In this article, Padamasre Manoj who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses How to change the name of a private company and public company.
How to change the name of a private company and public company
Name of the company always needs to be well thought through and constructed in a manner that can be scalable and sustainable to stay relevant even during the future of the company. The Companies Act will be applicable for set up and such name changes to legally render the changes as valid.
While registering the name, the registration authorities will check to ensure that the name is not already be used by any other organisation nor be resembling closely that of a competitor organisation. It should also not be vague or general, for example, Silk Company Pvt. Ltd.
It should be specific and reflect the nature of the business in the name. In cases where the organization decides to change its name, either due to change in ownership, beliefs, expansions etc. the legal process needs to be followed meticulously to ensure that the registration of the company is valid and the company bools is passed on without a break.
There are certain protocols to be followed to ensure that the name change for both private and public companies are done in a legally valid manner, we will look at those in the appended notes.
Name change in Private and Public company
Any alteration of name will result in fundamental change in the Memorandum of Association of the Company (MOA). This is critical as the name of the company will be mentioned as part of the various clauses of the MOA and therefore this needs thorough review and change across those clauses.
This also means that the shareholders of the company need to agree to the change and sign the MOA. The Ministry of Corporate Affairs needs to review the change and approve. These can be obtained through separate resolution to be passed based on the permission. Name change will however, not have a fundamental change to the corporate entity. Aspects such as the rights & obligations of the company will continue to remain as before. Likewise, any legal charges for or against the company will continue and not go invalid. Any new legal proceeding in the old name may also be filed by any consumer or shareholder and these will be valid.
Steps for incorporating the name change
The name change has to be discussed and agreed by all of the Directors of the company. As part of the legal process, a written notice has to be sent to each of the Directors address notifying the change. This should then brought to the Board meeting and a notice alongwith the agenda should be shared in the meeting. The new name for the Board to review has to be put forth in the Board meeting and enable 2 key resolutions to be passed at the end of the meeting; Firstly, the Company Secretary or Director needs to make an application to the registrar of companies for confirming the availability of the proposed name. This step is critical as no two companies in the same sector can exist with identical names. Secondly, upon receiving confirmation, there has to be an Extraordinary General Meeting called for to approve the new name and changes to MOA.
Application for Name reservation with Registrar of Companies
The Company Secretary or Director of the company has to present an application to the Registrar to confirm and reserve the proposed new name for the company. Form INC-1 is the application template, this along with the applicable fees prescribed in the Companies (Registration offices and fees) Rules, 2014, i.e, Rs. 1000 should be filed. The name selected should be in line with Rule 8 of the Companies (Incorporation) Rules, 2014. Form INC-1 is available online and can be downloaded from the website. The details for changing the name needs to be provided in Part B, C & D of the Form. The consensus based revised copy of the Board Resolution has to be attached with the Form. The approval provided by the Registrar of Companies is valid for a period of 60 days, within which the name change has to be incorporated.
EGM – Extraordinary General Meeting
Upon taking consensus of all the Directors, a resolution needs to be passed at the beginning of the name change process. With the confirmation of the Registrar of Companies, an EGM has to be conducted to ensure that the change is accepted by the Board. A notice explicitly stating the reason calling for an EGM has to be sent to Board members at least 21 days before the name change and should ideally be in writing to ensure that all of the stakeholders are available for the EGM. The details of interests or concerns raised by every Director and key stakeholders needs to be annexed to the meeting to ensure that all of the participants in the EGM understand the change, the meaning and impact on business caused due to the name change.
A minimum of 2 members should be present for the EGM to be valid. There needs to be voting to check if there are any differences and the proposal will be invalid if those disagreeing to the change is 3 times more than of those who are in agreement. This EGM is critical as the special resolution passed here will lead to the next step of fundamentally changing the Memorandum of Association.
Resolution to be filed with the Registrar – MGT 14
Upon changing the MOA, post the EGM, as per Sec.13(6) the revised MOA needs to be filed with the Registrar of Companies. The required forms MGT 14 with the annexures need to be updated and the special resolution that is passed to alter the MoA of the company needs to be filed with the registrar by paying the fee. This should be completed within 30 days from the date of passing the resolution as per the Companies Rules, 2014. This is also available and can be downloaded from the website.
Central Government Approval – FORM INC 24
Form INC 24 along with the required fees and documents need to be filed to the Central Government for altering the MOA and change in name. The Companies Rules, 2014 Rule 29 specifically lays out that a change of name shall not be allowed to a company which has defaulted in filing its annual returns or has defaulted in repayment of matured deposits or debentures or interest on deposits or debentures.
The Form INC 24 is available online and can be filed along with the required fees for obtaining the revised Incorporation Certificate. This is provided in Form INC 25, which confirms a change in name of company.
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Section 13(2) and 13(3) of the Companies Act, 2013
Section 173 (1) of the Companies Act, 2013
Section(4) of the Companies Act, 2013
Rules 8,9 of the Companies (Incorporation) Rules, 2014
Section 100(1) of the Companies Act, 2013