In this blog post, Ankit Sahoo, an Associate with Hammurabi and Solomon, Delhi and a student pursuing  a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the procedure to change the name of a private company. 

 

Introduction

The name of a company is regarded as the identity of a company, both public and private. The Memorandum of Association (MoA) of the company consists of the name clause of the company; hence change in name ultimately results in the alteration of the MoA. The name that is adopted at the time of incorporation of the name can be changed later on. This can be done with the approval of the shareholder and Ministry of Corporate Affairs (MCA). The approval of the shareholders is required through a special resolution plus permission from the MCA is required. The change of name of the company shall not have any effect on the legal existence as a corporate entity, i.e., changing the name of the company will not create a new entity. Therefore, we can say that change of name of the company shall not:

• Affect any rights or obligations of the company
• Render defective any legal proceeding by or against the company
• Affect any legal proceeding by or against the company pending in the old name of the company

A company by being registered under the Companies Act, 2013 (from now on known as ‘the Act’) inherits the concept of corporate personality or attains the status of the separate legal entity. The company being a separate legal entity has its name and seal. All the officers of the company are the representatives of the company, it being an artificial person.

The Act mandates a public company to entail the word ‘Limited’ at the end of the company’s name whereas in the case of a private company the words ‘Private Limited’ is to be added at the end.[1] A company after its incorporation can later change its name if it wants to. The company has to follow the procedure stipulated under the Companies (Incorporation) Rules, 2014. Sec.13(2) & (3) of the Act deals with the alteration of the MoA on the name clause. A company requires approval from the registrar of companies under the Ministry of Corporate Affairs. However, no approval is required when there is only an insertion or deletion of the word “private” in the new name. This is the case when a public company converts into a private company or vice versa.

 

Step – I (Board Resolution)

A notice has to be drafted along with its agenda for the Board meeting, and the same has to be issued in not less than seven days from the date of the meeting. The notice has to be sent to every director at his registered address, in handwritten form by hand delivery or by post or electronic means. [2] The proposal for the change of name of the company and the suggestion of the new name must be put forth in the board meeting. Subsequently, two resolutions have to be passed in the meeting namely:

• Firstly, to authorize a Director or Company Secretary of the company to make an application to the registrar of the companies for ascertaining the availability of the proposed name.
• Secondly, pass a resolution to convene an extraordinary general meeting (EGM) (No Objection Resolution) for approving the newly proposed name and making necessary changes in the MoA and AoA.

 

Step – II (Application for Reservation of Name)

The authorized Director or Company Secretary of the company has to make an application to the Registrar to reserve the proposed name. The application has to be made in Form INC-1 along with the applicable fees prescribed in the Companies (Registration offices and fees) Rules, 2014, i.e., Rs. 1000.[3] The selection of the company name should be in accordance with Rule 8 of the Companies (Incorporation) Rules, 2014.

The Form INC-1 is available on the MCA website in an electronic format. This can be downloaded from the site, and the form has instructions available in it which becomes very helpful for the applicant. The details for changing the name have to be filled Part B, C & D of the Form. A copy of the Board Resolution also has to be attached with the Form. Once the ROC approves the proposed name, the same is valid for 60 days.

 

Step –III (Extraordinary General Meeting)

A resolution to convene an EGM has already been passed in Step – I. The Board has to call an EGM now, and the notice for the same has to be sent twenty-one days before the date of the meeting either in writing or through electronic mode in such manner as may be prescribed.[4] The notice of the meeting has to be given to that entire list of persons as mentioned in Sec. 101(3) of the Act. Plus, the notice of the EGM must specifically mention the intention to pass a special resolution.

The notice has to be annexed with an explanatory statement which essentially specifies the nature of the concern or interest in respect of every director or manager, key managerial personnel and relatives of these persons mentioned.[5] The statement should also provide such other information which would enable the persons to understand the meaning, scope, and implication of the business item that would be discussed thereon, the change in the name of the company in our case.[6]

As we are talking about a private company, a quorum of two members to be personally present for the meeting is required. The quorum for a public company is different, but as we are talking about changing the name of a private company, in particular, we would stick private company itself. To pass a special resolution, the votes cast for the resolution should be three times the number of votes cast against the resolution[7]. The main reason behind calling an EGM and passing a special resolution is to approve the change of name of the company plus approving the alterations in MoA and AoA.

 

Step – IV (Filing of Resolution with the Registrar)

In accord with Sec.13(6) any resolution that is passed to alter the MoA of the company, the same has to be filed with the registrar. All the special resolutions are to be filed in Form MGT.14. This form can be downloaded from the MCA website. The form contains the instructions which can be referred to while filing. It should be noted that Form MGT.14 has to be filed along with the prescribed fee referred in the Companies (Registration offices and fees) Rules, 2014 within 30 days from the date of passing of such resolution.

 

Step – V (Approval from the Central Government)

Finally, an approval an application has to be filed to the Central Government for the alteration in the MoA for the change of name of the company. The application has to be made in Form INC 24 with the requisite fee of the Companies Rules, 2014. Rule 29 of the said Rules categorically mentions that a change of name shall not be allowed to a company which 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.

The said Form is again available on the MCA website in an e-format and the same has to be filed with a requisite fee as referred in the Companies (Registration offices and fees) Rules, 2014.

Now that all the formalities are met, the company has to wait for the new incorporation certificate that would be provided to it in Form INC 25 from the registrar of companies. Once the same is received the company’s name is officially changed.

 

 

 

[divider]

References:

[1] Sec 4(1)(a) of the Act

[2] Sec. 173(3) of the Act.

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

[4] Sec 101 (1) of the Act.

[5] Sec. 102 (1)(a) of the Act.

[6] Sec. 102(1)(b) of the Act.

[7] Sec. 114(2) of the Act