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CHANGE OF COMPANY NAME- UNDER COMPANIES ACT 2013
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CHANGE OF COMPANY NAME- UNDER COMPANIES ACT 2013
A company's name serves as an important symbol of its corporate ethos and brand identity in the ever-changing business world, and it is much more than just a label. A well-chosen name may leave a lasting impression on stakeholders and have a big impact on market presence and client perception.Nonetheless, there are situations in which a company's name needs to be changed. This is by no means a simple option; it requires careful legal observance and strategic strategy. The Companies Act of 2013 governs this procedure in India.
A company may change its name in accordance with the Companies Act of 2013 by passing a special resolution at an extraordinary general meeting, provided that the Central Government and the Registrar of Companies (ROC) provide their consent. Crucially, the company continues to operate under the new name and also its rights, duties, or on-going legal processes remain the same ; this change does not amount to the creation of a new company.
PROVISION FOR NAME CHANGE OF COMPANY
1. Section 13(2) and Section 13(6) of Companies Act
The name of the company may be altered with a special resolution and written approval from the Central Government. However, if the name change involves adding or removing the word ‘Private’ due to the company converting to a public company or the other way around, then Central Government approval is not necessary.
2. Section 13(2) of Companies Act
When a company's name is changed under section 13(2), the Registrar must issue a new certificate of incorporation with the new name and enter the new name in the register of companies in place of the old name. The name change will only be complete and effective upon the issuance of the new certificate.
3. Section 4(2) of Companies Act
The name specified in the memorandum cannot (a) be the same as or too similar to the name of an existing company registered under this Act or any prior company law; (b) be such that the company's use of it will (i) be illegal under any currently enacted laws; or (ii) be deemed undesirable by the Central Government.
4. Section 4(3) of Companies Act
A company cannot be registered with a name that contains (a) any word or expression that could be interpreted as suggesting that the company is associated with, or has the support of, the Central Government, any State Government, or any local authority, corporation, or body established by the Central Government or any State Government under any currently enacted law; or (b) any word or expression that may be prescribed, unless its use has previously been approved by the Central Government.
5. Rule 29(1) of The Companies Incorporation Rules
The company cannot change its name if it has not submitted its annual returns or financial statements to the Registrar or if it has not paid back any matured deposits, debentures, or interest on them. As long as the required paperwork is filed, matured deposits, debentures, or interest on them are paid back, or as the case may be, the name change will be permitted.
6. Section 16 (1) of Companies Act
If a company (whether on its first registration or on its registration under a new name) accidentally or otherwise registers under a name that is too similar to or identical to the name of an existing company, rectifying the name of the company is necessary. Any time after the company is registered, the Central Government may order that the name be corrected, and this must also be done. The corporation must comply with the Central Government's directive within six months of the day it was issued.
7. Section 16 (2) of Companies Act
Additionally, a company that modifies its name or acquires a new name under section 16 (1) must notify the Registrar of the change within fifteen days of the date of the change, along with the Central Government's order. The Registrar will then make the required changes to the memorandum and certificate of incorporation.
8. Section 16 (3) of Companies Act
Any failure to comply with the Central Government's directives could result in the company being punished with a fine of up to one thousand rupees for each day that the default persists, and its officers who are in default could face a fine of up to one lakh rupees, but not less than five thousand rupees.
REASONS FOR CHANGING NAME OF COMPANY
Motives for Renaming a Business A company may decide to change its name for a number of operational and strategic reasons.
Here are a few typical explanations:
• Status Change: A name change may be required when a company goes from being a private to a public one, or vice versa.
• Business Evolution: Companies that grow or change the scope of their operations frequently rename themselves to reflect new offerings or directions.
• Rebranding: A more comprehensive marketing or rebranding campaign may include a name change.
• Ownership Transitions: To symbolize change, new management may decide to use a different name for the business.
• A name change to improve trademark positioning or steer clear of legal problems with already-existing trademarks is an example of intellectual property considerations.
DOCUMENTS FOR CHANGE COMPANY NAME
In order to assure legal conformity, a corporation must submit certain documents as part of a formal process to change its name.
The following is a list of important documents that are typically needed when a company changes its name:
• A board resolution: is a decision made by the board of directors that suggests a name change for the business and gives a director or company secretary the authority to file for a name change.
• Special Resolution: The Company’s name change was approved by a special resolution passed by the shareholders. At least 75% of the shareholders who are eligible to vote must favour this.
• Amended Memorandum of Association: The MOA needs to be updated to reflect the company's new name. The Registrar of Companies (ROC) must receive this modification.
• Amended Articles of Association (AOA): The AOA needs to be amended to reflect the new company name, much like the MOA. Together with the required payment,
• Form INC-24: Application for approval of the company name change must be submitted to the ROC. Following approval of the name change, the ROC will issue.
• Form INC-25: Certificate for change of name. A copy of the general meeting's notice and explanatory statement: A record of the notice given for the meeting at which the special resolution was passed, along with an explanation of the significance and rationale for the name change.
• General Meeting Minutes: Contains information on the votes taken at the general meeting where the name change was agreed.
• Documentation: a copy of the initial certificate of incorporation that was issued before the name change.
• The Authorized Director's digital signature is necessary in order to electronically file forms with the ROC.
• Proof of Registered Business Address: Documents that attest to the company's registered address.
ADDITIONAL REQUIREMENT FOR LISTED COMPANY IN CASE OF NAME CHANGE
The listed company must separately report the net sales or income, expenses, and net profit or loss after tax figures related to the new line of business in the financial results if it has changed its name to suggest a new line of business. It must also continue to make these disclosures for the three years following the change in name.
Additionally, the following requirements must be met by any listed company that chooses to alter its name:
• At least a year ought to have passed since the last name change.
• The new activity proposed by the new name should have accounted for at least 50% of the company's total revenue in the previous year, or the amount invested in the new activity/project (Fixed Assets + Advances + Work in Progress + Inventories + Investments + Trade Receivables + Cash & Cash equivalents) should have equalled at least 50% of the company's assets. Only those benefits given to suppliers and contractors in the course of project execution that are unique to the new activity and are represented by the new name will be considered "advances." The business would need to provide the stock exchange with an auditor's certificate to verify the compliance.
• For a continuous period of one year from the date of the last name change, the new name and the previous name must be reported on the websites of the stock exchange or exchanges where the firm is listed.
• In accordance with the guidelines outlined in the Companies Act of 2013, a listed company must modify its name to reflect any changes to its operations that are not represented in its name within six months of the activity change.
PROCESS TO CHANGE YOUR COMPANY NAME
Renaming your business to reflect new directions or a revised branding strategy can be a big step. The method to change a company name in India under the Companies Act of 2013 requires many important.
Step: 1. Board resolution:
Convene a meeting of the board of directors to discuss the need and justification for changing the company’s name, then the board must pass a resolution proposing the new name and allowing a director or company secretary to request name availability from the Ministry of Corporate Affairs (MCA).
Step: 2.Check Name Availability
Under MCA's RUN (Reserve Unique Name) function, the authorized director or company secretary will submit a request for the new name to be reserved and approved. They can use the RUN facility to see if the new company name is available. This procedure is identical to the one used when the name was first approved. The suggested name's availability is approved by the R0C. Please be aware that this is merely ROC's confirmation that the suggested name is accessible and will not constitute the final approval of the company name. The suggested name must not contain any words that are forbidden by the Companies (Incorporation) Rules, 2014, nor should it be confusing to another company name or brand. In this case, there are additional criteria that were present at the time the name was first approved.
Step: 3.Extraordinary General Meeting (EGM)
The name specified in the memorandum cannot (a) be the same as or too similar to the name of an existing company registered under this Act or any prior company law; (b) be such that the company's use of it will (i) be illegal under any currently enacted laws; or (ii) be deemed undesirable by the Central Government.
Step: 4.Submitting an application to the Registrar of Companies (ROC).
MGT-14 Form is filed after passing the special resolution you have 30 days to file this form. It should contain the amended Articles of Association (AOA), Memorandum of Association (MOA), special resolution, and explanatory statement. Once MGT 14 is filed, the company need to file Form INC-24 By submitting Form INC-24 and the required payment you can request approval of the new company name. The modified MOA and AOA, as well as the special resolution, should be included with this form.
Step: 5.A new certificate of incorporation is issued
A new Certificate of Incorporation with the updated name will be issued after the ROC gives its approval. This document attests to the correctness of the name change.
Step: 6.Compliance after a Change
Internal Documents: Update all internal documents, such as shareholder agreements, corporate seals, and the MOA and AOA.
External Records: Report the name change to banks, tax authorities, and other relevant bodies. Update all digital properties, including websites and social media accounts, firm stationery, advertisements, and licenses and permits.
- FAQ
1. Why should a company change its name?
For a number of reasons, including rebranding or repositioning, a business may decide to alter its name.
1. Restructuring, acquisitions, or mergers.
2. A change in the company's expansion or focus.
3. If the company's operations no longer correspond with the name.
4. Legal justifications (such as a name that clashes with an already-existing business or trademark).
2. What are the steps for changing the company name?
A board resolution authorizing the name change must be passed as the first step.
1. Shareholder Approval: At a general meeting or by postal ballot, shareholders must approve a special resolution.
2. Name Approval Application: Submit a request for the new name's approval to the MCA. Form RUN (Reserve Unique Name) is used for this.
3. Obtain Name Approval: The proposed name will either be accepted or rejected by the MCA.
4. File with ROC: To register the special resolution with the Registrar of Companies (ROC), submit Form MGT-14 after receiving name approval.
5. Modify the Articles and Memorandum: The new company name should be reflected in the Memorandum of Association (MOA) and Articles of Association (AOA).
6. Submit to the Registrar of Companies: Submit Form INC-24 (Application for Approval of Name Change).
3. How do I apply for the new company name on the MCA portal?
The actions listed below should be taken in order to modify the company's name:
1. Open the MCA site and log in.
2. Enter the suggested new name on Form RUN (Reserve Unique Name).
3. Fill out the form and pay the required amount.
4. After confirming the name's availability, the Ministry will either accept or deny it.
5. To formally implement the change, submit the INC 24 form to the Registrar of Companies (ROC) if authorized.
4. What is Form RUN?
To suggest a new name for the business, file Form RUN (Reserve Unique Name). Prior to initiating the name change process, the MCA must provide name change approval. The form, which contains a suggested company name and a justification for the name change, can be submitted online through the MCA site.
5. What documents are required for a name change?
1. Board Resolution: The name change was approved by a resolution passed by the Board of Directors.
2. A special resolution approved by shareholders at a general meeting is known as shareholder approval.
3. The new name must be reflected in the Memorandum and Articles of Association (MOA and AOA).
4. Form MGT-14: submitted for the special resolution to the ROC.
5. Form INC-24: To request approval for a name change.
6. Is there a fee for changing the company name?
Yes, filing the required forms—such as Form RUN, MGT-14, and INC-24—carries a price. Depending on the company's authorized share capital, the charge changes..
7. Can a company name change be rejected?
Yes, if the new name is too similar to an already-existing business or trademark, the MCA may deny the request to alter the name. Any rules or regulations are broken by the new name (e.g., it is deceptive or objectionable).The name does not adhere to the MCA's criteria or the restrictions of the Companies Act.
8. What happens after the name change is approved?
The business will obtain a new Certificate of Incorporation bearing the new name after the Registrar of Companies approves the name change. All of the company's formal documentation, including contracts, letterheads, and business records, must be updated to reflect the new name.
9. How long does it take to change a company name?
Depending on how long it takes the MCA to approve the name and file the necessary forms, the full procedure could take two to five weeks.
10. Can the name change process be reversed?
Unless the business decides to alter it again in the future, the name change is final once the new certificate is granted. Reversing a name change is not an easy process, though, and it can necessitate submitting the same paperwork as the original name change because the original name might not be accessible again.
11. Can a company change its name multiple times?
Yes, a business is allowed to change its name more than once, but each time it must adhere to the guidelines and obtain ROC permission.
12. What are the common mistakes to avoid during a name change?
• Selecting a name that is too close to those of already-existing businesses or trademarks or that is already in use.
• Failing to update all official papers with the approved new name.
• Notifying authorities about the name change, including banks or tax authorities