Company Assignment

NAME CLAUSE A company being a legal entity must have a name of its own to establish its separate identity. The name of the company is a symbol of its independent corporate existence. The first clause in the memorandum of association of the company states the name by which a company is to be known. The company may adopt any suitable name provided it is not undesirable. 6 names should be proposed by the company in order of priority. There are following pre-requisites for choosing a name for a company. According to section 4(2), the name stated in the memorandum shall not— 

be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or

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be such that its use by the company— i) will constitute an offence under any law for the time being in force; or ii) is undesirable in the opinion of the Central Government.

Section 4(3) provides that without prejudice to the provisions of section 4(2), a company shall not be registered with a name which contains— 

any word or expression which is likely to give the impression that the company is qin any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or

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such word or expression, as may be prescribed, unless the previous approval of the Central Government has been obtained for the use of any such word or expression.

As per section 4(4) a person may make an application, in such form ( Form INC1) and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out in the application as— (a) the name of the proposed company; or (b) the name to which the company proposes to change its name.

Section 4(5)(i) lays down that upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of 60 days from the date of the application. As stated above, section 4(2) provides that the name stated in the memorandum shall not be such that its use by the company, in the opinion of the Central Government, is undesirable. A name which is identical to or too nearly resembles, the name by which a company in existence has been previously registered, will be deemed to be undesirable The Registrar must make preliminary enquiries to ensure that the name allowed by him is not misleading or intended to deceive with reference to the Objects Clause of the memorandum [Methodist Church v. Union of India, (1985) 57 Com Cases 443 (Bombay)]. The Registrar is not, however, required to carry out any elaborate investigation at the time of registration of the company. Unless the purpose of the company appears to be unlawful ex-facie or is transparently illegal or prohibited by any statute, it cannot be regarded as an unlawful association [T.V. Krishna v. Andhra Prabha (P) Ltd., (1960) 30 Com Cases 437 (AP)]. The object is to prevent the use of a name likely to mislead the public. For example, a company is not allowed to use a name which is prohibited under the Emblems and Names (Prevention of Improper Use) Act, 1950, or suggestive of any connection with Government or of State patronage where there is none. In determining whether a proposed name is identical with another, the differences on account of the following shall be disregarded(a) the words like Private, Pvt, Pvt., (P), Limited, Ltd, Ltd., LLP, Limited Liability Partnership; (b) words appearing at the end of the names – company, and company, co., co, corporation, corp, corpn, corp.; (c) plural version of any of the words appearing in the name; (d) type and case of letters, spacing between letters and punctuation marks;

(e) joining words together or separating the words does not make a name distinguishable from a name that uses the similar, separated or joined words; (f) use of a different tense or number of the same word does not distinguish one name from another; (g) using different phonetic spellings or spelling variations shall not be considered as distinguishing one name from another. Illustration (For example, P.Q. Industries limited is existing then P and Q Industries or Pee Que Industries or P n Q Industries or P & Q Industries shall not be allowed and similarly if a name contains numeric character like 3, resemblance shall be checked with ‘Three’ also;) (h) misspelled words, whether intentionally misspelled or not, do not conflict with the similar, properly spelled words; (i) the addition of an internet related designation, such as .com, .net, .edu, .gov, .org, .in does not make a name distinguishable from another, even where (.) is written as ‘dot’; (j) the addition of words like New, Modern, Nav, Shri, Sri, Shree, Sree, Om, Jai, Sai, The, etc. does not make a name distinguishable from an existing name and similarly, if it is different from the name of the existing company only to the extent of (l) if the proposed name is the Hindi or English translation or transliteration of the name of an existing company or limited liability partnership in English or Hindi, as the case may be. adding the name of the place, the same shall not be allowed; such names may be allowed only if no objection from the existing company by way of Board resolution is submitted; (k) different combination of the same words does not make a name distinguishable from an existing name, e.g., if there is a company in existence by the name of “Builders and Contractors Limited”, the name “Contractors and Builders Limited” shall not be allowed unless it is change of name of existing company;

Publication of Name

The name of the company and the address of its registered office must be painted or displayed outside every office or place at which its business is carried on, in a conspicuous position and in legible letters in English and in the language in general use in that locality. The name must also be engraved on the company’s common seal. Further, the name of the company and the address of the registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any must be mentioned in legible characters in all business letters, in all its bill heads, letter papers and in all its notices and other official publications, as well as in all negotiable instruments and other prescribed documents (Section 12). However, where a company has changed its name or names during the last two years, it shall paint or display or print, as the case may be, along with its name, the former name or names so changed during the last two years as required above. Further in case of One Person Company, the words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved. Ministry of Corporate Affairs (MCA) has clarified that display of its name in English in addition to the display in the local language will be a sufficient compliance with the requirements of the section. The MCA has also clarified that a share certificate is not an official publication of a company within the meaning of Section 147 of the Act [Corresponds to section 12 of the Companies Act, 2013]

Alteration of the Name Clause in MoA The procedure to be followed in regard to the change of the name under different circumstances is as follows. 1. General Change of the Name The name of the company can be altered at any time. For the purpose, a special resolution has to be passed and a written approval of the Central Government is to be obtained. A copy of the special resolution should be filed with the Registrar within 30 days of its passing. 2. Change of Name under the Direction of the Central Government

If by mistake or otherwise a company has been registered by a name, which the Central Government thinks, is identical with or closely resembles the name of an existing company, the Government may direct the company to change its name. The direction of the Central Government is required to be complied with, within a period of 3 months from the date thereof. Any default in complying with the direction by the Government, render the company and its officers in default liable for punishment with fine which may extend to Rs.1,000 for every day during which the default continues. The following procedure should be followed. 1. The company should pass an ordinary resolution. 2. The company should get the written approval of the Central Government. 3. A copy of the ordinary resolution has to be filed with the Registrar within 30 days of its date. 3. Addition or Deletion On conversion of a private limited company into a public limited company and vice versa, the addition or deletion of the word ‘Private’ is to be made. It requires no Government’s approval. 4. Minor Mistakes A minor mistakes like spelling mistakes etc. may be altered by an ordinary resolution.