A very initial and important step is to choose a name for the business and apply for its registration. But choosing a correct name is not so easy. There are some rules framed by the government under the Companies Act, 2013, which the applicant needs to follow before making application to the Registrar. Section 4(2) & (3) and Rule 8 of Companies (Incorporation) Rules, 2014 is applicable for the name of the company only.
As per Section 4(2) of the Companies Act, 2013: the name of the company shall not:
- Be identical with and resemble too nearly to the name of the existing company registered under this Act or any other previous law
- Its use by the company:-
- Will constitute an offence under any law for the time being in force; or
- Is undesirable in the opinion of Central Government
As per Section 4(3) of the Companies Act, 2013: Without prejudice the provision of section 4(2), the company shall not be registered with the names which contain-
- Any word or expression which is likely to give the impression that the company is involved in any patronage activity of the Central Government, State Government, local authorities, etc. or
- Such words or expressions as may be prescribed.
Rule 8 of Companies (Incorporation) Rules, 2014: It contains the provisions relating to undesirable names
- In determining whether a proposed name is identical with another, the difference on account of the following shall be disregarded:-
- The words like Private Limited, Pvt Ltd, (P), Limited, Ltd, LLP, etc;
- Words at the end of the name- company, and company, co. corp, etc;
- Plural version of any word appearing in the name of the company;
- Type and case of the letter, the spacing between letters and punctuation marks;
- Joining the word together or separating them doesn’t make any difference;
- Use of a different tense or number of the same word doesn’t make any difference;
- Using different phonetic spelling or spelling variation shall not be considered as any difference
- Mispelt words whether intentionally mispelt or not;
- The addition of internet related words like, .com, .org, .in, .co, .edu, etc;
- The addition of a word like New, Modern, Shri, Shree, Sai, Jai, Sir, etc; does not make any distinguishable identity if the applied name is similar or identical with an existing company
- Different combination of a word like “(NAME) Medical and Healthcare Private Limited” by “(NAME) Healthcare and Medical Limited” is not considered as a difference
- If the proposed name is the translation word or Hindi or English
- The name shall be considered undesirable, if:
- It attracts the provisions of section 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950 (12 of 1950)
- It includes the names of a trademark registered or applied for registration under Trademark Act, 1999 unless the consent of the owner or the applicant for registration has been taken or produced by the promoters.
- It includes any word or words which are offensive to any section of the people.
- The name shall also be considered undesirable, if-
- the proposed name is identical with or too nearly resembles the name of a limited liability partnership,
- the company’s main business is financing, leasing, chit fund, investments, securities or a combination thereof, such name shall not be allowed unless the name is indicative of such related financial activities, viz., Chit Fund or Investment or Loan, etc.;
- it resembles closely the popular or abbreviated description of an existing company or limited liability partnership;
- the proposed name is identical with or too nearly resembles the name of a company or limited liability partnership incorporated outside India and reserved by such company or limited liability partnership with the Registrar:
Provided that if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of word India or name of any Indian state or city, if otherwise available;
- any part of the proposed name includes the words indicative of a separate type of business constitution or legal person or any connotation thereof e.g. co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF, firm, Inc., PLC, etc.,
- the proposed name contains the words ‘British India’;
- the proposed name implies association or connection with embassy or consulate or a foreign government;
- the proposed name includes or implies association or connection with or patronage of a national hero or any person held in high esteem or important personages who occupied or are occupying important positions in Government;
- the proposed name is identical to the name of a company dissolved as a result of liquidation proceeding and a period of two years have not elapsed from the date of such dissolution:
Provided that if the proposed name is identical with the name of a company which is struck off in pursuance of action “or under section 560 of the Companies Act, 1956” then the same shall not be allowed before the expiry of twenty years from the publication in the Official Gazette being so struck off;
- it is identical with or too nearly resembles the name of a limited liability partnership in liquidation or the name of a limited liability partnership which is struck off up to a period of five years;
- the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual fund’ etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA etc. have been complied with by the applicant;
- the proposed name includes the word “State”, the same shall be allowed only in case the company is a government company;
- the proposed name is containing only the name of a continent, country, state, city such as Asia limited, Germany Limited, Haryana Limited, Mysore Limited;
the name is only a general one, like Cotton Textile Mills Ltd. or Silk Manufacturing Ltd., and not Lakshmi Silk Manufacturing Co. Ltd;
- the proposed name includes the name of any foreign country or any city in a foreign country, the same shall be allowed if the applicant produces any proof of the significance of business relations with such foreign country like Memorandum Of Understanding with a company of such country:
Provided that the name combining the name of a foreign country with the use of India like India Japan or Japan India shall be allowed if, there is a government to government participation or patronage and no company shall be incorporated using the name of an enemy country. Explanation.- For the purposes of this clause, enemy country means so declared by the Central Government from time to time.
- The applicant shall declare in affirmative or negative ( to affirm or deny ) whether they are using or have been using in the last five years, the name applied for incorporation of company or LLP in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and if, yes details thereof and No Objection Certificate from other partners and associates for use of such name by the proposed Company or LLP, as the case may be, and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not .
- The following words and combinations thereof shall not be used in the name of a company in English or any of the languages depicting the same meaning unless the previous approval of the Central Government has been obtained for the use of any such word or expression-
(l) Small Scale Industries;
(m) Khadi and Village Industries Corporation;
(n) Financial 8[Omitted] Corporation and the like;
(q) Development Authority;
(r) Prime Minister or Chief Minister;
(u) Forest corporation;
(v) Development Scheme;
(w) Statute or Statutory;
(x) Court or Judiciary;
(z) the use of word Scheme with the name of Government (s) , State , India, Bharat or any government authority or in any manner resembling with the schemes launched by Central, state or local Governments and authorities; and
- For the Companies under section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc. Every company incorporated as a “Nidhi” shall have the last word ‘Nidhi Limited’ as part of its name.
- The names released on change of name by any company shall remain in database and shall not be allowed to be taken by any other company including the group company of the company who has changed the name for a period of three years from the date of change subject to specific direction from the competent authority in the course of compromise, arrangement and amalgamation.