• Subham Patro

Section 16: Rectification of name of the company.

Updated: Mar 1



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Name change of Limited Company

Section 16 of the Companies Act, 2013 talks about the Rectification of name of the Company. 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, —

(a) 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 and the company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose;

(b) on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999, made to the Central Government within three years of incorporation or registration or change of name of the company, whether under this Act or any previous company law, in the opinion of the Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of six months from the issue of such direction, after adopting an ordinary resolution for the purpose.



What comes in your mind when you think of any company?


Yes, it’s the name of Company. It is of foremost impression when we hear it for the very first time. When an entrepreneur have an intention to register a new company, the initial step is to decide name for his company. To choose name of company is not easy task as it seems to be. Numerous do’s and don’ts under Companies Act, 2013 are specified for choosing name of company which can in turn be challenging for entrepreneur to have name of his choice. It may happen that the name which entrepreneur decides for his company is already registered by some other entrepreneur so in such case, he won’t be able to apply for same name. It will be rejected by the CRC, Delhi (Ministry of Corporate Affairs). Many times, after registration of Company or during incorporation, the concerned Registrar of Company (ROC) may order to rectify name if it comes to notice that the existing name is opted in contravention with Rule 8 of Companies (Incorporation) Rules, 2014. Sec 16 deals with Rectification in name of the Company under Companies Act, 2013.


Do ’s and Don’ts under Rule 8 for choosing name of the Company


Rule 8 deals with choosing name of the company. Few do’s and don’ts are mentioned below-


1. Resembling name too nearly with name of existing Company

2. Use of host name like www or any domain name like .net or. Org etc

3. Using name of any city or place in existing name of any other company

4. Undesirable names under section 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950 (12 of 1950)

5. If company deals with financing, leasing, chit fund, investments, securities or combination thereof and name of the company does not indicates its activities then it will not be allowed etc.

Rule 8 of Companies (Incorporation) Rules, 2014 contains in detail the above explanation.


Can Registrar of companies order for rectification of name of the Company?


Yes. Registrar of Companies have authority to order for rectification of name of the company. If a company is registered and it is found that the name opted is inappropriate or nearly resembling or identical to the name of existing companies/ LLPs or Trademarks registered under Indian Trade Marks Act, 1999, then the concerned Registrar of Company may on representation from other party, order for rectification of name to such company if it is satisfied in all terms that the said name needs to be rectified.


Directions on Suo Moto by the Central Government for order of Rectification of name of the Company


There are few conditions whereby Central Government may issue suo moto directions to the company for rectification of name of the Company. This order can be issued anytime either-

1. Before Registration of company or

2. After Registration of company or

3. Any time during its existence

Please take a note on conditions mentioned below

The name approved is found identical or it nearly resembles

1. Name of already existing company; or

2. Name of already existing LLP; or

3. Trademarks registered under Trademarks Act, 1999.


Can proprietor of registered trademark make an application to Central Government for rectification of name of other company?


As the Government has authority to suo moto issue an order in case of rectification of Company, likewise a proprietor of registered trade mark can also make a representation to the government on the grounds that the name of another company is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999 as under-

1. for change of name within a period of 3 years from the date of registration of Private Limited Company

2. 3 years from the change of Company name.


Approval/ Rejection of Application made by the entrepreneur


The Central Government on receipt of application from the entrepreneur, if gets satisfied that the documents submitted are as per the requirement under sec 16 of Companies Act, 2013, and agrees that the name of another company is too nearly resembling or identical the it may approve the application and simultaneously order the company to rectify the name of the company but before that the government should give atleast once an opportunity of being heard to another company.

Similarly, if the Central Government does not find grounds of application to be worth and true, then it may directly reject the form after giving an opportunity of being heard.


10 Steps Procedure for Rectification of Name of the Company

Once an order is received from the central government then the company

should take steps for rectification of name of the company on priority. Following procedure need to be followed by the company-

Step 1: Decide another name for the company

Step 2: Check on www.mca.gov.in whether the decided name is available or not

Step 3: Conduct a Board Meeting and pass the necessary resolution for change in name of the company

Step 4: Apply online in e-Form RUN for name reservation

Step 5: Name will be approved by the Ministry of Corporate Affairs

Step 6: Issue of name approval letter, valid for 21 days from the date of approval.

Step 7: Hold Extra Ordinary General meeting of the members of the Company for rectification in name of the Company

Step 8: File form MGT-14 after according consent of members

Attachment:

1. Name approval letter

2. Copy of Board Resolution

3. Copy of EOGM resolution

4. Altered copy of memorandum of association of the company

5. Altered copy of Articles of association of the company


Step 9: Make an application to central government in form RD-1

Attachment:

1. Name approval letter

2. Copy of Board Resolution

3. Copy of EOGM resolution

4. Altered copy of memorandum of association of the company

5. Altered copy of Articles of association of the company

6. Copy of Registered Trademark Certificate if any

Step 10: Approval by concerned Regional Director and intimation mail sent to the Company


Penalty

It is utmost recommendation to all companies to have timely compliance under Companies Act, 2013 to avoid heavy penalties for the same. In case of rectification of name of the company, if there is contravention in compliance of sec 16 of the Companies act, 2013 then the company shall be punished with fine up to Rs 1,000 for each day of default. The officers in default of the company shall be liable for fine of amount being not less than Rupees Five Thousand but which may extent to Rupees One Lakh.

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