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Komal Singh
| Updated: 07 Jan, 2021 | Category: Company Registration

What are the Requirements Before Choosing Company Name in India?

Company Name

Entrepreneurs cannot start a business without a business name! But the process of choosing the right business name that is attractive, and that describes what your business is about is not easy. The business has largely failed in the past due to a name that has not worked yet, so it is important to pick the right label.

Choosing a catchy business name plays a vital role in it is going to be successful, and it is the key to differentiate you from your opponents. Consumers connect a company name with the value it offers to them. Choosing the right name for your company is not an easy task. Choosing a suitable and practical name plays a big role in future prosperity for any new business or start-up.

A company name makes the first impression on potential customers. Therefore, it becomes crucial to choose a well-suited name, which has to do with all efforts. The nomenclature of a company does not only cover the technical aspect, but it also includes some legal proceedings.

Different Types of Company Based on Name

  • Private Limited:  involved the words ‘Private Limited’ or ‘Pvt Ltd.’
  • Public Limited: involved the words ‘Public Limited’ or just ‘Ltd.’

Choosing of Company Name according to Business Activity and Industry

Once the entrepreneurs understand what your company does & whom it is trying to serve, it shall give you a platform for names in order to choose from or a starting point. You should remember that your target audience should be able to connect with the name.

Negative Example: – “Chubbybrain” is a company that funds other companies, however, because of its name, ‘Chubbybrain’, no one knew what they did as business operation as they couldn’t relate the name to fundraising. Positive example: – Glucon D is a company that prepares energy powder, and its name suggests in itself that this brand is known among the people as glucose energy drink.

MCA Rules that Entrepreneurs should Follow while Choosing a Company Name

Under the Companies Act, 2013[1], the MCA (Ministry of Corporate Affairs) has laid down certain rules on the naming of a private limited or LLP company. According to the Act, to approve a company name, it must be unique and descriptive, & desirable. The below discussed are both the aspect of MCA Rules.

Choosing a Company Name

Unique Component

This part of the company’s name depends entirely on the creativity of the owner. Sometimes, people can add names just by adding the names of the directors. It has nothing to perform with the service provided by the company or even has any definite meaning.

Descriptive Component

If the entrepreneurs can’t think of a creative name, they can make it direct and descriptive of the service or product which they live in. This means that the company name communicates with consumers in the field of work or the nature of services offered.

RULE 8A Stating a List of Undesirable Names

The below discussed are the list of undesirable names.

  • A Company Name Registration should not be forbidden under Emblems and Names (Prevention and Improper Use) Act, 1950 unless previous permission is allowed.
  • The company name should not include any existing trademarks that fall under the same class of goods or services activity unless prior consent has been obtained by the promoter from the trademark owner.
  • A Company name should not evolve any words that are outrageous to any class of people
  • The proposed company name should not be indistinguishable or have near similar to any existing any entity.
  • The proposed company name should not be indistinguishable with the name reserved under rule 9
  • In case the basic and primary concern of the company related with activities like chit funds, investments, financing, securities, or a similar related works, then that proposed company name should include accordingly their respective financial activity such as debt, investment, security, and so on. While the other aspect, your proposed name shall not lie under the above said financial activities.
  • Your proposed company name should not have resembled the popular or abbreviated name of an existing LLP or company.
  • Your proposed company name should not have resembled the company or LLP registered abroad, and such name has been registered with registrar for establishing its subsidiary in India. Even rule 8 of name similar is considered for name approval.
  • Your company name must not include words representing legal persons or business constitution or connotations like Firm, HUF, PTE, Inc., AG, etc.
  • Your company’s name shall not include words like ‘British India or English East India company’s.
  • The proposed Company name should not relate with any of the links or connections with the foreign embassies or consulates.
  • The proposed name should not be interconnected or related with the any of the national hero patronage or important persons who were in previously holds ranks in the Government positions.
  • The proposed Company name should not resemble to any preciously dissolved company which has dissolved with the 2 years of the company. In case, the company name is struck off from the register due to some of the reasons, which literally results from the same name shall not be up for the next twenty years.
  • LLP name which struck off from the said register can not be applied for the next 5 years.
  • To propose the companies name has starting or ending words like Bank, Stock Exchange, Asset Management, Nidhi, Mutual fund etc. Shall need to achieve a prior acknowledged and pre-approval from concerned regulatory establishments like IRDA, SEBI, MCA, RBI etc. and their suggestions must be complied and noted accordingly.
  • The company name shall not hold vivid words like State, Continent, Country, place etc. as a prefix or suffix in the name.
  • Your company name shall not be in the process of using common words to describe an activity.
  • Prohibited from using the names of foreign cities and countries etc. Further provides the applicant shall mandate to procure the proofs of business linked with.
  • In further cases, in Sec 8 of companies, the proposed name should include words like Foundation, Forum, Federation, Association, Chambers, Council, Electoral Trust, Confederation, etc.
  • A proposed company related with Nidhi zone should evolve with the word “Nidhi Limited” in its ending name.
  • You can apply for the name of the company that had removed recently from the said register after the successful completion of said debarred period of 3 years—provided with the same cause that no special instructions have been issued by the competent authority for the same.

RULE 8B Codes Specific Usage of – Word or Expression to be Used with Prior Government Approval

The selection of any company name is a challenge in itself. The following words &  combinations thereof will not be used in the name of a company in English/ any of the languages portraying the same meaning unless and until the previous approval of the Central Government has been obtained for the use of any such word/expression:-.

  • Authority,
  • Board,
  • Commission,
  • Undertaking,
  • Central,
  • Republic,
  • National,
  • Union,
  • Rashtrapati,
  • Small Scale Industries,
  • Federal,
  • Financial Corporation and the like,
  • Municipal,
  • President,
  • Khadi and Village Industries Corporation,
  • Prime Minister or Chief Minister,
  • Minister,
  • Panchayat,
  • Forest corporation,
  • Development Scheme,
  • Statute or Statutory,
  • Development Authority,
  • Nation,
  • Governor,
  • Court or Judiciary,
  • Usages of word ‘ Scheme’ with Government names like India, Bharat, State,  or any Government authority or any resemblance with schemes of Central, State or local Government, authority/Bureau.”.

Concrete Lines Needs to be Remember while Using, Adapting or Confirming any Company Name.

  • In case you do not want to get extra and unnecessary trouble while registering your company names under private limited, the name for your company needs to be kept in mind before ensuring such names.
  • Choose a name, which is easier to recognize and remember having an impactful sense, easily can be pronounced, short in words and a thoughtful in it and circulates or communicate your brand significantly in your customers. Say no to rigid multiple and complex words.
  • In case you picked a name, which has already in existence and similar sounds with any pre-existing brand name. Trust us; it’s a bad idea. We found numerous cases where existing names were ordered to be changed further only of their striking similarities to other existing companies, and you won’t ever like to do that, right? Literally, you have spent a  hefty sum of amounts on marketing your brand.
  • The proposed name must propagate or clarify your significant vision and the motive of your future business. Let the name of your company conveys all about your business and which product you’re selling.
  • During the era of digitalization, when the domain exists after your brand’s name, it doesn’t make any sense to choose that name for your company.
  • Together with the domain name, must need to check and ensure it’s availability with a  proper domain extension. Suppose, a business involved in India, .in or .com is suitable and suggested prominently. For global businesses or country-specific businesses, you have to find and choose the extension accordingly.

Basic Knowledge to Have Before Selecting a Company Name

  • Ignore the usage of abbreviations, adjectives and generic words
  • Grants and permits from the concerned authorities to plan and include a few words in your company’s name.
  • Do not pick any name Unnecessary.
  • Find and keep knowledge by the research of the existing company name.
  • Do check for the usage of the registered trademark in the same name.
  • Do propose six names.
  • Do not evolve words that indicate a separate business.

 Conclusion

Having a unique and eye-catching name gives the company a boost by a reasonable margin. Clever names with intelligent wordplay make a good impression of the company as well as the founders. Consumers have a greater inclination towards such companies.

The correct name of your start-up has a significant impact on your success. The wrong name can have a negative effect like failure to attract the right customers. Sometimes it also leads to legal and commercial hurdles. In the other situation, a powerful and clear name is extremely beneficial in branding and marketing your business and its products/services.

Kindly contact with CorpBiz to get professional assistance to choose the right name for your business.

Read our article: Learn the Process for the Reservation of Company Name

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Komal Singh

Komal Singh is a Legal scholar, having diverse experience in scripting research papers, articles & dissertations, which serves her main interest & competent in drafting legal documents. She has polished her skills in dealing with the matter related to consumer affairs and now building intelligible Legal Content for Corpbiz.

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