One of the main steps in a Private Limited Company Registration process is the selection of a Company Name. Giving the right Name to the Company is essential, and the Company’s Name should be unique because it distinguishes it from other companies. The applicant can seek approval of the proposed name well in advance. The newly introduced SPICe+ incorporation process integrates the process of obtaining DIN (Director Identification Number), Name Approval & Incorporation into a single step. However, only one choice of Name can be provided while Company Registration is using SPICe+ Form. In case the Name of the Company provided is identical to an existing Company Name or Trademark or LLP Name, then the entire Form would have to be resubmitted. In this blog, we will discuss some common reasons for Company Name Rejection in India.
Some Reasons Behind Company Name Rejection in India
Following are some main reasons behind Company Name Rejection in India
- Proposed Name comprises of undesirable words: Use of unpleasant words like Central, Union, National, and Federal etc., in the Name of the Company or is considered undesirable by the Ministry. Hence, the MCA (Ministry of Corporate Affairs) will reject the names, including such words.
- Use of Words like Udyog or Industry, Products, Manufacturing, Business: The Ministry of Corporate Affairs will allow for the use of such words like Udyog or Industry, Products, Manufacturing, Business only if the Company proposes to deal in various business activities and/or the Company is already carrying on various business activities. The words will not be allowed in names that are into only a particular trade. Moreover, Startups with no record of doing more than one business may not be able to use the words Udyog or Industry, Products, Manufacturing, or Business just because they propose to undertake many activities. A proven record may be requested.
- Proposed Name Consists of Keywords such as India, Bharat, Corporation, International, Asiatic: The use of keywords such as India, Bharat, Corporation, International, Asiatic, etc., will only be allowed when the scale & scope of the business justify the use of these words. Hence, the MCA will reject the Name with these words if the scale or scope of activity is considered as small.
- The Proposed Name doesn’t consist of a suitable prefix: This is one of the main reasons behind Company Name Rejection. The prefix in the Company Name is usually the Company’s Name or its brand. To get Name Approval, it is vital that it consists of a suitable prefix. If the prefix used is identical to an existing Company Name or Trademark or it is inappropriate, a rejection may be received by the MCA.
- The Proposed Name is inconsistent with the activities described in the Main Objects: If the proposed Company Name is not in line with the main objects mentioned in the Company Incorporation application, the proposed Name will be rejected by the Ministry. For instance, the Company name is ABC Manufacturing Private Limited, with the main object as per application is to provide business consultancy services. Then, this will be rejected on the grounds that there is a complete inconsistency in names & objects.
- Proposed Company Name is too general without any distinct identity or word: If a proposed name of the Company is too general without any distinct word or identity, then it may be rejected. For example, Super Enterprises Private Limited, in this Name, both the Name & object are very general & do not provide any identity regarding the Company. Moreover, names like Super Indian Private Limited, Best Business Private Limited may be considered as names without any distinct identity or word.
- The proposed Name is similar to the existing Company Name: This is also one of the main reasons behind Company Name Rejection. Two identical names can often be used to deceive the public at large. According to the Rules of Companies Act, 2013, no 2 Companies can be registered with the same names & Trademark. If the proposed Name is identical to any existing name, then it will be rejected. Also, one vital point to be noted is that names with identical pronunciation, such as BAAN & BAN will be considered similar by approving authorities.
- The Proposed Name indicates the Partnership/Patronage of Any National Leader or Government: Any proposed Company Name that indicates Partnership/Patronage of Government or of any National Leader will be rejected by the Ministry of Corporate Affairs. For example, Delhi State Hospital Private Limited may be rejected as it shows Partnership or the Patronage of the Government.
Things You Should Know for Company Name Reservation
The application for Company Name Reservation shall be applied in Part-A of the SPICe+ Form. Once the Ministry of Corporate Affairs approves the Name, the Ministry will reserve the Name for 20 days & in those days, the applicant must submit the remaining documents & complete the Company Incorporation process. The applicant must file the incorporation form within such time period otherwise, the Name will expire & the new name application will have to be filed with an additional fee.
After discussing some common reasons behind Company Name Rejection in India, it is concluded that if you choose a name for the Company after taking care of all these points as mentioned above, then there are bright chance that the Name chosen by you will be approved in a single shot. However, seeking professional help in this regard is highly recommended to avoid any rejection by the MCA.
Read Our Article:How can I check the Availability of Company Name in India?