is necessary.
  8. The name shall not include the name of a person other than promoters or their close blood relatives. In such a case, the applicant shall take NOC i.e. No Objection Certificate, and attach it with RUN Form.
  9. The name shall not include the name of any sole proprietor or partnership firm already registered. In such a case, the applicant shall take NOC i.e. No Objection Certificate from the proprietor or partnership firm.
  10. For the Companies under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like, etc. Every company incorporated as a “Nidhi” shall have the last word ‘Nidhi Limited’ as part of its name.
  11. The proposed name shall not include words such as Board, Commission, Authority, Undertaking, National, Union, Central, Federal, Republic, President, Municipal, Panchayat, Development Authority, Minister, Nation, Small Scale Industries, Governor, etc. To use such words, previous approval from the Central Government is required.
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FAQs

I have a partnership firm registered in Tamil Nadu? Can I give my new company the same name as my Partnership Firm?

Yes. You can give your new company the same name as your partnership firm. But while filing RUN form you need to attach NOC from the partnership firm.

Can I name my company after my name?

Yes, you can name your company after your name. However, you need to keep in mind that you are a promoter of that company.

What is a NIDHI company?

A NIDHI Company is notified under section 620-A of the Companies Act and is classified as “Mutual Benefit Financial Company” by the RBI. Essentially, a Nidhi Company differs from a regular finance
investment company or a Non-Banking Finance company (NBFC), as it deals only with its shareholders or members, for mutual benefits of its members. A Nidhi Company accept deposits only
its members and lends funds only to them on demand. A Nidhi Company is not entitled to carry out business/activities related with hire purchase financing, leasing finance, chit funds, acquisition of
securities issued by any corporate body, etc. or issue any debt instruments (such as preference share,debentures, etc.) in any form

RUN Form – Apply for Name Reservation for Company Incorporation

As part of the incorporation process of a Company, it should apply for name reservation through RUN Form on MCA Portal. A Company can file RUN (Reserve Unique Name) on MCA for the following purposes:

  • To Reserve the name of New Company,
  • To Change the name of any Existing Company.

Before applying for name reservation, the applicant must check the available names of the proposed company before filing RUN form to avoid rejection.

Steps to file RUN for Name Reservation for Incorporation of Company

  1. Login to MCA Portal

    Log in to your account on MCA Portal

  2. Navigate to RUN Service

    Go to MCA Services > Company Services > RUN (Reserve Unique Name). Click on New Request

  3. Select Entity Type

    Select Entity Type i.e. Type of Company. Select New Company (Others) if reserving name for Private Limited Company. Select Private (OPC) if reserving a name for One Person Company

  4. Enter Proposed Name

    Enter the new Proposed Name 1 and Proposed Name 2 with a suitable suffix

  5. Click on Auto Check

    The system performs the primary check for the name entered and displays the message whether it is valid or invalid

  6. Enter Objective of Company

    Enter the objective of the new company in brief under Comment

  7. Attach Documents

    Attach NOC i.e. No Objection Certificate or any other certification by clicking on Choose File. It is not mandatory to attach relevant documents

  8. Success Message

    Click on Submit, a pop up with the successful submission will appear

  9. Payment of Fee

    Make a payment of fees. INR. 1,000 is charged as fees. You can not file RUN without making payment. There is no Pay Later Option available in case of RUN

  10. SRN generated

    Upon successful submission, SRN and a Challan will be generated. Save the SRN and challan. You can track the status of RUN through its SRN on MCA portal

Private Limited Company (PLC) Registration
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Once the Company files RUN Form, it is approved or rejected by MCA. You will receive an email from MCA Administrator on approval or rejection of an application. In case of rejection of RUN, Resubmission of RUN is allowed in certain specific situations. You will have 15 days for resubmission of RUN.


FAQs

How does one reserve a name? Are there any considerations to be kept in mind while providing a name to the company?

An applicant can pick up any suitable name for the company, provided that
(i) the company cannot be registered with a name which is undesirable as per the Central Government
(ii) the name of the company has to end with ‘Private Limited
(iii) the name which is chosen for the company should not resemble or be identical to the name of another registered company. One can reserve the name of its company via Reserve Unique Name form (“RUN”).

How long is the approved name valid for?

An approved name is valid for a period of twenty (20) days from the date of approval of such name.You can file the remaining incorporation forms i.e, SPICe INC -32, 33 & 34 from the date of the name approval letter to incorporate a company

Is it mandatory to reserve a name in advance?

No, it is not compulsory to reserve a name through the RUN service. The approval of a name can also be sought while filing the SPICe (INC-32) form.One can apply for the proposed name through SPICe (INC-32) form on the MCA portal. Only one name can be applied for under this form. However, in case of rejection due to non-approval of the name, the applicant in this case gets a second chance of refilling the same SPICe (INC-32) form without any further charges.

One Person Company v/s Private Limited Company

One Person Company (OPC) is a recently introduced concept in India to promote business enterprises that are owned and managed by a single entrepreneur. OPC allows for a single individual to own and manage the business whereas other business entities like Partnership Firm, LLP i.e. Limited Liability Partnership, PLC i.e. Private Limited Company and Public Company require two or more individuals to partner and run a business. Therefore, OPC is a viable option for those looking to start a registered proprietorship firm instead of a PLC. Business can register for OPC or PLC on MCA Portal.

One Person Company (OPC) Registration
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One Person Company v/s Private Limited Company

Particulars One Person Company Private Limited Company
Recommended For Individual Proprietor Multiple Promoters
Minimum Owners 1 Owner & 1 Nominee 2 Shareholders
Maximum Owners 1 Owner 200 Shareholders
Board of Directors At least 1 Director At least 2 Directors
Shareholding 100% of shares held by a single person 100% of shares cannot be held by a single person. Minimum of two shareholders required
External Investment Difficult to obtain Easily Available
Credibility Low High
Compliance Requirements Annual Return Filing. No Board Meetings if only one director & No General Meetings Annual Return Filing, Board Meetings & General Meetings
NRI or Foreign Nationals Only Indian Citizens and Indian Nationals are allowed to start NRIs or Foreign Nationals are also allowed to start and manage
Mandatory Conversion If annual turnover exceeds Rs. 2 crores or paid-up capital exceeds Rs. 50 lakhs, then mandatory conversion into Private Limited Company No mandatory conversion
Procedure Obtain DSC (Digital Signature Certificate), Obtain DIN (Directors Identification Number), Name Approval, Filing for Incorporation & File Nominee details Obtain DSC (Digital Signature Certificate), Obtain DIN (Directors’ Identification Number), Name Approval & Filing for Incorporation
 
 

FAQs

What are the advantages of registering a company as a One Person Company (OPC) over Private Limited Company

The following are the most outstanding advantages associated with an OPC in India, over the private limited or public limited companies:
-To form an OPC, only one Director is needed.
-The Section 173 which dictates that a limited company should conduct at least four Board meetings every year, is not applicable for OPCs.
-The provisions and regulations given in Section 98 and Sections from 100 to 111, which relate with general meetings, are also not applicable to OPCs.
-An OPC also enjoys relaxations and exceptions from many other legal, governance, ad regulatory compliances.
-The mandatory rotation of auditor after every five-year period, is also not applicable to an OPC.

What are the conditions when an OPC must change itself into a Pvt Ltd Company or a Public Limited Company?

As per the Companies (Incorporation) Rules, 2014, a One Person Company has to change itself compulsorily into a private limited company or a public limited company, if at any point of time, its paid-up capital exceeds INR 50 Lac OR its average annual turnover of three immediately preceding consecutive financial years becomes more than INR 2 Crore. Under any of these conditions, the OPC is necessarily required to inform the relevant ROC through Form INC-5, within 60 Days of the exceeding threshold limits. Here, it may also be noted that an OPC cannot voluntarily change itself into any type of company, within two years of its incorporation, except under any of these two cases of exceeding the threshold limits.

How to Convert an OPC into a Pvt. Ltd Company or a Public Ltd Company in India?

The concerned OPC is strictly required to follow the rules, provisions, and regulations provided in the Companies Act of 2013 under its Section 18, and in the Rule 7(4) of the Companies (Incorporation) Rules of 2014. Roughly, in addition to meeting the statutory requirements of the desired form of company, the OPC has to make certain necessary changes in its MOA and AOA to suit the targeted type of company. Here it should be noted that, for conversion into a private limited company, the interested OPC is required to have at least two directors and two shareholders. For voluntary or mandatory conversion of an OPC into a private limited company or a public limited company, the Application Form used will be Form INC-6.

What are documents required for Incorporation of One Person Company (OPC)?

OPC i.e. One Person Company is a company that can be registered with a single director. It is a separate legal entity with a distinct PAN. The process of incorporation on and the annual compliances of an OPC are simpler than a Private Limited Company and Public Company. After the introduction of a new scheme of incorporation by the Ministry of Corporate Affairs in January, 2018, read about the documents to incorporate a One Person Company on MCA.

Documents for Incorporation of One Person Company (OPC)

  1. From Promoter/ Director of Proposed OPC
    • Copy of PAN – self-attested
    • Copy of Aadhaar – self-attested
    • Passport/ Driving License/ Voter ID Card
    • Residential Proof – Copy of Bank Statement/ Bank Passbook/ Electricity Bill/ Mobile Bill/ Telephone Bill not older than 2 months
    • Valid mobile number of Director
    • Valid email address of Director
    • Place of birth of Director
    • Occupation type
    • Education Qualification
  2. From Nominee of Proposed OPC
    • Copy of PAN
    • Copy of Aadhaar
    • Residential Proof – Copy of Bank Statement/ Electricity Bill/ Telephone Bill/ Mobile Bill not older than 2 months
    • Valid mobile number of Nominee
    • Valid email address of Nominee
    • Place of birth of Nominee
    • Occupation type
    • Education Qualification
  3. Registered Office Proof
    • Proof of address of the registered office of the proposed company- Utility Bill not older than 2 months. For Example – telephone bill, gas bill, electricity bill, water bill, property tax bill or rent agreement in the name of the owner.
    • NOC i.e. No Objection Certificate – An NOC is required from the owner allowing the LLP to use the premises as its registered office.
  4. Declaration by director and Nominee
    • Affidavit and consent of the proposed director in Form INC-9 and Form DIR-2.
    • Consent of nominee of proposed company in Form INC-3.
    • If any subscriber to the proposed company is a company itself, then it is mandatory to attach resolution passed by the promoter company.
  5. Documents regarding approval of Name
    • Copy of approval from central government in case the proposed name contains any words or expression which requires approval.
    • Approval of the owner of the trademark or the applicant of such trademark for registration of trademark.
    • In case the name is similar to any existing, it is mandatory to attach a certified true copy of No Objection Certificate by the way of a Board Resolution.
  6. Optional Attachment
    • Any other information can be reported as an optional attachment.
One Person Company (OPC) Registration
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FAQs

Who can form or incorporate a OPC?

As per Rule 3(1) of the Companies (Incorporation) Rules 2014, only a
natural person who is an Indian Citizen and resident in India shall be
eligible to incorporate/form a OPC.

Is there any number restriction on formation of OPC by a person?

As per Rule 3(2) of the Companies (Incorporation) Rules 2014, no
person shall be eligible to incorporate more than one OPC.

Is there any number restriction on acting as a nominee of a person?

As per Rule 3(2) of the Companies (Incorporation) Rules 2014, no
person shall be eligible to become a nominee in more than one OPC.

Information to file SPICe Form for Incorporation of Company on MCA

SPICe Form is the form for the process of incorporation of a Private Limited Company or One Person Company on MCA Portal. The information and details required to file SPICe Form for Company Incorporation have been discussed in detail under this article.

The new process of incorporation of company comprises of the following two steps:

  1. Name approval of the proposed company in RUN Form,
  2. Incorporation of Company through SPICe form.

Information required to file Form SPICe for Company Incorporation

  1. Basic information of the Proposed Company
    If the ROC has approved the proposed name of the company, details can be prefilled from SRN of RUN form filed for name approval:
    • SRN of RUN Form
    • Address of registered office of the company
    • Phone and email of the company
    • The main division of industrial activity of the company based on its business activities
  2. Details of Subscribers cum Directors
    • Number of first subscribers of the proposed company having valid DIN
    • Details of first subscribers for allotment of DIN
    • The total monetary value of the contribution by all the directors in the company
  3. Details of proposed name or approved name
    • The proposed or approved name
    • Significance of words in the proposed or approved name
    • Names of vernacular languages used in the proposed or approved name
    • If the proposed name is based on a registered trademark or a pending trademark application, submit details of the trademark or the pending application
  4. Details of Payment of Stamp Duty
    • Stamp duty payments, if any paid against Form, MOA or AOA.
    • Mode of payment of stamp duty, the total amount of stamp duty paid, Name of vendor or Treasury or Authority, Registration number of vendor, Date and place of purchase of stamp paper.
  5. PAN and TAN Application of proposed company
    • Information such as AO Code, AO Type, Range Code, AO No. for PAN and TAN application
    • Mentions the source of income
  6. Investment Particulars
    • If any investments are to be made by the proposed company then the details of the same.
    • Proposed Amount of investment in Land, Building, Plant & Machinery
  7. DSC of Director
    The Director of the Proposed Company should digitally sign the SPICe Form using DSC. Further, a practicing professional member i.e, Chartered Accountant, Company Secretary, Cost Accountant, or Advocate should also attest SPICe Form.

FAQs

How are e-Forms processed by the Central registrar of companies?

The Central Registration Centre (CRC) processes the application and if found the details / documents are in order, the Central Registrar of Companies shall register the Company and issue the following:
1. Company Incorporation Certificate
2. DIN for Directors
3. Permanent Account Number (PAN)
4. Tax Collection and Deduction Number (TAN) to the New Company.

What e-Forms are required to file for Incorporation of an OPC?

Company Incorporation Process consists of preparation and filing of the flowing E-Forms:
1. e-Form INC-32 – Simplified Proforma for Incorporating Company Electronically (SPICe)
2. e-Form INC-33: e-Memorandum of Association (SPICe MoA)
3. e-Form INC-34: e-Articles of Association (SPICe AoA)

All the documents executed / notarised / attested as per documentation requirements has to be attached to the e-Form INC-32 / 33/ 34 and the e-Forms has to be digitally signed with the Digital Signature Certificate (DSC) of the shareholder.

Is Audit compulsory for OPC?

Yes. OPC is mandatorily required to get its books of accounts audited by a CA just like any other limited company. However, the provision relating to the rotation of auditors is not applicable to an OPC.

What is One Person Company (OPC) under Companies Act, 2013?

Companies Act, 2013 introduced the concept of One Person Company (OPC) for entrepreneurs who want to create a single person economic entity. Similar to a Company, a One Person Company is a separate legal entity from its promoter and it is easy to incorporate. One Person Company (OPC) allows a single member to Incorporate and run a business. OPC should be incorporated on MCA Portal.

Who can incorporate One Person Company (OPC)?

Any individual who is an Indian citizen and resident of India in the previous financial year can incorporate OPC. A Resident of India means a person who has stayed in India for more than 182 days during the previous year. The minimum authorised capital required for incorporation is Rs. 1,00,000.  For incorporation of OPC, the promoter must appoint a nominee and the nominee cannot be minor.

Who can not Incorporate One Person Company (OPC)?

  • Legal entities like Company, LLP, Trust, AOP, BOI can not incorporate OPC.
  • Any businesses involved in financial activities can not incorporate OPC.
  • Any businesses covered under section 8 of the Companies Act,2013 can not incorporate OPC.
  • Non- Resident, Foreign Citizen and Minor individuals can not incorporate OPC.
  • OPC cannot be incorporated if the paid-up capital is more than Rs. 50,00,000 and the turnover is more than 2 crore rupees.      

What are the benefits of incorporating OPC?

  • Separate Legal Entity
    One Person Company is a separate entity from its promoter/ member. It is capable of doing business in its own name.
  • Control with the single owner
    It becomes easy to control and manage any entity if there is a single owner. By incorporating One Person Company (OPC) an owner can take quick decisions and focus on the growth of the business.
  • Minimal Compliances
    In the case of One Person Company (OPC) compliances are also less compared to a private limited company. No requirement to hold an annual or extraordinary general meeting, only one meeting of the Board of Directors is required each half of a year. Form filing with the Registrar of Company (ROC) is also lesser than a private limited company. Any remuneration paid to the director will be allowed as deduction as per income tax act. Any rent or interest paid to the director is also allowed as deductible expenses which reduce the profitability of the company.  
  • Easy Transferability
    Since there is a single person holding 100% of shares of One Person Company (OPC), it is easy to transfer the ownership of company by transferring the shares.
  • Ease in obtaining a loan from the bank
    One Person Company can avail of the benefits of Small Scale Industries and can obtain funding from the bank without depositing any securities to a certain limit. Incorporating One Person Company (OPC) is also beneficial since the banking and financial institutions prefer to lend money to the company rather than proprietary firms.   

FAQs

Can a person be a member of more than one One Person Company (OPC)?

No, a person can not be a member of more than one One Person Company. And if a person who is a member of One Person Company becomes a member of another One Person Company by virtue of his being a nominee then he shall meet the eligibility criteria of being a member in only One Person Company within a period of 180 days. In simple words, he shall withdraw his membership from either of One Person Company within 180 days.

Is nominee mandatory for incorporation of One Person Company (OPC)?

Yes, One Person Company can not be incorporated without a nominee. The nominee is an individual who will take place of a sole promoter in case of death or incapacitation of the sole promoter. The nominee must be over the age of 18 years and must be an Indian citizen and Indian resident.

What tax rate is applicable for an OPC?

Tax rates on an OPC are the same as of a Private Limited company. Thus OPC is liable to pay tax at the flat rate of 30% plus 2% education cess and 1% secondary higher education cess. Also, surcharge at 5% is levied if the turnover exceeds Rs. 1 Cr. similar to a Private company.

What is the new process of incorporation of One Person Company (OPC) in India?

The concept of One Person Company (OPC) was introduced in companies act, 2013. One Person Company is suitable for one founder/ promoter who wishes to start a company. For incorporation of OPC one promoter/ member and one nominee is required. Read about the process of incorporation of One Person Company (OPC) through SPICe Form on MCA Portal with two different methods.

One Person Company Incorporation through SPICe – Without filing RUN Form

  1. DSC of Promoter / Founder

    Firstly, apply for DSC i.e. Digital Signature Certificate of promoter/ founder

  2. File SPICe Form

    File SPICe forms for Incorporation i.e. Form INC-32, Form INC-33, Form INC-34. One can avail service of name reservation, allotment of DIN, incorporation of new company, allotment of PAN and TAN through INC-32 form. And e-MOA, e-AOA can be submitted in INC- 33 and INC-34 respectively as linked forms

  3. Nominee Details INC-3

    In case of OPC, since nominee is compulsory details of nominee can be filed in Form INC-3 and can be filed as an attachment to INC-32 form

  4. No Name Reservation through RUN

    The Company need not file name reservation through RUN Form on MCA

  5. Payment of Fees

    The proposed director and certified professional should digitally sign the SPICe Forms along with form filing fees. MCA will then start processing the forms.

  6. Observation Report by MCA

    If any issues are found in the forms by the MCA, it sends an Observation Report to the applicant’s email as per SPICe Form. The applicant can make necessary changes and file forms again

  7. Certificate of Incorporation

    Once MCA successfully processes the forms, it issues a Certificate of Incorporation along with PAN and TAN on email

One Person Company Incorporation Process through SPICe – With RUN Form

  • Obtain Digital Signature Certificate of promoter/ founder.
  • Apply for Name Reservation in RUN Form. Company can apply for two proposed names in the RUN Form. Form filing fees are Rs. 1,000. Company does not need to use Digital Signature or DIN of promoter to file RUN Form.   
  • Company shall receive the name approval within 20 days of filing the SPICe form i.e. Form INC-32, Form INC-33 and Form INC-34. You can apply for allotment of DIN, Incorporation of new company, allotment of PAN and TAN through INC-32 form. Company can submit e-MOA in Form INC-33 and e-AOA in Form INC-34 as linked forms.
  • In case of OPC, a nominee is compulsory. The Company should file details of nominee in Form INC-3. Form INC-3 is an attachment to Form INC-32.
  • The proposed director and certified professional should digitally sign the SPICe Forms along with form filing fees.
  • Once the MCA authority successfully processes the forms, it sends the Certificate of Incorporation along with PAN and TAN on the email.

FAQs

Should OPC hold an AGM?

An OPC is not required to hold an Annual General Meeting (AGM). Section 173 and 174 (Quorum of Meeting of BoD) will not apply to an OPC as there is only one director on its Board.

Is Audit compulsory for OPC?

Yes. OPC is mandatorily required to get its books of accounts audited by a CA just like any other limited company. However, the provision relating to the rotation of auditors is not applicable to an OPC.

Who is eligible to act as a member of an OPC?

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.

Who can be nominated by the member of OPC as nominee?

A nominee is a person appointed by the member of the one person company (OPC) who shall, in the event of subscriber’s death or his incapacity to contract becomes a member/shareholder of the OPC.

What tax rate is applicable for an OPC?

Tax rates on an OPC are the same as of a Private Limited company. Thus OPC is liable to pay tax at the flat rate of 30% plus 2% education cess and 1% secondary higher education cess. Also, surcharge at 5% is levied if the turnover exceeds Rs. 1 Cr. similar to a Private company.