This article is written by Nimisha Srivastava, a  IIIrd year student of Gujarat National Law University.

You are a fresh engineering graduate; along with your friends you have came up with an idea for a startup. You seek to incorporate the company and name it as ‘SoundCloud’, but you can’t since the name is already taken up by another company. You make some alterations and come up with ‘CloudSound’ and you think, this should be allowed- Right!, it’s not the same name. Well, your lawyer will discard ‘CloudSound’, in the trashbin too. Mindboggling, isn’t it, thinking of a name of a company, and here you thought it was easy!

Name of the company is an important step in incorporation of a company. The Memorandum of Association of Company, the most important document of the company, gives scope and limitations to the activities of the Company.[1] Section 4(1) enlists different clauses of the memorandum of association. The foremost clause in a memorandum is the name clause. A name clause establishes the identity of the Company, as a separate legal entity.

Conditions followed while deciding upon names:

Section 4, Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014, lays down conditions to be followed while deciding upon the name of the Company that is mentioned in the Memorandum. Some of the conditions are:

1. The last word of the name of the Company shall read “Limited” in case of a public limited company and “Private Limited” in case of private limited company.[2]
2. For Companies under Section 8, the name should include words like foundation, forum, association, federation, chambers, confederation, council, electoral trust, etc.

• The name shall not be identical to or resemble, or, be a popular or abbreviated description[3] of name of an existing company,[4] or a limited liability partnership,[5] if incorporated within India and if incorporated outside India and the name is reserved with the Registrar.[6]

1. The use of the name shall not constitute an offence under any law.[7]
2. The name should not contain any word or expression which gives the impression that company is connected to the Government, unless the permission of Central Government has been obtained.[8]
3. The name of the company should not use existing name in the following manner:

Joining or separating words, using different tense, using different phonetic spellings or spelling variations , misspelled words, addition of ‘.com’, ‘.net’, ‘.edu’ etc internet related designation, addition of words like ‘New’, ‘Modern’, ‘Shree’ etc, different combinations of the same words (as in the above mentioned example), Hindi or English translation of the same name.[9]

• The name of the company will be considered ‘undesirable’ under following circumstances:
  1. Any name or emblem specified in the Schedule of the The Emblems And Names (Prevention Of Improper Use) Act, 1950 or, any colourable imitation of the same unless permission from Central Government has been obtained.[10]
  2. The name of the Company contains the name of registered trademark unless the owner has provided consent.
  3. The name contains words offensive to any section of people.
• The name of the Company, if it indicates objects, then it shall be in conformity with objects mentioned in Memorandum of Association.

The whole set of conditions to be followed are enumerated under Rule 8 of the Companies Incorporation Rules, 2014. Before applying for registration, the availability of name can be checked on the MCA website ‘www.mca.gov.in’, to see if any company is registered with similar name.

 

Procedure for filing the name of the Company:

Section 4(4) read with Rule 9 of Company Incorporation Rules, 2014 elaborates upon the procedure of filing for name of the company.

1. A person is required to make an application in Form No. INC 1[11] along with the fee(as provided) to the Registrar of Companies for reservation of the name of the company or the name to which company intends to change its name. [12]
2. The Registrar can reserve the name for sixty days after perusal of the application and documents therewith.[13]
3. If the name is found to be unacceptable after it has been reserved, then the reserved name shall be cancelled and the person shall be liable to pay a penalty which may extent to Rs. One Lakh.
4. In the case if the company has already been incorporated, and the name is found to be applied after furnishing wrong or incorrect information, then an opportunity of hearing is provided to the Company, after which the Registrar can:
5. Direct the company to change its name within a period of three months; or
6. Take action for striking off the name from the register of companies;

• Make a petition for winding up the company.[14]

Name application can be resubmitted only once, also there is an option to submit multiple names for approval with the application.

Central government can direct a company to change its name by passing an ordinary resolution after it has been registered if the name is identical or closely resembles an existing name. The company has to change the name within 3 months from the issue of such direction. If within three years of incorporation of company or registration of change in name of company, the registered proprietor makes an application to Central government that the name infringes a trademark; the Central Government may direct the company to change its name within 6 months of issue of such a direction.[15]

After a company changes its name, it has a fifteen days time period to give notice of the same to Registrar of Companies.

Publication of Name

The name of the company and the address of its registered office must be painted or displayed outside every office or place at which its business is carried on, in a conspicuous position and in legible letters in English and in the language in general use in that locality. The name must also be engraved on the company’s common seal. Further, the name of the company and the address of the registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any must be mentioned in legible characters in all business letters, in all its bill heads, letter papers and in all its notices and other official publications, as well as in all negotiable instruments and other prescribed documents.[16]

Further in case of 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.

Changing the name of company

Under Companies Act, 2013, companies can change their name with the permission of Central Government. The change of the name requires alteration of Memorandum of Association. The procedure for changing the name is:

1. The meeting of board of directors[17] has to be convened. In the meeting the reason of change of the name and and suggestions for the new names have to be put forth. Subsequently, two resolutions have to be passed. First with respect to authorizing the Board of Directors of the Company to make an application to the Registrar of Companies for the reservation of the new name. Second, a no objection resolution with respect to the new name.
2. The company has to file form INC 1 with the Registrar of Companies.[18]

• Thereafter, after the name approval certificate from Registrar is received, a board meeting is convened. Thereafter, an extraordinary general meeting[19], is convened, where a special resolution[20] needs to be passed approving the change of name of the company and approving the alterations to the Memorandum of Association and Articles of Association wherever the name clause appears.

2014. The special resolution passed in the above step, has to be filed with Registrar of Companies via Form MGT-14 (Filings of Resolutions and Agreements to the Registrar)[21] along with a fee as prescribed by Companies (Registration offices and fees) Rules, 2014.
2015. Thereafter, form INC 24 has to be filed along with a fee as prescribed by Companies (Registration offices and fees) Rules, 2014 for approval of central government to alter the memorandum of association by change of name within 30 days of passing special resolution. [22]
2016. After completing above Procedure Registrar will issue a New Certificate of Incorporation in form No- 25.[23] Name will be effective from the date of issue of Certificate.

 

[1] Section 2(56) of Companies Act, 2013, defines “memorandum” means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act.

[2] Section 4(1) (a), Companies Act, 2013.

[3] Rule 8 (2)(b), Companies (Incorporation) Rules, 2014.

[4] Section 4(2)(a), Companies Act, 2013.

[5] Rule 8 (2)(b), Companies (Incorporation) Rules, 2014.

[6] Ibid.

[7] Section 4(2)(b), Companies Act, 2013.

[8] Section 4(3) , government includes Central government, state government, local authorities, corporation or body constituted under any law by State or Centre.

[9] Rule 8 of the Companies (Incorporation) Rules, 2014.

[10] Rule 8 of the Companies (Incorporation) Rules, 2014, read with Section 3 of The Emblems And Names (Prevention Of Improper Use) Act, 1950.

[11] Rule 9 Company Incorporation Rules, 2014.

[12] Section 4(4) , Companies Act, 2013.

[13] Section 4(5) , Companies Act, 2013.

[14] Ibid.

[15] Section 16, Companies Act, 2013.

[16] Section 12, Companies Act, 2013.

[17] Section 173 (1) of the Companies Act, 2013.

[18] Section 4(4) Companies Act, 2013.

[19] Section 100(1) of the Companies Act, 2013.

[20] Section 114 (2) of the Companies Act, 2013.

[21] Section 13(6)(a) of the Companies Act, 2013.

[22] Rule 29 of the Companies (Incorporation) Rules, 2014.

[23] Ibid.