NAME AND CLASS OF THE COMPANY

UPDATE: on 30^th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

After reading my posts on Formation of a Company and Alteration of Memorandum and Articles, few readers suggested that I should cover provisions related to names in one place. I will discuss these provisions here along with provisions related to conversion of company from one class to another.

Name of the Company (Section 4):

The name of the company shall not be identical with or resemble too nearly to the name of an existing company.

The name of the company shall not constitute an offence under any law for the time being in force or is undesirable in the opinion of the Central Government.

A company shall not be registered with a name which contains any word or expression which may give impression that company is connected with any government or authority or any such word or expression as prescribed unless the previous of the Central Government has been obtained.

On application made by a person, the Registrar may reserve the name for a period of sixty days from the date of the application.

If it is found that name was applied by furnishing wrong or incorrect information, then the reserved name shall be canceled and fine may be imposed. If the company has been incorporated with such name, the Registrar may, after giving the company an opportunity of being heard— (i) either direct the company to change its name within a period of three months, after passing an ordinary resolution; (ii) take action for striking off the name of the company from the register of companies; or (iii) make a petition for winding up of the company.

Name in case of companies under Section 8:

Where a person or an association of person proposed to be registered as a limited company –

(a)  has in its object the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(b)  intends to apply its profit or other income in promoting its objects; and

(c)  Intends to prohibits the payment of any dividend to its members;

The Central government by license issued and on specified condition allows that person or association of person to be registered as a limited company without addition to its name of the word “Limited” or Private Limited. The registrar shall on application, register such person or association of person as a company.

Change in Name:

Any Change in name of the company shall be subject to sub – section (2) and (3) of Section 4. Any such change of name shall have effect only after approval of Central government in writing. This approval is not required in case of conversion of company from one class to another, like Public Company converting into One Person Company.

In case of change in name, the registrar shall enter replace new name for old name in its register and shall issue a fresh Certificate of Incorporation. The change in name shall be effective only on issue of this fresh certificate of incorporation.

Rectification of Name (Section 16):

If a company is registered by a name or has changed to a new name, which inadvertently or otherwise is a name which should not be permitted, will be asked to change its name.

In first case, the Central Government has opinion that the name is identical with or too nearly resembles the name by which an existing company has been registered. In this case Central government may direct the company to change its name. The company shall change its name by adopting an ordinary resolution within three months from issue of the direction.

In second case, an application by a registered proprietor of a trademark made that the name is identical with or too nearly resembles to a trademark registered in his name, within three years of incorporation or change of the name of the company. Where Central Government has opinion in favour of applicant, it may direct the company to change its name. The company shall change its name by adopting an ordinary resolution within six months from issue of the direction.

The company shall within fifteen days from such change, give a notice of change in name to the Registrar along with a copy of order of the Central government.

For default under this section, the company shall be punishable with fine of one thousand rupees for every day during which the default continues and every officer who is in default shall be punishable with fine which shall not be less than five thousand rupees but which may extend to one lakh rupees.

Conversion of Registered Companies (Section 18)

Any company may convert itself as a company of other class by alteration of memorandum and articles of the company.

The company shall make an application for this purpose with the registrar. After satisfying himself, the registrar shall close the former registration of the company and issue a fresh certificate of incorporation as if it is a first registration.

This conversion shall not affect any debts, liabilities, obligations or contracts incurred or entered into by or on behalf of the company and shall remain enforceable as such.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.