How do you Name a Private Limited Company?

To provide a name to a Private Limited Company in India, it is compulsory to follow some legal guidelines related to the name so that the name is unique, appropriate, and compliant with the Companies Act, 2013, along with the other relevant Acts.

Hence, this comprehensive guide provides information on factors and processes that should be followed for naming your company effectively.

Key Considerations to Name a Private Limited Company

Key considerations that need to be followed to name your Private Limited Company effectively are as follows:

Uniqueness and Distinctiveness:

The proposed name for the new company must not be the same as that of an existing company or that contains any trademark. It is supposed to be unique and distinct.

Simple modifications for instance having plural forms, difference in the spacing between the elements, punctuation or making use of capital letters do not make the name different and unique. For example, “XYZ Pvt. Ltd. ” and “X.Y.Z Pvt. Ltd. ” will be considered identical and not unique.

Reflecting Business Activity:

The name of the company should also reflect the company’s business activities so that anyone hearing or reading the name can easily understand the nature of the business.

It should not be ambiguous or deceptive regarding what the business is all about. This is very effective in creating a distinctive image and helps avoid confusion with other establishments.

Legal Compliance:

• Prohibited Words: The company’s name should not contain certain words which are restricted under the Companies Act, 2013, for instance words such as “Board”, “Commission”, “Authority”, “National”, “Republic”, “President”, and “Minister” without obtaining prior permission from the Central Government.
• Offensive Terms: The name should not include any Vulgar, obscene, or offensive words.
• Government Associations: The name chosen should not imply any connection with the Central or State Government or any Local Authority unless it is specifically approved.
• Avoiding Intellectual Property Issues: The name should not have any legal implications by violating other individuals’ or group’s Trademarks, Copyrights or Patents.

Therefore, conduct a proper Trademark search to check that the name has not already been registered or is pending registration under the Trademark Act, 1999. Avoiding Intellectual Property Issues helps in reducing the prospects of a legal dispute and potential penalties.

Registrar of Companies (ROC) approval:

When the name is selected, the proposed name has to be approved and registered by the Registrar of Companies (RoC). This can be done by submitting the application for name availability on the Ministry of Corporate Affairs’ website.

The approval simply ensures that the name to be used does not contravene any of the naming guidelines and regulations.

Specific Naming Rules:

• Suffix “Private Limited”: The Private Limited Companies are bound to use “Private Limited” at the end of its name as a suffix.
• Section 8 of The Companies Act: These non-profit organisations need to incorporate certain words like ‘Foundation’ or ‘Association’ in their organisation’s name.
• Nidhi Companies: These Nidhi companies need to include “Nidhi Limited” in their company names mandatorily.

Restrictions pertaining to Names:

• Similar Names: It is important that the name used by your company is not similar to the name of an existing company or LLP or any company that has been dissolved in the last two financial years.
• Generic or Common Terms: The employment of non-specific or generic terms, including descriptive terms, is prohibited, as they fail to distinguish the company.
• Misleading Terms: It should not give a wrong impression of the type of business the company is into and should not project larger operations than actual.

Cultural and Linguistic Considerations:

While choosing a name for the company, one should focus on its cultural and linguistic relevance in the Indian context to make sure that the name chosen is appropriate and meaningful across different regions and in India.

Do not use names that may be offensive or stand a chance of getting misinterpreted in the context of different cultures.

Post-Approval Requirements:

A firm changes its primary business activities and then is supposed to ensure that its name reflects a change in the principal business activities that the company is involved in, and this has to be done only within a period of six months.

In addition to this, according to the statute, no company can use their previous name for a period of three years after a name change. This helps in harmonising the affairs of the business and avoiding confusion among the stakeholders.

Step-by-step Guide for Naming a Private Limited Company

There are certain steps that must be followed when naming a private limited company in India. You must understand this comprehensive guide if you are a business enthusiast looking for company registration in India. Some of the significant steps are mentioned below-

1. Conduct a Name Search: You must refrain from using a name that has been used by another company. You can make inquiries from the MCA website to verify whether the proposed name is available for use or not.
2. Trademark Search: You need to mandatorily conduct a Trademark search to establish whether the Trademark designation transpires to infringe on any existing Trademark.
3. Consider Availability of Domain: You need to check to confirm that the desired domain for website creation is available to your company.
4. Draft a Name List: You must gather and make a list of potential names that meet the criteria of the guidelines.
5. Submit for Approval: In order to initiate the approval process, you are required to apply for name approval on the MCA portal.
6. Review and Confirm: You are required to wait for the confirmation from the RoC and be prepared to provide extra documents if necessary.

Conclusion

The process of naming a Private Limited Company in India is one of the most important processes that one needs to incorporate carefully and must follow specific legal guidelines. Thus, having a unique and distinct name that reflects the business activity of the company enables business owners to not only consolidate a recognizable brand image but also comply with the provisions of the Companies Act, 2013.

While choosing a name for your business, it is recommended to conduct a name search on the Ministry of Corporate Affairs (MCA), Government website and also perform a Trademark search.

Frequently Asked Questions

Read our article: Important Documents For Private Limited Company Registration