# Cancellation of Reserved Name

Where, after reservation of name, it is discovered that the name was obtained by furnishing wrong or incorrect information, the consequences differ depending on whether the company has been incorporated.

## Case 1: Company NOT Yet Incorporated

The reserved name shall be cancelled
The person who made the application is liable to a penalty up to ₹1,00,000

## Case 2: Company HAS Been Incorporated

The Registrar may, after giving the company an opportunity of being heard, take any of the following actions:

1. Direct the company to change its name within 3 months, after passing an ordinary resolution; OR

2. Strike off the name of the company from the register of companies; OR

3. Make a petition for winding up of the company.

## Summary Table

Status	Consequence
Not incorporated	Name cancelled + penalty up to ₹1 lakh on applicant
Incorporated	(a) Change name in 3 months via ordinary resolution, OR (b) Strike off, OR (c) Petition winding up

Worked example

### Example 1

Example: Mr. A applied for reservation of the name 'Sunshine Foods Ltd.' by furnishing incorrect information. The company has not yet been incorporated. What are the consequences?

Answer: The reserved name shall be cancelled, and Mr. A shall be liable to a penalty which may extend to ₹1,00,000.

### Example 2

Example: Bright Star Ltd. was incorporated based on a name reserved by furnishing incorrect information. Can the Registrar straight away strike off the name?

Answer: Yes, but only after giving the company an opportunity of being heard. Alternatively, the Registrar may direct change of name within 3 months by ordinary resolution, or petition for winding up.

⚠️ Common exam mistakes

Assuming a special resolution is required for change of name in cancellation cases — actually only an ordinary resolution is needed under Section 4.
Forgetting that the Registrar must give the company an opportunity of being heard before action where company is already incorporated.
Confusing the ₹1 lakh penalty as applying to the company — it applies to the applicant when company is not yet incorporated.

Reference: Section 4 — The Companies Act, 2013

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