William Shakespeare once said “What’s in a name?”seldom he knew that after centuries, it is “the Name” only that will matters be it for individual or for corporates.
Name is an identity for any Company by which it makes its presence in the corporate world. But corporates too recourse to change in name of their Companies and continue their presence with a new name.
Reasons behind Changing Names by the Company
Numerous factors motivate the corporates to change their name , various aspects like stepping into new venture by acquisition or change of object, Merger and amalgamation long term growth, competition in market, branding, arrangement’s etc.,
- Companies entering into Joint venture might want to change their name to reflect their business decision in their name or vice versa. To quote one example, upon termination of Joint venture between Hero Group of India and Honda of Japan, Name of Hero Honda has been changed from Hero Honda Motors Limited to Hero MotoCorp Limited.
- Entities often change their name to make them more appealable in the market and to create a new brand image like UTI bank has changed its name to Axis Bank.
Name Change as per Companies Act,2013
Chapter II of Companies Act, 2013 deals with the Incorporation of Company and Matters Incidental thereto, wherein Ministry of Corporates Affairs has allowed the Companies to change their name after following due procedures. However, provisions related to change of name is not limited to any one specific section, in fact it is scattered throughout various sections and rules.
Name clause in Memorandum of Association
Memorandum of Association is a fundamental document of the Company which sets out the objective and basic nature of the Company. Section 4 basically deals in detail regarding Memorandum of Association of the Company which inter alia include Name clause as its first clause.
Thus if we make any change in the name of the Company, Memorandum of Association, needs to be altered accordingly, provisions of which are dealt in another section of Companies Act,2013.
Section 4 also specifies what guidelines to be followed while considering the name and also in case of change of name, below given are some provisions:
- Name should not be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law;
- It should not be undesirable in the opinion of the Central Government.
- It should not contain 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;
Further Rule 8 of the Companies (Incorporation Rules) 2014 specify in details how a Company can ensure that proposed name is viable or not.
Alteration in Memorandum of Association
As per Section 13 of Companies Act, 2013, any alteration in the Memorandum of Association can be made by the Company after passing a special resolution under Extra Ordinary General Meeting (EGM) or Annual General Meeting (AGM) and complying with the procedures as specified in the section.
As stated earlier, Name Clause is first clause of the Memorandum, so Company can change its name by passing a special resolution.
In addition to passing of special resolution, the Company is required to seek approval of the Central Government to change the name of the Company.
For this section power of the Central Government is delegated to the Registrar of Companies as per MCA circular dated May 21 ,2014 and Companies are required to file an E form i.e. INC-24 to seek approval of the Central Government which in this scenario is the Registrar of Companies.
Upon approval of application from the Registrar of Companies, registrar will record new name of the Company replacing old name and issue fresh Certificate of Incorporation in new name in form of INC-25.
Section 13 also states that Company may not require to take any approval from the Central Government, Quoting the relevant proviso:
“No approval shall be necessary where the only change in the name of the company is the deletion therefrom, or addition thereto, of the word “Private”, consequent on the conversion of any one class of companies to another class in accordance with the provisions of this Act”
In simple terms if a Company is only converting its status from private to public or vice versa the Company is not required to take approval of Central Government for addition or deletion of word Private in the name of the Company as this is only change in type of Company not change in the name per se.
Name Application in Form_RUN.
This rule gives directions for web service based form i.e. RUNwhich is required to be filed with Central Registration Centre (a part of Ministry of Corporate Affairs)to reserve the new name of the Company.
Company needs to file the RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.
Further to application by the Company, the Central Registration Centre scrutinise the availability of name as per section 4 read with rule 8 of the Companies (Incorporation) Rules, 2014 and accord their approval if name is in compliance with above said section and rules.
However, Registrar has also power to reject the name after allowing re-submission of such web form within fifteen days for rectification of the defects.
Thus it is advisable to have prior check on the proposed name with the required guidelines provided in the Companies Act, 2013.
Restrictions in Name Change
Rule 29 imposes restrictions on the Company to change their name if they had committed default as below:
- Companies which has not filed annual returns or financial statements due for filing with the Registrar
- Companies which has failed to pay or repay matured deposits or debentures or interest thereon
However Companies Act, 2013 has further provided that the change of name shall be allowed upon filing necessary documents or payment or repayment of matured deposits or debentures or interest thereon as the case may be.
Overview of Name Change Process
In a nutshell view, we can summarise name change process of the Company given under above given rules and sections as follows:,/p>
- Any director or person authorised by the Board will dispatcha notice to call for Board Meeting .Notice shall be give as per section 173 of Companies Act,2013 read with secretarial standard 1 on Board Meetings.
- Conduct Board Meeting and analyse the requirement of change in name of the Company and finalise the proposed name.
- Make an application in Form RUN with Central Registration Centre
- Post approval , dispatch notices for calling an Extra Ordinary General Meeting/Annual General Meeting (AGM) to all the members in accordance with provisions section 101 of Companies Act,2013 read with secretarial standard 2 on General Meetings
- Accord approval of Members through Special Resolution at Extra Ordinary General Meeting/Annual General Meeting (AGM) for Name change and alteration in Memorandum of Association.
- File E form MGT-14 to submit special resolution with the Registrar of Companies
- Post approval of MGT14 make an application to the Central Government (the Registrar of Companies) in INC -24 for approval
- Get approval from the Central Government (the Registrar of Companies)in form of fresh Certificate of Incorporation and continue business with new Name.
Is there any Compliance needs to be done post name change approval?
Yes, below given are some requirements needs to be complied:
- Printing of New Memorandum of Association and Article of Association to reflect change of name.
- Change in Sign Board, Letter head, stationary and other items where old name used to be displayed.
- Company shall paint or affix or print, as the case may be, along with its name, the former name or names so changed during the last two years.
- Application to update name in PAN.
- Intimation and application to other authorities where Company is registered i.e. GST, EPF, ESI etc.
- Intimation to various suppliers and parties with whom Company has business.
- Intimation to banks where Company is maintaining bank accounts.
It is pertinent to note that the above stated regulatory framework are as per Companies Act, 2013 only, If any Company is registered with other any regulatory bodies like SEBI, RBI, MSME, IRDA , Companies have to follow additional compliance as prescribed by different regulators under which Company is registered.
Some cases to understand the legal effect on change of name of the Company
- Change in name of the Company does not changes the legal identity of the Company, Companies identity will remain same : Historice Resort Hotels Pvt. Ltd vs State of Rajasthan on 16 August, 2018
- change of name shall not affect any rights or obligations of the company and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name: Surendra Nath Shukla vs Indian Airlines Corporation, AIR 1966 Cal 272
In light of above stated, it can be concluded that name change process is not much complicated but one has to keep in mind all the regulatory provisions provided under Companies Act,2013 or prescriber under other regulatory bodies.”