India is at the cusp of economic transformation and change unseen in its history. The Indian economy is growing at 6% to 7% year on year with potential to grow as faster rates. The GDP is at $2 Trillion which is 4th in size globally when compared in Purchasing Power Parity (PPP) terms. Millions of new businesses are starting up every year as people seek to build their own destiny and create wealth for themselves. We have hundreds of new multi-millionaires in India every year now in India. Even then, basic financial literacy levels among the majority of entrepreneurs is very low and they need a lot of guidance to help them and their businesses.
What is the problem then and what can we do about it?
However, one thing that continues to shake the economy and destroy more than 90% of startups registered in India is the lack of Financial Literacy among entrepreneurs in India. Don’t get me wrong. Indian entrepreneurs are among the most street smart entrepreneurs compared to anybody else across the world. But many of them are first time entrepreneurs starting up, who have never taken any professional business class or entrepreneurship courses. Thus, our entrepreneurs make a lot of silly mistakes and end up losing their startup. That is why they say that more than 90% startups fail. So, what can we do to help our young enthusiastic startup founders. We can start by helping them understand the basics of business. Today, we will learn to search for and apply for a company name in 2018 under the revised naming guidelines and systems prevalent in India today.
So, how should startup founders undertake company name search and apply vide RUN system?
The Ministry of Corporate Affairs has introduced the new Reserve Unique Name (RUN) system with effect from 26th January 2018. The RUN system is available under “CHECK COMPANY NAME” tab in the MCA website. This facility is only available for registered users on MCA21 portal. (learn how to register and login to MCA21 portal). The RUN system has been launched to allow entrepreneurs to search for and apply for their company’s name and get pre-approval. If the new name is approved, then it will valid for 20 days, during which they have to form their company. The RUN system can be utilized by anyone and anybody can book a company name, LLP name , Foundation name, Producer company name, Public Limited Company Name, Section 8 Foundation name, OPC name and Other company name vide this RUN system. You don’t have to be a Chartered Accountant or a Company Secretary to book name in this new system. The fees to be paid to the government has been fixed at Rs.1000 per application. On paying this Rs.1000 fee, the applicant gets a chance to apply for 2 (two) proposed company names. In case , the names are not allocated due trademark issue, or matching other company name issue or mismatch in objects issue, the applicant gets another chance to resubmit 2 (two) alternate names. However, after the second time resubmission, if the company name is not allocated, then the fees paid Rs.1000 is forfeited and the applicant has to apply fresh again and pay the fees again.
The new Run system is highly beneficial for practicing CAs and CS as they can pre-approve the company name and then prepare the documents. If the CA prepares the documents, but the name is rejected, then the effort, time and costs of preparing the company incorporation documents like MOA and AOA goes for waste. The new RUN system is something entrepreneurs need to know and learn about if they planning to register Private Limited Company, Limited Liability Partnership Firm (LLP), Section 8 Foundation, Microfinance company, Public Limited company, Nidhi Company, One Person Company, or NBFC. If you need any help with RUN system, we have experts who would be glad to advise and facilitate the process for your startup.