This article has been written by Ms. Preksha Bothra, a 4th year BA LLB student from BMS College of Law, Bengaluru.
Introduction
A company name is a crucial aspect of its identity, and it serves as a branding tool. In India, the Companies Act, 2013, provides for the rectification of a company name. The rectification process ensures that the company’s name is in accordance with the law and meets the statutory requirements. This article aims to provide an overview of the procedure for rectifying the name of a company in India.
Grounds for rectification of a company name
The Registrar of Companies (RoC) is responsible for registering and maintaining records of companies in India. The RoC may rectify the name of a company if it violates the provisions of the Companies Act, 2013, or any other law in force. The following are the grounds on which a company name can be rectified:
- Similarity or identical nature of the name
If the name of the company is similar or identical to an existing company’s name, the RoC can rectify the name of the company. The RoC may also rectify the name of the company if it is similar or identical to a registered trademark.
- Misleading or offensive nature of the name
If the name of the company is misleading or offensive, the RoC may rectify the name of the company. The RoC may also rectify the name of the company if it violates any provisions of the law.
- Non-compliance with the naming rules
If the company name does not comply with the naming rules as specified in the Companies Act, 2013, the RoC may rectify the name of the company. For example, if the company name does not include the word ‘Private Limited’ or ‘Limited’ as applicable, the RoC may rectify the name of the company.
- Non-use of the name
If the company has not used its name for a period of two years or more, the RoC may rectify the name of the company. The company must use its name to maintain its registration and avoid any issues with the RoC.
Procedure for rectification of a company name
The procedure for rectifying the name of a company in India involves the following steps:
- Board Resolution
The first step in the rectification process is to pass a board resolution. The board of directors must pass a resolution to change the name of the company. The resolution must specify the new name of the company and the reason for the change.
- Availability of the new name
Once the board resolution is passed, the company must check the availability of the new name. The company must ensure that the new name complies with the naming rules as specified in the Companies Act, 2013. The company must also ensure that the new name is not similar or identical to an existing company’s name or registered trademark.
- Application to the RoC
After ensuring the availability of the new name, the company must file an application with the RoC. The application must be in the prescribed form and must include the following information:
- The old name of the company
- The new name of the company
- The reason for the name change
- The board resolution
- The consent of the members
- The fee as prescribed in the Companies (Registration Offices and Fees) Rules, 2014
- Approval from the RoC
Once the application is filed, the RoC will examine the application and verify the information provided. The RoC may also conduct a search to ensure that the new name is not similar or identical to an existing company’s name or registered trademark.
If the RoC is satisfied with the application, it will issue a certificate of incorporation with the new name. If the RoC is not satisfied, it may reject the application and provide reasons for rejection.
- Publication of the name change
Once the RoC approves the name change, the company must publish a notice of the name change in the Official Gazette of India and in a newspaper circulating in the district where the registered office of the company is situated. The company must also update its name on all its official documents, such as the memorandum and articles of association, letterheads, business cards, and website.
Appeal against the RoC decision
If the RoC rejects the application for the name change, the company has the right to appeal against the decision. The company may appeal to the Company Law Board (CLB), which is an appellate authority for disputes related to company law. The CLB has the power to review the RoC’s decision and may direct the RoC to rectify the name of the company if it finds the RoC’s decision to be incorrect.
However, the appeal must be made within a specified time limit, which is usually 60 days from the date of receipt of the RoC’s decision. The appeal must be made in the prescribed format and must include the grounds of appeal and any supporting documents. The CLB may conduct a hearing to hear the arguments of both parties before making its decision.
Consequences of non-compliance with the naming rules
Failure to comply with the naming rules as specified in the Companies Act, 2013, may result in penalties or fines. The RoC may also reject the application for the name change and may not issue a certificate of incorporation with the new name. In some cases, the RoC may even initiate legal proceedings against the company for violation of the naming rules.
Therefore, it is important for companies to ensure that their names comply with the naming rules and are not similar or identical to existing company names or registered trademarks. Companies must also ensure that they use their names to maintain their registration and avoid any issues with the RoC.
Compulsory rectification of the name
In some cases, the RoC may direct a company to rectify its name if it is found to be in violation of the naming rules. The RoC may issue a notice to the company to rectify the name within a specified time limit. If the company fails to rectify its name within the time limit, the RoC may initiate legal proceedings against the company.
The RoC may also direct the company to change its name if it is found to be identical or similar to an existing company name or registered trademark. The RoC may issue a notice to the company to change its name within a specified time limit. If the company fails to change its name within the time limit, the RoC may initiate legal proceedings against the company.
Rectification of the name in case of amalgamation or merger
In case of amalgamation or merger of companies, the name of the resulting company may be changed. The procedure for changing the name of the resulting company is similar to the procedure for changing the name of a company. The resulting company must pass a board resolution for changing the name, check the availability of the new name, file an application with the RoC, and obtain approval from the RoC. The resulting company must also publish a notice of the name change in the Official Gazette of India and in a newspaper circulating in the district where the registered office of the company is situated.
Rectification of the name in case of change of business activity
In case a company changes its business activity and the new business activity is not reflected in the name of the company, the company may be directed to rectify its name. The procedure for rectifying the name in such cases is similar to the procedure for changing the name of a company. The company must pass a board resolution for changing the name, check the availability of the new name, file an application with the RoC, and obtain approval from the RoC. The company must also publish a notice of the name change in the Official Gazette of India and in a newspaper circulating in the district where the registered office of the company is situated.
Conclusion
Rectification of a company name is a crucial process that ensures that the company’s name is in accordance with the law and meets the statutory requirements. The procedure for rectifying the name of a company in India involves passing a board resolution, checking the availability of the new name, filing an application with the RoC, obtaining approval from the RoC, and publishing the name change. Companies must ensure that their names comply with the naming rules and are not similar or identical to existing company names or registered trademarks. By following the procedure for rectifying a company name, companies can maintain their registration and avoid any issues with the RoC.