Would you like if the name of your company is not of your choice? Would you like if the name of your company is alphanumeric beyond your control?
New Rule 33A of the Companies (Incorporation) Rules, 2014 may create such a possibility. The root of the new rule is under Section 16 of the Companies Act, 2013.
Section 16, till this notification, was one of the marginalized provisions of the Companies Act, 2013 ignored by consultants and companies alike.
Sub-section (1) of Section 16 simply says:
If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, in the opinion of the Central Government, is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, it may direct the company to change its name.
The central Government (powers delegated to the Regional Directors under Notification S.O. 4090(E) dated 19 December 2016) may form such opinion suo motu or on an application made by a registered proprietor of a trademark. The central Government may form such opinion at any time. However, an application by the registered proprietor should be within three years of incorporation or registration or change of name of the company.
If the Central Government (Regional Director) forms such an opinion, it may direct the company to change its name. The company shall change its name within three months from the issue of such direction after adopting an ordinary resolution for the purpose.
What will happen if the company does not change its name as per these directions?
Presently till 1 September 2021, when Notification S.O. 2904(E) dated 22 July 2021 will come into force, such company and its officers in defaults attract a fine up to one lakh rupees only.
What will happen if the company pay such a fine and stay idle?
The Companies Amendment Act, 2020 change the position by amending subsection (3) of Section 16(3) of the Companies Act 2013. This amended section 16(3) will come into force with effect from 1 September 2021.
Amended Section 16(3) has real teeth:
If a company is in default in complying with any direction given under sub-section (1), the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter:
Newly inserted Rule 33A provides procedure for Section 16(3):
In case a company fails to change its name or new name, as the case may be, in accordance with the direction issued under sub-section (1) of section 16 of the Act within a period of three months from the date of issue of such direction, the letters “ORDNC” (which is an abbreviation of the words “Order of Regional Director Not Complied”), the year of passing of the direction, the serial number and the existing Corporate Identity Number (CIN) of the company shall become the new name of the company without any further act or deed by the company.
When such eventuality happens, the name of the company may look like:
Name of the Company: ORDC2021RDD000U2021DL2021PTC123456 Private Limited
Does it not look like an innovative name? All documents of the company shall display its name and CIN as under:
ORDC2021RDD000U2021DL2021PTC123456 Private Limited
Order of Regional Director Not Complied
(under section 16 of the Companies Act, 2013)
Rule 33A further say:
A company whose name has been so changed shall at once make necessary compliance with the provisions of section 12 of the Act and the statement, “Order of Regional Director Not Complied (under section 16 of the Companies Act, 2013)” shall be mentioned in brackets below the name of company, wherever its name is printed, affixed or engraved.
It seems no company would like to have such a display below its innovative name. No such statement shall be required to be mentioned in case the company subsequently changes its name.
However, the rule provides a breather. The proviso of Rule 33A(1) says the provision for such forced name cannot be given where the company has already filed Form INC-24 for approval of the Central Government for change of its name.
The Certificate of Incorporation under Section 16 read with Rule 33A shall be issued by the jurisdictional Registrar of Companies on Form INC – 11C.
This certificate shall form part of the company history and documents.