MCA extends the validity of name reservation

January 2021

The Ministry of Corporate Affairs (“MCA”) issued the Companies (Incorporation) Third Amendment Rules, 2020 effective from January 26, 2021 in order to introduce a new Rule 9A extending the validity of name reservation for companies to be incorporated from 20 to 60 days.

Background: Initially, the validity of the name reservation by proposed companies was 60 days from date of its approval under the Companies Act, 2013. Subsequently, this validity was reduced to 20 days by the Companies (Amendment) Act, 2017 effective from January 26, 2018.

Amendment: The MCA has (re)extended the validity of name reservation up to 60 days by introducing the aforesaid Rule 9A. However, this is subject to payment of certain additional fee. The normal filing fee for proposed company’s name reservation with a validity of 20 days through e-form SPICE+ is INR 1,000. The extension can be granted up to:

  • 40 days from the date of initial approval, on additional payment of INR 1,000 made before the expiry of 20 days from the date of approval;
  • 60 days from the date of initial approval on payment of INR 2,000 made before the expiry of 40 days; and
  • 60 days from the date of initial approval on cumulative payment of INR 3,000 made before the expiry of 20 days from the date of approval.

PSA View: This is a positive step as it will give flexibility to promoters of prospective companies to keep their name for more than 20 days and will also provide for additional revenue for the government. In our view, 20 days was too short a time period and with this new amendment, prospective companies will hopefully not risk losing their already approved name.

By:

Jaya Moorjani