An Overview of Company Name Approval
The Ministry of Corporate Affairs is the governing body which regulates the operation and functioning of companies in India. The Ministry of Corporate Affairs, or the MCA, has prescribed norms and compliances to which companies duly incorporated under the Companies Act of 2013 must adhere to both pre-incorporation and post-incorporation of the company. A business owner looking to register her company in India must obtain a certificate of incorporation from the MCA.
The process of incorporation of a company in India also involves reserving a new name for the company and obtaining the approval of the MCA for the same. Earlier, the Reserve Unique Name web service or the RUN service was used to reserve a new name for the company and to change the name of an existing company.
What is SPICe+ Form?
The MCA has simplified a company's incorporation process by bringing out the integrated SPICe+ Form or E-Form INC-32. The SPICe+ Form is one of the many initiatives taken by the Government of India towards EODB or Ease of Doing Business in India. The SPICe+ Form is an updated version of the previous SPICe Form. It is an integrated web form which facilitates obtaining 11 services by three of the central government departments and ministries, namely, the Department of Revenue in the Ministry of Finance, Ministry of Corporate Affairs, Ministry of Labour and State Governments of Maharashtra, West Bengal, and Karnataka.
Every company looking to get incorporated is required to make an application for reservation of name, incorporation of the company and avail of other integrated services by filling in the SPICe+ Form. The SPICe+ Form is divided into two parts. Part-A is used to reserve the name of a new company. Part-A of the SPICe+ Form can either be submitted individually for the reservation of the company name or can also be filed along with Part-B of the SPICe+ Form for the reservation of the company name and incorporation of the company along with other services. Part-B of the SPICe+ Form offers the following services:
Reserve Unique Bank or RUN
Reserve Unique Name or RUN is a web service provided by the MCA to reserve the proposed name of a company or change the name of an existing company. The Government of India also introduced this as an initiative towards the Ease of Doing Business in India. Earlier, this was the only Form available to reserve the name of a new company. However, after the Government of India brought out the SPICE+ Form, the name of a new company can be reserved in Part-A of the SPICE+ Form.
Both the SPICe+ Form and the RUN Form must be filed along with the prescribed fee as is provided in the Companies (Registration Offices and Fees) Rules, 2014.
Choosing an Appropriate Company Name
As per norms prescribed by the MCA, every company looking to get incorporated must reserve the company's name and get the requisite approval from the MCA for the company name. Before deciding on a name, the applicants must be aware of the MCA guidelines and the provisions of Section 4 of the Companies Act of 2013 pertaining to the name of a company. Section 4 lays down certain dos and don’ts for choosing a company name prior to getting approval from the Registrar of Companies.
The following are the guidelines mentioned with respect to the name of a company:
Rule 8 of the Companies (Incorporation) Rules, 2014 elaborates on this point by stating that while deciding whether the name resembles or is identical to an existing company, the following shall be disregarded as differentiating factors:
- Use or absence of words like Private, Pvt, (P), OPC Pvt Ltd, IFSC Pvt Ltd, IFSC limited, limited LD, unlimited, limited liability partnership, LLP, company, and company, and Co, Co, or corporation, corpn, group shall not be regarded.
- The singular or plural form of the words in both names shall also not be regarded.
- The case and type of letters, punctuation mark, any space between letters and special characters used in their names.
- Use of different tenses in both names.
- Using different phonetic spellings or misspelt words of the same expression.
- The use or absence of host names like www or other domain extensions like org, net, com, dot
- The order of words in the company name
- Use or absence of the indefinite or definite article in the either name.
- Complete or partial transliteration or translation of an existing name in English or Hindi.
- Addition to an existing name a name of any place.
- Slight variation in the spelling of the name or grammar in the two names.
- The addition, modification or deletion of any expressions noting numerals or numerals in any existing name unless the numerics presents a brand.
- Unless prior permission has been obtained, any name prohibited under Section 3 of the Emblems and Names (Prevention and Improper Use) Act of 1950.
- Unless provided and section 35 of the trademarks act of 1999, if the name includes a trademark which has been duly registered under the trademarks act in the same class of services or goods under which an existing company has already been registered. However, if the applicant obtains the trademark owner's consent, this bar shall not apply.
- The name contains words that can be offensive to a particular section of people
- The name is similar or identical to an existing name of an LLP.
- When the company's primary business is leasing, financing investments securities commerce chit fund or any combination of these, the company's proposed name does not indicate the carrying of any financial activities.
- When the company's proposed name is an indicator of activities like leasing financing, investing, securities, chit fund or any combination of these, but the business of the company is not related to such financial activity.
- When the name resembles very closely with the abbreviation of an existing company or an LLP.
- When the proposed name of the company is nearly similar or identical to the name of an LLP or a company which has been incorporated outside India and has been already reserved by such LLP or company with the registrar of companies.
- However, suppose the company being incorporated is a subsidiary of a foreign company. In that case, the holding company's name may be allowed by adding the word “India” or an Indian city or state.
- If any part of the name of the company includes words which indicate a particular business type or a legal person like trust, LLP, society partnership, Inc, HUF firm.
- If the name of the company has the words British India
- The name of the company implies any connection or association with a consulate or an embassy of a foreign government. However, the name of a foreign country or any foreign city shall be allowed if the applicant produces a valid proof of business relations with such a foreign country.
- The name of the company implies or includes a connection or association with the national hero or any other person who is held in the highest team or occupies an essential position in the Government of India.
- The name of the company is identical to the name LLP in liquidation or an LLP which has been struck off for a period of 5 years.
- The name of the company is identical to the name of a company which has been dissolved due to liquidation, and the liquidation proceeding was conducted not less than two years ago.
- The company's name, which includes words requiring a declaration to be submitted by the applicant that specific requirements are provided for by the regulators like RBI SEBI, IRDA, and MCA, have been complied with. Words like, among other things, bank, insurance, venture capital, Nidhi, Stock Exchange, mutual fund, and asset management shall come under the purview of this,
- when the company is not a government company, but the name has the word “State” in it.
- The company's proposed name contains only the name of a city, state, country or continent.
- When the company's proposed name consists of descriptive words commonly used to describe any activity.
- Prime minister
- Chief minister
- Foreign Corporation
- Financial corporation
- Small scale industries
- Statutory or statute
- Development scheme
- Khadi and Village Industries Corporation
- Judiciary or court
- When the word ‘Scheme’ is used along with the name of government India or Bharat state or any other governmental authority to resemble any of the schemes launched by a state government or central government, or local government
If the proposed name, which is to be reserved for a new company or change the name of an existing company, does not follow the guidelines mentioned above, it shall be sent for resubmission or rejected.
Documents Required for Company Name Approval
Certain documents are required to be submitted for company name approval from the MCA. They are as follows:
How to Reserve a Company Name and Obtain Approval From MCA?
As mentioned above, an applicant looking to reserve a name for a new company must file Part-A of the SPICe+ form individually or along with Part B of the Form. Applicants looking to change the name of an existing company which has already been incorporated must file the RUN form. Both forms are available on the MCA website.
If the applicant chooses to reserve the proposed name first by filing Part A of the SPICe+ Form and then filing Part B later, the applicant shall have the option to submit two names through Part-A of the SPICe+ Form. After the two names have been submitted, a single name made available by the CRC or Central Registration Centre shall be approved and reserved for 20 days from the date of approval.
If the applicant files Part A and Part B of the SPICe+ Form together, the applicant shall have the option to enter only one name in Part A of the SPICe+ Form.
The following steps are required to be followed to reserve a new name for the company and obtain approval:
- Choose an appropriate name for the company
The applicant should choose a company name that portrays the services or products in which the company deals with or the business the company is involved in. The applicant should ensure that the name does not fall under any other prohibitions or within the purview of undesirable names as is mentioned under the Companies Act and the appropriate rules.
- Create an account on the MCA portal
To fill out the SPICe+ Form, the applicant is required to create a new user account to use the MCA services. This account shall be used to file all the forms, upload documents and carry out any other activity required for the association of the name of a company, incorporation of the company and other services.
- Fill out Part -A SPICe+ Form or RUN Form
The applicant must fill in Part A of the SPICe+ Form to reserve the new company's proposed name. If the applicant requires to change the name of an existing company, she is required to file a RUN Form. The name shall be approved only if it follows the guidelines applicable to company names.
- Convert into PDF and apply signatures
Once the SPICe+ Form has been duly filled with all the requisite details, it must be converted into PDF format in order to affix the relevant Digital Signature Certificates or DSCs. After the Form has been digitally signed, it must be uploaded to the MCA portal.
Before submitting the Form, the applicants must ensure that the PDF version of the Form is the latest one, the directors and the requisite professionals have duly signed the forms, and the DSCs have been validated. The director signing the application must not be disqualified under any provisions of the Companies Act of 2013. Moreover, the size of the documents must be within the prescribed limit, and the documents attached must be legible. The applicants must ensure that signatures are not copy pasted into any of the attached documents.
Once the name has been approved, it shall be reserved for a period of 20 days from the date of approval for a company name reserved for a new company. The Part B of the SPICe+ Form must be filed within the above period of 20 days. In case the name has been resolved to change the name of an existing company, the period of the reservation shall be 60 days from the date of approval of the company name.
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