CHANGE IN THE NAME CLAUSE OF A COMPANY
The company is identified only by its name. Changing company names amounts to a significant alteration since the Memorandum of Association and Articles of Association need to be altered.A company can change its name by following the procedure to change in name clause of company.
The section lays down that a company may, by special resolution and with the approval of the Central Government signified in writing, change its name. The power of the Central Government under Section 13(2) to approve change in the name has been delegated to Registrar of Companies(ROC).
However, if the only change required is the addition thereto or deletion there-from, of the word “Private”, consequent upon the conversion of any one class of Companies to another class, no such approval of the Central Government is required. In addition, a change of name does not mean incorporating a new company, and also it will not affect the following:
- Rights or obligations of the company or
- Any legal proceedings by or against the company
A change of name of a company does not result in its dissolution and incorporation of a new company under a new name.
What are the reasons for the Change of Company Name?
A company may decide to change its name for various reasons. Some of the common reasons are listed below:
a. Change in business activity
A company board may decide to change the name when it changes its business activities. It may change the name to reflect the new or additional business objects. In such circumstances, the company should also alter its Memorandum of Articles to change its main object.
b. Voluntary change of name
The company board may decide to change the company name voluntarily. It is legal to change the company name voluntarily subject to the fulfillment of all the conditions.
c. Change of ownership
Usually, when the ownership of a company changes or entity takeovers the company, it is seen that the company name also changes to reflect the authority of the new management and for branding purposes.
d. For marketing or rebranding
A company can change its name for marketing reasons or to effectively position the company’s brand. It may also change the name to as per the latest fashion and trend for better brand positioning. When a company is ready to move into a new market, it may change its name to reposition its brand.
e. Avoid IPR issues
A company may change its name to reinforce its trademark or copyright in its name. Similarly, the company can change its name to avoid a potential IPR conflict.
f. Compliance with RoC direction
The RoC can make an order directing the change in the company name subsequent to a complaint filed by another company claiming priority of use of the name or trademark. In such a case, the company will have to change its name.
The change of name shall not be allowed to a company:
1. Which has not filed annual returns or financial statements due for filing with the Registrar or
2. Which has failed to pay or repay matured deposits or debentures or interest thereon
Section 4(2) of the Companies Act, 2013 provides that no company shall be registered by name which:
is identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law: or (Refer Rule 8 of Companies (Incorporation) Rules, 2014 or more information)
- will constitute an offense under any law for the time being in force or,
- is undesirable in the opinion of the Central Government.
Section 4(3) provides that, without prejudice to the provisions of sub-section (2), a company shall not be registered with a name that contains unless the previous approval of the Central Government has been obtained for the use of any such word or expression:
- any word or expression which is likely to give the impression that the company is in 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
- Such word or expression, as may be prescribed
Documents Required for Change of Company Name
The following documents are required apart from the documents to be filed with MGT-14 and INC-24:
- Certificate of Incorporation
- Altered MOA and AOA
- List of shareholders and directors
- Digital Signature of the authorized director
- Proof of registered business address
Procedure for Changing a Company Name:
I. Passing board resolution
A board meeting should be called for passing a resolution to change the company name. In the meeting, the board of directors will discuss and approve the change in name, authorizing a Director or the CS of the company to check name availability with MCA, and call Extraordinary General Meeting (EGM) for passing a special resolution.
II. Checking name availability
The authorized director or company secretary will request for reservation and approval of the new name under the RUN (Reserve Unique Name) facility of MCA. They can check the availability of the new company name through the RUN facility. This process is the same as the process adopted at the time of initial name approval.
The RoC send approval that the proposed name is available. Please note that this will not be the final approval of the company name, it is just a confirmation from RoC that the proposed name is available.
The proposed name shouldn’t be similar to another existing company name or trademark, and it shouldn’t include the words prohibited under the Companies (Incorporation) Rules, 2014. Other conditions existing at the time of initial name approval exist in this situation also.
III. Passing special resolution
Once the name is approved by RoC regarding the name availability the company should call for an Extraordinary General Meeting (EGM). A special resolution will be passed in the EGM for changing the name and making the change in the Memorandum of Association and Articles of Association.
IV.Applying to registrar
A special resolution will be filed with RoC within 30 days of passing the resolution. With it, Form MGT-14 will also be filed which contains the details about special resolution. The following documents are submitted with MGT-14:
- Certified copy of Special Resolution,
- Notice of EGM,
- The explanatory statement to EGM,
- Altered (MOA),
- Altered (AOA)
Once MGT-14 is filed, the company needs to file INC-24 with the RoC for taking approval from the central government for a name change along with the prescribed fee.
INC-24 will be filed after MGT-14 is filed since INC-24 specifically asks for the SRN of MGT-14 filed with RoC. Along with the INC-24 form, the following documents should be filed:
- A certified copy of the minutes of the EGM where the special resolution was passed
- Notice of the EGM
- Copy of resolution agreement consisting of the members voting for and against the resolution
- Copy of approval order received from the authorities such as SEBI, IRDA, RBI, etc., if any
- Altered MoA and AoA with the new company name
- Any other optional attachments
In INC-24, reasons for the name change, details about the number of members who attended the EGM, the number of members voting in favor/ against the resolution, and the percentage of shareholding are also mentioned.
V. Issuance of certificate of incorporation
If the Registrar of Companies is satisfied with the documents, it will issue a new certificate of incorporation. The company name change process isn’t completed until the new certificate of incorporation is issued by the RoC.
Once the RoC issues the new certificate of incorporation, the new company name must be incorporated
What are the Compliances after the change of Company?
in all the copies of MOA and AOA. The company must also make changes and put its new name in the following documents:
- The common seal of the company and the official company seal
- Promissory notes and bills of exchange
- Company bank account name
- Tax authorities, EPF, and ESI department
- Company website and social media accounts
- Company PAN and TAN
- Company letterheads, business cards, etc.
- Company statutory registers
- Employment and business contracts
- Update business licenses or permits