Change in Name Clause

Change in Name Clause of the Company

The name of a company serves as more than just a label. It is an integral part of its identity, signifying the nature of the business, its brand value, and its market presence. A well-chosen name can convey the company’s vision, ethos, and industry relevance. However, businesses often undergo transformations that may necessitate reconsidering their name. These changes could stem from rebranding efforts, mergers, acquisitions, expansion into new markets, or even regulatory requirements.

Regardless of the reason, changing a company name is a complex and challenging task. It is a legal process governed by the Companies Act, 2013, that requires careful planning and adherence to specific procedural norms. The process involves securing approvals from the board of directors and shareholders, filing necessary forms with the Registrar of Companies (ROC), and updating relevant statutory records. Failure to comply with these legal requirements can result in penalties and administrative challenges.

Memorandum of Association (MoA)

The Memorandum of Association (MoA) is the heart and soul of the company, which outlines its constitution. It serves as a charter for the company, defining the fundamental conditions under which it operates. The Memorandum of Association of a company includes the following clauses:

1. Name Clause:

• It specifies the name of the company.
• For a public limited company, the word “Limited” must be used at the end.
• For a private limited company, the name must end with “Private Limited.”

2. Registered Office Clause:

• It mentions the state in which the company’s registered office is located, which helps in determining the jurisdiction of the Registrar of Companies (ROC).

3. Objects Clause:

• This clause states the main objectives for which the company is incorporated.
• It includes incidental or ancillary objects that support the main objectives.
• Helps in defining the scope of activities the company can legally undertake.

4. Liability Clause:

• It defines the extent of liability of the members of the company.
• In companies limited by shares, liability is limited to the unpaid amount on shares held.
• In companies limited by guarantee, liability is limited to the amount members undertake to contribute if the company is wound up.

5. Capital Clause:

• This clause specifies the company's authorized share capital.
• It includes details about the division of capital into shares of fixed denominations.

6. Association or Subscription Clause:

• This clause contains subscribers' declarations to form the company.
• It states its intention to acquire shares and become a part of the company.

7. Nomination Clause (for One Person Company):

• This clause is mandatory for One Person Companies (OPCs) only.
• It mentions the nominee who will take over in case of the sole member’s death or incapacity.

What is the Name Clause in the Memorandum of Association of the Company?

The Name Clause is the first and one of the most important clauses in a company's Memorandum of Association (MoA). It specifies the legal and official name under which the company will conduct its business activities. The name clause ensures that the company’s name is unique, compliant with the legal requirements, and is easily distinguishable from other existing companies. The name must adhere to the guidelines laid down by the MCA.

Types of Name Changes

When a company decides to change its name, it can do so for various reasons. The broader reasons include:

1. Voluntary Change

This type of name change occurs when the company itself decides to change its name without any external mandate or compulsion. Some common reasons for a voluntary name change include:

• Rebranding
• Expansion of the Operations of the business
• Alignment with new business activities

2. Mandated Change by the Regulatory Authorities

There are some cases when a company may be legally required to change its name, such as in the following cases:

• Trademark Infringement
• Misleading or Offensive Name
• Misleading or Offensive Name

3. Change of name due to Mergers and acquisitions

When companies merge or one company acquires another, it may become necessary to change the name to reflect the change in a new entity, enhance the brand recognition, and to avoid confusion.

What Cannot Be the Name of the Company?

The company cannot choose such names that are:

• Identical or too similar to the existing entities: The names that are identical or closely resemble existing companies or the Company name, LLP name.
• Name Implying Government Affiliation: Names that suggest association with the Central or State Government or local authorities cannot be used.
• Use of certain words without permission: "National," "Union," "Central," "Federal," "Republic," "Rashtrapathi," "Statute," “Banks,” or "Governor" without appropriate approvals.
• Names that are offensive or undesirable in the opinion of the Central Government.
• Names that attract the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950.
• Names that include words like "Board," "Commission," "Authority," "Undertaking," "Municipal," "Panchayat," "Development Authority," etc., without proper justification or approvals.
• Names including words such as "Foundation," "Forum," "Association," "Federation," "Chambers," "Confederation," "Council," "Electoral Trust," etc., are reserved for specific types of companies.