Introduction
The name of a company forms a crucial part of the business. The name of the Company helps to make or break the identity of a business. Since it is one of the most important elements of branding a business, it leaves a lasting impact on the clients and the affiliates of a particular business. Therefore, the brains of the Company put in a lot of thought into the name of the Company. Being one of the most important elements of incorporating a company, the Memorandum of Association (hereinafter referred to as “MOA”) even has a dedicated Clause that enumerates the name of the Company. Although the name of a company is proposed during the formation of the business or company, it is not unalterable. Therefore, the name of the Company can be changed provided the necessary steps have been followed. In this Article, we will be elaborating on Company Name Change Procedure in India.
Alteration of Memorandum of Association
When the name of the Company is changed, the MOA of the said Company will be altered in the process. The MOA enumerates the powers of the company. The Company shall confine itself to the aforesaid powers. Any act by the Company in abrogation of the MOA shall be declared void and inoperative. The MOA of a Company is one of the most important documents of a Company. This is primarily because the MOA consists of five essential clauses, namely, the Liability clause, the Object clause, the Name clause, the Registered Office Clause and the Capital Clause. Since the MOA contains the aforementioned Clauses, the applicable law i.e., the Companies Act, 2013 mentions method for alteration of the MOA. Therefore, it cannot be said that an MOA is unalterable.
Undesirable Names
While proposing a name for the Company, section 4 (2) and section 4 (3) of the Companies Act, 2013 and Rule 8 and Rule 8A of the Companies Incorporation Rules, 2014 shall be complied. As per section 4 (2), the name shall not be identical to an existing registered company. Furthermore, the proposed name must not even resemble the existing registered company. Section 4 (3) bars any company from using such expression and words that might create a presumption that the said company is associated or connected with some local authority or the Government or its corporates or any other body. The term Government can be understood to mean Central or State Government.
The name of a Company shall not be undesirable. It must not be in contravention of any laws. The following consists of a few (not all) criterions as per Rule 8 and 8A that would help summarize the concept of ‘similar names’ and ‘undesirable names’:
- The name shall not be a similar name. This means that the name shall not be similar to that of an existing company. Eg: the name Farrera Technologies is similar to Ferrera Technologies Mumbai Ltd, the name Fun for Laugh Pvt. Ltd. is similar to Fun for Laughs Pvt. Ltd etc.
- The name shall not be inconsistent with section 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950.
- The name shall not include the name of a trademark registered as per the applicable laws.
- The name of a Company shall not include such words that would deem to be offensive to a group of persons.
- Where a name is likely to deceive by suggesting a connection or association with a company it may be regarded as ‘too similar’.
Name Change Procedure of Company
Section 13 states that the name of a company can be changed by passing a special resolution (hereinafter referred to as “SR”) at the general meeting (hereinafter referred to as “GM”). Additionally, an approval of the Central Government may be required when the change of name includes change from Public Company to Private Company and Private Company to Public Company.
The conditions for Change of Name of a Listed Company are different from other types of Companies. This is because SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 specify certain conditions that must be fulfilled in order to change the name of the listed company. The following are the aforesaid conditions that a listed Company needs to comply with prior to changing the name of the said Company:
- 1 year should have elapsed from the date of last name change;
- A minimum of 50% of the total revenue in the preceding 1 year period must have been accounted for by the new activity suggested by the new name; or
- The amount invested in the new activity/project shall be a minimum of 50% of the assets of the Company.
E-forms required to be filed for effecting Change of Name
The following is a list of e-forms that need to be filed for changing the name of a Company:
- MGT-14 needs to be filed once the name is approved.
- INC-24 (eForm) needs to be filed in order to give effect to the change in name.
- INC-25 for the issue of incorporation certificate under new name.
- The Company shall reserve the name via RUN.
Company Name Change and Procedure for Altering Memorandum of Association
1) In order to change the name of a Company, it is necessary to get the approval of the Board Members by passing a Board Resolution (hereinafter referred to as “BR”). The Board would even propose a new name for the Company or give authorization for filing an application for Approval of the name decided by the Board.
2) The next step would be to confirm if the proposed name is available. An application shall be filed in RUN for the reservation or availability of the proposed name. This must be done by checking if it is available with the MCA and Trademark Registry. As mentioned herein above, the name shall not be inconsistent with Companies (Incorporation) Rules, 2014’s Rule 8.
3) Reserve Unique Name i.e., RUN form is needed to be filed along with a No Objection Certificate (NOC) of the Owner or applicant of the Trademark with whom the proposed name is colliding i.e., it is either based on such Trademark or subject matter of a trademark that is still pending registration.
4) The Registrar, Central Registration Centre may either grant his approval or reject the name. Subject to rejection or disapproval of the name, the said Company will get another chance to resubmit the name. Where the said Registrar approves of the name, he shall issue a letter certifying the same.
5) Upon receiving approval, a Board meeting shall be held to hold an Extra–Ordinary General Meeting (hereinafter referred to as “EGM”) in order to facilitate the alteration of the Name Clause. Once the Special Resolution for holding an EGM has been passed, the notice for the same shall be issued to all concerned parties.
6) After passing the EGM, the Special Resolution shall be filed by the Company for altering the MOA with the ROC.
7) E-form MGT 14 needs to be filed with the Registrar. MGT-14 shall be filled in accordance with Section 117. It shall be filed with the Certified True Copy of the Special Resolution with explanatory statement, the altered MOA along with the AOA and the Certified True Copy of the BR (optional). INC–24 form shall be filed in order to make an application for the fresh certificate of incorporation within 30 days along with Minutes of the member’s meeting and certificate of incorporation with the altered MOA and AOA (optional). The ROC may issue the New Certificate of Incorporation in Form INC – 25 only post completion of the filing of the aforementioned forms.
8) All the concerned Authorities shall be intimated. The new name shall replace the old name on the name and sign boards. The new name is to be added to all the documents, books, registers and records that are crucial.
Conclusion
While it may seem like a lucid task, changing the name of a company involves quite a few steps. The procedure must be followed to avoid any future legal complications. This is because the name change process also involves alteration in the charter documents of the Company. These Charter documents can be easily accessed by the public. Therefore, the concerned officers in charge of carrying out the name change process must make sure that they are following all the necessary steps as per the most recent applicable laws, Rules and Regulations.
FAQs on Company Name Change Procedure
When is a Company barred from changing its Name?
A Company is barred from changing its name on failure of filing its annual statements with the Registrar. Further, in case of failure to pay or repay mature deposits, debentures or interest, the Company shall not be allowed to change its name. If the aforesaid conditions are met with, the Company shall be allowed to change its name.
Under what circumstances can a Company change its name?
A Company is entitled to change its name in the following circumstances:
a) Conversion of private limited company into public limited company, which would entail changing its name from a Private Company to a Public Company, or
b) Conversion of public limited company into private limited company which would entail changing its name from a Public Company to a Private Company,
c) Change of name from PQR to RST.
References
- https://www.lawrbit.com/companies-act-procedures/change-in-name-of-the-company/
- https://www.taxwink.com/blog/name-change-of-company-mca-procedure
- https://ca2013.com/rule-8-companies-incorporation-rules-2014/#:~:text=%2D(1)%20A%20name%20applied,)%2C%20the%20names%20are%20same.
- https://taxguru.in/sebi/checklist-change-listed-entity-sebi-lodr-2015.html
- Setting Up of Business Entities and Closure Module by ICSI.
