Private Company (Other Than OPC):

• Ownership: Restricted to a maximum of 200 shareholders. Shares cannot be freely traded to the public.
• Minimum Members: Requires a minimum of two members (shareholders) to form the company.
• Regulations: Subject to less stringent regulations compared to public companies. Filings and disclosures are generally less complex.
• Capital: No minimum capital requirement is mandated.
• Suitable for: Small and medium-sized businesses, startups, family-owned businesses seeking to maintain control within a limited group.

Public Company:

• Ownership: No limit on the number of shareholders. Shares can be freely offered to the public through stock exchanges.
• Minimum Members: Requires a minimum of seven members to form the company.
• Regulations: Subject to stricter regulations and higher compliance requirements compared to private companies. More frequent disclosures and filings are mandatory.
• Capital: No longer has a minimum capital requirement.
• Suitable for: Large businesses seeking to raise capital from the public, companies with a wider ownership base, and those aiming for an eventual Initial Public Offering (IPO).

Here’s an additional point to consider:

• One Person Company (OPC):This is a type of private company with a single member who can also be the sole director. It offers a simpler structure for sole proprietors seeking limited liability protection. However, it has limitations like conversion to a private company if the paid-up capital exceeds a certain limit.

 

Examples

The INC-29 form is specifically designed for incorporating Private Limited Companies with a maximum of 3 directors and 2 shareholders. It cannot be used for Public Companies.

Here’s a breakdown:

• INC-29 can be used for: Private Limited Company (other than OPC – One Person Company)
• INC-29 cannot be used for: Public Company

Public Companies typically have a larger number of shareholders, stricter regulations, and a more complex incorporation process requiring separate forms beyond INC-29.

The INC-29 form is specifically designed for incorporating Private Limited Companies with a maximum of 3 directors and 2 shareholders. It cannot be used for Public Companies.

Case laws

• Darius Rutton Kavasmaneck vs Gharda Chemicals Ltd. & Ors (2014):This case dealt with a private company accepting deposits from the public. The court ruled that such an action could lead to the company being reclassified as a public company, with stricter regulations.

Public Companies

• M/S.Sait Nagjee Purushotham & Co.Ltd vs Vimalabai Prabhulal & Ors (2005):This case highlighted the distinction between private and public companies in terms of transferability of shares. Public companies generally have fewer restrictions on share transfer compared to private companies.

Finding More Case Laws

Here are some resources to help you find more relevant case laws:

• Indian Kanoon: This is a free online database of Indian legal information, including case laws. You can search for specific keywords related to private and public companies and the Companies Act.
• Company Law Board (CLB):The CLB adjudicates on various company law matters. Their website might contain relevant orders or judgments

 

• Reservation of Names in INC-1

The Reservation of Names is a process covered in the eForm INC-1 (previously Form INC-1) used in India for securing a unique name for your company before incorporation. This applies to both new companies and existing companies seeking a name change.

Here’s a breakdown of Reservation of Names in INC-1:

• Purpose: To prevent duplicate company names and ensure distinctiveness in the marketplace.
• Process:
  • File the e Form INC-1 electronically with the Registrar of Companies (ROC) where your company’s registered office will be located.
  • You can propose up to six names in order of preference.
  • The form requires details about the proposed company and its activities.
• Approval: The ROC will review the names against various criteria to ensure they comply with naming guidelines. These include:
  • Not resembling an existing company’s name too closely.
  • Not including sensitive or undesirable words.
  • Not infringing on registered trademarks.
• Validity Period: If approved, the ROC will reserve your chosen name for a period of 60 days from the approval date.
• Next Steps: Within the 60-day window, you need to file the INC-29 form (or the relevant incorporation form) to complete the company registration process. If you miss this deadline, the name reservation will expire, and you may need to re-file the INC-1 with a new name.

Benefits of Name Reservation:

• Secures your desired name: Prevents others from registering a similar name during the initial incorporation stage.
• Provides certainty: Allows you to move forward with branding and marketing efforts with confidence in your company’s name.

Remember: While INC-1 facilitates name reservation, final company registration happens through separate forms like INC-29 for private limited companies.

Examples

• Clearly Identifiable Names: “ABC Private Limited” or “XYZ Consultancy Services LLP”. These names clearly indicate the nature of the business and are distinguishable from existing companies.
• Descriptive Names: “Bangalore Web Developers” or “Mumbai Accounting Solutions”. These names describe the location and services offered by the company.
• Invented Words: “Creative Technologies” or “Innova Solutions”. These are unique names that are not similar to existing trademarks or generic terms.

Names that would likely be Rejected:

• Generic Names: “The Mobile Store” or “The Clothing Company”. These names are too generic and lack distinctiveness.
• Similar to Existing Names: “Google Technologies” or “Apple Consultancy”. These names are too similar to established trademarks and could be misleading.
• Suggestive Names: “The Best Bakery” or “Number One Solutions”. These names are not specific enough and make subjective claims.
• Restricted Words: Names including words like “Bank”, “Stock Exchange”, or “Insurance” might require special permission from the government.

Case laws

• Similarity and Deception: Cases like Bisazza vs Pino on 30 April, 2010 [Bisazza vs Pino on 30 April, 2010 case] showcase how courts view deceptively similar names. The Registrar might reject names too closely resembling existing registered companies to prevent confusion.
• Geographical Indications: Geographical names with specific product associations might be restricted. Legal precedents exist to protect regional specialties.
• Undesirable Names: The Registrar might reject names deemed offensive, misleading, or against public interest. Case law around trademarks and business names can provide reference points.

Resources for Further Research

While there aren’t specific case laws for INC-1 name reservation, these resources can be helpful:

• Registrar’s Guidelines: The MCA website might publish guidelines on name reservation practices followed by the Registrar’s office.
• Company Law Judgments: Sites like Indian Kanoon [https://indiankanoon.org] allow searching for case laws related to company names and relevant sections of the Companies Act (e.g., Section 4(1) on name restrictions).

Remember:

• These are just general pointers. Always refer to the latest guidelines from the MCA for the most up-to-date information on name reservation.
• Consulting a legal professional can provide specific guidance on your chosen name and its potential for approval.

Faq questions

• How do I reserve a company name?

You can reserve a company name through the RUN service available on the MCA portal https://www.mca.gov.in/content/mca/global/en/home.html.

• What are the benefits of name reservation?

Name reservation helps ensure the proposed name is available before proceeding with company incorporation. It avoids delays due to name rejection during registration.

Process and Requirements

• Can I reserve multiple names at once?

No, the RUN service allows reserving only one name at a time. However, you can submit multiple applications if needed.

• What information is required for name reservation?

You will need to provide details like the proposed company name, main objects of the company, and the type of company (private/public).

• What are the grounds for name rejection?

Names similar to existing companies, trademarks, or those considered undesirable by the MCA can be rejected.

Approval and Validity

• How long does name reservation take?

The name reservation process is usually quick, with approvals granted within a few days if the name meets all requirements.

• How long is a reserved name valid?

A reserved name is typically valid for six months from the approval date. You can apply for extension if needed.

Additional Considerations

• Do I need a Digital Signature Certificate (DSC) for name reservation?

Yes, a DSC is required for online filing through the RUN service.

• What happens if my chosen name is rejected?

You will receive a communication outlining the reason for rejection. You can then choose a new name and re-submit the application.

• Is professional help advisable for name reservation?

While not mandatory, consulting a professional like a Company Secretary (CS) can be helpful, especially for complex name selection processes.