EXTENSION OF RESERVATION PERIOD OF COMPANY NAME DURING PANDEMIC?
INTRODUCTION
The Companies Act, 2013 was amended in 2020 to provide for an extension of the reservation period for company names during the pandemic. The amendment was made by the Ministry of Corporate Affairs (MCA) through the Companies (Incorporation) Third Amendment Rules, 2020.
The amendment provides for an extension of the reservation period for company names from 20 days to 60 days. This extension is applicable to both new companies and existing companies that are changing their names.
The amendment was made in response to the challenges faced by businesses during the pandemic. The pandemic caused delays in the processing of company registrations, and many businesses were unable to register their companies within the 20-day reservation period. The extension of the reservation period will help to address these challenges and make it easier for businesses to register their companies.
The amendment is effective from 26 January, 2021.
ADVANTAGES :-
There are several advantages to the extension of the reservation period for company names during the pandemic as per the Companies Act, 2013. These include:
- It provides businesses with more time to register their companies. The pandemic caused delays in the processing of company registrations, and many businesses were unable to register their companies within the 20-day reservation period. The extension of the reservation period will give businesses more time to complete the registration process and secure the name they want for their company.
- It reduces the risk of losing a desired company name. If a business does not register its company within the 20-day reservation period, the name can be reserved by another business. The extension of the reservation period reduces the risk of this happening, giving businesses more time to complete the registration process and secure the name they want.
- It makes it easier for businesses to start their operations. The registration process for a new company can be complex and time-consuming. The extension of the reservation period will help to reduce the time it takes for businesses to register their companies, making it easier for them to start their operations.
- It supports economic growth. By making it easier for businesses to register their companies, the extension of the reservation period will support economic growth. This is because it will allow businesses to start operating more quickly.
DISADVANTAGE:-
There are also some disadvantages to the extension of the reservation period for company names during the pandemic as per the Companies Act, 2013. These include:
- It can lead to confusion and delays. The extension of the reservation period may lead to confusion and delays in the company registration process. This is because the RoC may be overwhelmed with applications for name reservations, which could lead to delays in processing applications.
- It can increase the cost of registering a company. The extension of the reservation period may increase the cost of registering a company. This is because businesses may have to pay additional fees for the extended reservation period.
- It can be exploited by unscrupulous businesses. The extension of the reservation period could be exploited by unscrupulous businesses. These businesses could reserve names that they do not intend to use, in order to prevent other businesses from using them.
CONCLUSION: -
The extension of the reservation period for company names during the pandemic as per the Companies Act, 2013 is a positive step that will benefit businesses and the economy. However, it is important to be aware of the potential disadvantages of this measure, and to take steps to mitigate them.
Overall, the extension of the reservation period is a good thing for businesses, as it will give them more time to register their companies and secure the name they want. However, businesses should be aware of the potential risks associated with this measure, and take steps to mitigate them
HOW AURIGA ACCOUNTING HELP YOU
- Provides businesses with more time to register their companies.
- Reduces the risk of losing a desired company name.
- Makes it easier for businesses to start their operations.
- Supports economic growth.
