GUIDELINES ON THE NAME OF A COMPANY UNDER COMPANIES ACT 2013

PXV Law Partners

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Guidelines in Relation to the Name of a Company

The registration of the name of a company has to be according to the provisions of the Companies Act, 2013, the Companies (Incorporation) Rules, 2014 and the Companies (Name Availability) Rules, 2011.

The new Act has added and revised certain provisions in relation to the registration, change and rectification of the name of a company.

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Conditions for Registering a Name

Provisions which are similar to the old Act of 1956 or Companies (Name Availability) Rules, 2011:

Names shall not be identical or similar to an existing company or LLP. undesirable in the opinion of Central Government. similar to any trademark, whether registered or in the process; in violation of the provisions of Emblems and Names (Prevention of Improper Use) Act,

1950; be offensive to any section of people or constitute an offence under any law for the time

being in force gives the impression that the company is connected in any way to the central or state

government or statutory authority.The proposed name does not necessarily have to be consonance with the principal

objects of the company as set out in the MoA.The clause providing the words whose presence shall not be considered as a

differentiating factor while determining the similarity of name has been kept unchanged.Search facility for checking the similarity of the proposed names with the registered

names of companies and LLPs.

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Newly added provisions – Undesirable Names

The Companies (Incorporation) Rules, 2014 provides a more exhaustive list of conditions which shall be taken into consideration for determining undesirability of names than previously. For example, the name cannot

be similar to a foreign company and reserved with the Registrar unless it is a subsidiary;

be similar to the popular or abbreviated description of an existing company or LLP; contain the words ‘British India’; imply association or connection with embassy or consulate or a foreign government; include or imply association or connection with or patronage of any person of national

esteem; be only a general one, like Cotton Textile Mills Ltd. or Silk Manufacturing Ltd.

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Further Additions for Registration of Names

If any company has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities.

In case the key word used in the name proposed is the name of a person other than the name(s) of the promoters or their close blood relatives, no objection from such other person(s) shall be attached with the application for name. In case the name includes the name of relatives, the proof of relation shall be attached and it shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the name of the promoters or their relatives.

The applicant shall declare in affirmative or negative whether they are using or have been using in the last five years, the name applied for incorporation of company or LLP in any other business constitution like Sole Proprietor or Partnership or any other incorporated or unincorporated entity and if, yes details thereof and NOC from other partners and associates for use of such name and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not .

The names released on change of name by any company shall remain in data base and shall not be allowed to be taken by any other company including the group company of the company who has changed the name for a period of three years from the date of change subject to specific direction from the competent authority in the course of compromise, arrangement and amalgamation.

If the proposed name includes the name of any foreign country or city, it will be allowed only if either the company or the country has business relations with the foreign country.

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Reservation of Name – Section 4(4) & 4(5) & Rule 9

Similar to Rule 7 of the Companies (Name Availability) Rules, 2011.

Applicable both for newly incorporated company as well as for change of name.

Registrar may reserve the name for 60 days.

Prescribes penalty in case of submission of incorrect information – Absent earlier.

Unincorporated Company Incorporated CompanyCancellation of name; applicant shall be liable to a penalty which may extend to one lakh rupees

After having being given an opportunity of being heard, the Registrar may – ask the company to change its name within 3 months; strike off the name of the company; make a petition for winding up.

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Display of Name – Section 12

The Companies Act, 2013

Retains the provision of affixing the name and registered address of the company at its registered office, place of business, seal, letterheads, cheques and other official documents.

Adds other items to be included in all its business letters, billheads, letter papers and in all its notices and other official publications: CIN, telephone number, fax number, e-mail and website addresses.

Modifies the penalty clause

In case the company has changed its name or names during the last two years it shall paint or affix or print, along with its name, the former name or names so changed during the last two years. However, the Act does not mention time limit for which the former name needs to be kept.

For a One Person Company, the words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.

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Change of Name – Section 13

Similar to Companies Act, 1956 – change of name permitted if authorised by special resolution and approved by the Registrar.

Adds the condition under Companies (Incorporation) Rules, 2014 that a company shall not be permitted to change its name if it has defaulted in filing its annual returns or financial statements or any document due for filing with the Registrar or which has defaulted in repayment of matured deposits or debentures or interest on deposits or debentures.

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Rectification of name – Section 16

The Companies Act, 2013Retains the conditions for rectification of name, viz., that the Central Government feels

that the name is identical or similar to an existing company or on an application by a registered proprietor of a trade mark that the name is identical or similar to his registered trademark. The application has to be made within 3 years from the date the name of the company came into existence.

Modifies the time limit for such rectification of name

Companies Act, 1956 Companies Act, 2013

No time limit mentioned; previous approval of Central Government required.

If the name is similar to another company’s name – rectification within 3 months; no prior approval;If the name is similar to a registered trademark – 6 months; no prior approval.

If the Central Government directs the company to change its name within 1 year of the registration of the name, the company must rectify it within 3 months from the date of such direction with prior approval of the Government.

No such provision.

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Rectification of name (contd.)

Adds procedure for notification of the change to the Registrar within 15 days of the date of change, along with the order of the Central Government. The Registrar shall accordingly carry out necessary changes in the certificate of incorporation and the memorandum.

Increases the liability of the officers in default to a minimum of Rs. 5,000 and a maximum of Rs. 1 lakh.