In this article, Sandip Ghosh, a student pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the laws to be kept in mind while naming your company

Introduction

Why is Company name important?

The Company name whatever we choose plays a monumental role in the brands’ growth and perception, i.e. it can completely make or break a Company. We are aware of the power of brand image in today’s world for e.g. Apple, Amazon etc. and how their names are creating magic in people’s mind. The Company name puts a deep impact on the Customer’s mind in various ways. Some of the ways how a company’s name plays a significant role are discussed below:

It’s the first thing the customer sees

The first thing a Customer sees is the name of the Company which creates an impression in his/her mind about the nature of the business. A catchy name will always help in putting the Brand’s presence in the customer’s mind and help in retention as well.

It tells about the company’s nature of work

Let’s take the example of Apple, the specific values and beliefs are attached to the name, and the brand is also solidified because of the same.

It provides a unique take on the Industry

There could be different companies which deliver similar kind of services or sales product. The name of the Brand or Company creates the difference in Customer mind.

The above-mentioned things clearly state that how important it is to choose the correct name for a Company. 

Guidelines as per Company Act 2013

The draft rules under the Companies Act 2013 talk about the naming of the Company such as (Private Limited, Limited or LLP). As per the Act, the name should be unique and desirable.

Conditions to be followed for a name to be ‘unique and desirable’

• The proposed name should not be identical with another surviving name: To identify the name is identical or not following measures are to be taken.
• Plural Version:  The plural version of any words appearing in the name of an existing Company does not make a name unique. For e.g., If a company exists with a name of” Axe Foundation Private limited Company” already then the name “Axes Foundation Private Limited “will not be allowed or be treated as unique.
• Types, Letter case, Spacing or Punctuation marks: Changes made in the name as mentioned are not treated as unique. For e.g., If a company exists in the name of “Duplex India Private limited” then the names such as “DUPLEX India Private limited”, “DuplexIndia Private Limited”, “Duplex-India Private Limited “ are not allowed.
• Joining or Separating Words: For e.g. If a company exists with a name of” Acme Foundation Private Limited” then “AC ME Foundation Private Limited” or ”ACMEFOUNDATION Private Limited” is disallowed.
• Using different tense or number with the word: For e.g., If a company exists in the name of “Duplex India Private limited” then “Duplex’s India Private Limited” or “Duplex 1 India Private Limited” is disallowed.
• Different Phonetic variations or spelling variations: For e.g. If a company exists in the name of “D.P. Private limited” then” D and P Private Limited” or “Dee Pee Private Limited” is disallowed.
• Misspelling of the word intentionally: For e.g. If a company exists in the name of “Duplex India Private limited” then “Duuplexx India Private Limited “ is disallowed.
• Adding Internet designations: For e.g., If a company exists in the name of “Duplex India Private limited” then “ Duplex India.com Private limited” or “Duplex India DOT COM Pvt Limited”  is not allowed.
• Addition of Common Names or titles:  The name such as New, Modern, Shri, Shree etc. does not provide a unique identification. For e.g., If a company exists in the name of “Duplex India Private limited” then” The Duplex Private Limited “ or” New Duplex India Private Limited will not be allowed.
• Addition of name of Place: Only adding a name of a place does not make it unique. It may be done only if no objection has been obtained from the existing Company by submitting Board resolutions. For e.g., If a company exists with a name of” Acme Foundation Private Limited” then” Acme India Foundation Private limited” will not be allowed.
• Combination difference of the same words: For e.g., If a company exists with a name of” Contractors & Builders Ltd” then “ Builders & Contractor Ltd” will be disallowed.
• Translation of words: If the proposed name is found to be the translation or conversion of Hindi or English of the existing company it will be disallowed.

The proposed name should not be undesirable

The name is considered to be undesirable if it violates the following rules:

• Emblem and Name Act: The proposed name should not violate rule no 3 of the Emblems Act 1950.
• Violation of the rules of trademark: The name that had been proposed should not violate the rules of a registered trademark or a trademark which is subject of 8 applications for registration unless the consent of owner or applicant of registration is obtained.
• Offensive words: The proposed name should not contain any words that are offensive to any section of people.

The other conditions behind the above rules

• The proposed name should be in consonance with the principal object of the Company set out in the memorandum of association.
• If the companies main business is of finance, chit fund, investments, securities etc., the Company must put the same indication in their proposed name also.
• The name that indicates a separate type of business constitution or legal person such as co-operative, Inc., shekari, trust, LLP, partnership etc. then it is not allowed.
• The name containing British India is not allowed.
• The name which is associated with an embassy, foreign government or consulate is not allowed.
• Any name proposed that implies of any Patriotic person, highly positioned person in government or a national hero, then that name will not be considered.
• The abbreviation or vague words used in names are not considered.
• If any Company had been dissolved as a result of the liquidation processing same name could be used after two years from the date of dissolution.
• The proposed name if found identical to the name of the Company under Section 248 of the Act was struck off, then it is not allowed up to twenty years from the publication in the official gazette being so stuck off.
• The name that is identical of an LLP or LLP under liquidation process or stuck off for five years is not allowed.
• If the proposed name carrying the following in it such as Bank, Institute, Stock Exchange etc. then it is mandatory to take clearance from the respective regulators such as IRDA, RBI, SEBI, MCA etc.
• The word “state” can only be used in case of Government Company.
• The names that contain a generic name such as a continent, country, state, city such as, Haryana Ltd, Gujarat Ltd etc. and general one like Cotton Textile Mills, Silk Manufacturing Ltd are not allowed.
• If a proposed name contains any name of foreign country or states of foreign countries, it can only be allowed if the applicant can produce a relevant document such as MOU with that country. No one is allowed to use the name of any enemy country.
• Approval required from Central Government for using the following listed names in the Company such as Board, Commision, Authority, Undertaking, National, Union, Central, Federal, Republic, President, Rashtrapati, small-scale industries, Khadi and village industries corporation, Chief Minister, Minister, Forest Corporation, Development scheme, statute or  statutory, court or judiciary, Governor, development scheme, state, India, Bharat, etc.

Companies Incorporation Act Amendment rules 2016

The Ministry of Corporate Affair (MCA) had made an amendment on rule no.8, 9, 36 of Companies Incorporation Act 2014 (hereinafter referred as the principal rules) vide notification dated January 22, 2016.

The changes in the principal rules that are made stated as follows:

Amendment in Rule 8

Rule no. 8 of the principal rules state the names that are undesirable for incorporating a name for a Company. The Government had made some changes by omitting the following conditions in the rules by the amendment:

• The name which is not in consonance with the principal objects of the Company as set out in the memorandum of association.
• The proposed name is vague or an abbreviated name such as “ABC Limited” or “23K limited” or abbreviated name based on the promoter.
• The name of the Company will be considered undesirable if it does not disclose the scope of the scale of the activities which would be beyond the resource of its disposal.
• If the Company changes its activity, the name of the Company must be changed in a line of the activity within six (6) months’ time period complying with all the provisions that are applicable for changing the names.
• If the name that is proposed is other than the name(s) of the promoters or their close blood relatives, no objection from such person should be attached with the application of the name. In case the name used is of the relatives, a copy of proof need to be attached along with the application to furnish the significance for using of the coin words made out of the name of promoters or their relatives.

Amendment in Rule 9

Reservation of name

The application for reservation of the name must be made through the form no. INC 1 along with the fees as provided in the Companies (Registration and fees rules 2014), which may be rejected or approved by the Registrar “Central Registration Center. Therefore, it is mandatory that all the application for names will be approved by Registrar “Central Registration Center, New Delhi.

Amendment in Rule 36(12)(ba)

After resubmission of the form for two times, a third opportunity must be provided to rectify the same by the Registrar if he founds the documents is incomplete or defective.

A time limit of 30 days is allotted for resubmission.

In the principal rules, the Rule 36 (12) (c) for the opportunity of two submissions has been revised with three submissions.

The Form INC -1. has also revised.

With the introduction of the Digital system in the Country, Government had taken steps to introduce digitalization in filling incorporation of a Company in the year 2018.

The MCA vide notification GSR_E dated 20.01.2018 in an exercise of the power conferred by subsections (1) and (2) of Section 469 of Company Act 2013(18 of 2013) has made an notified the Companies Incorporation Act 2018, further to the amendment of Company Act 2014. It had been introduced on 26.01.2018.

The major changes in key points have been highlighted here

• The incorporation of the Company can be done with the prior approval or using spice form wherein the incorporation form is included in the name is acceptable to MCA. The entrepreneurs can now submit their unique name of the company through the SPICE form saving valuable time and money. If they wish to use an existing name of a Company or LLP or trademark then prior approval can also be obtained from MCA.
• The introduction of RUN form has also simplified to reserve a Company name even before obtaining the digital signature. A fee of Rs.1000/-only is to be provided irrespective of whether the name is approved or not.
• To apply with the RUN web-form one have to create a free MCA account. After logging into the account, the Entrepreneur can choose a type of Company he wishes to register and provide a single name to get it checked against the MCA database of Company and LLP name.
• With the submission of Rs.1000/-, the requested name will be checked by the MCA personnel at the Central Registration Center (CRC) against the company, LLP or trademark after it is found to be a unique name and conforms to Company Act 2013 as per the database an email of confirmation will be sent to the registered email id of the applicant.

The Company name availability can be checked through here

The MCA is constantly trying to provide a simplified way to the applicants for incorporation of the Company. They had offered zero fees for new Startups hence the entrepreneurs can save few thousands at the time of incorporation. Though the incorporation fees have been made zero for the SPICE form, eMOA, eAOA but the stamp duty will remain there as per the state of incorporation.

Conclusion

The importance of the name of the Company is not only just a name; it’s the identity of an entire brand. It deserves time and attention, and when handled properly, it’ll change a business forever. With the changing world and increasing interest Government is also moving a step ahead to simplify the mode of incorporation through digitalization helping and inviting the new business entrepreneur to fulfil their dreams.