Common reasons for rejection of Company names
Naming Company is very important and first thing to decide in Private Limited Company registration or Limited Liability Partnership (LLP) Registration process. In our previous article about Company names, we have already discussed the how to name a Company. In this article we will discuss about common reasons of Company name rejection.
Six names can be applied in order of preference while applying for Company name with the Ministry of Corporate Affairs (MCA). The Registrar of Companies will allot any one of the six names which are applied. If all the names are rejected by the ROC, resubmission of name approval of form can be done with six more choices. Resubmission of form for name approval can be done only once. One should note here that rejection and resubmission can delay company registration process. MCA has recently launched Fast Track Company Incorporation through Form INC 29, where only one choice of name can be given. In this case, if the name is rejected by the ROC, entire Form INC 29 will have to be resubmitted. It is therefore very important to choose a Company name as per Companies (Name Availability) Rules and Companies Act, 2013.
Reasons for Company name rejection
Proposed name is not according to the activities described in main objects
If the name of the company does not match with the object provided in the name, the name of the company will be rejected. Letâ€™s take an example of one name application â€œABC Constructions Private Limitedâ€ with the main object as per the name application is that of â€œManufacturing of readymade garmentsâ€. This name will be rejected by the ROC as the activities described in main object is not in accordance with the proposed Company name.
Proposed name is not available if companies with identical or closely resembling name are in existence.
If the proposed name is already in existence or is closely resembling name of an existing company, or trademark the name will be rejected. So if there is a company named ABC Consultants Private Limited is in existence a new company ABC Consultancy Private Limited or ABC Consultancy Services Private Limited may be rejected.
Proposed name is too general without any distinct word or identity
A name which is too general or does not have distinct identity may be rejected by ROC. For example Chemical Manufacturing Private Limited or Steel Trading Private Limited may be rejected as these are too general names without any distinct word or identity.
Names which include industry, enterprise, business etc as keywords
Keywords like industry/udyog, products, enterprises, business, manufacturing may be allowed when the proposed company proposes to deal in various types of business activities or in case of change of name, the company is already carrying on various business activities.
Proposed names does not include suitable prefix
Prefix is the name part or first part of company name. For example, in Venus Legal Services Private Limited, Venus is the prefix. If the name or prefix is not acceptable or is a registered trademark, the name may be rejected.
Names which include words like International, India, Bharat etc.
Words like International, Globe, Universal, InterContinental, Asia, India, Bharat, Hindustan, Continental, Asiatic, Corporation will not be allowed unless scope and scale of business justifies use of these words. These keywords requires certain amount of minimum authorized capital.
Proposed names include words like National, Central, Union, Federal etc
Words like National, Central, Union, Federal, etc are considered as undesirable. Ministry of Corporate Affairs do not approve any name which includes these words.
No Objection by way of resolution of the Board of Group Companies
When a company or its promoters are incorporating a new company with the same name part, the ROC may require the NOC from the company. For example, Ancharm Lab Supplies Private Limited may give NOC by way of Board Resolution to the promoters of proposed new company Ancharm Testlab Private Limited.
Name indicates the partnership or patronage of any National Leader or of Government.
The Ministry of Corporate Affairs may reject the name which indicates partnership or patronage of any National Leader or of Government unless necessary evidence is produced to consider the matter. For example name like Mumbai City Hospitals Private Limited may not be allowed.
Other points which has to be taken care of while name application.
In case the company is taking over business of Partnership Firm, make sure that copy of partnership agreement, balance sheet and profit & loss account of past two years and latest assessment order are furnished. One affidavit from partners that the main object of the company is to take over business of the firm and there after the firm will be dissolved has to be filed.
Following documents may be furnished for Change of Name of Company:
A resolution passed by Board of Directors of existing company approving change of name and reasons for change of name.
Present and proposed activities of the company specifying object clause of Memorandum of Association under which such activities are covered.
Turnover of existing company from existing activities in past one year.
Turnover of existing company from proposed activities in past one year duly certified by Statutory Auditors.
NOC from out-going promoters if fresh allotted name is being applied as Change of Name.
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