The name of a company represents its identity, embodying its business nature and brand presence. Sometimes, due to factors like rebranding, mergers, acquisitions, or regulatory compliance, a company may need to change its name. Changes to the name clause of a company are governed by the Companies Act, 2013, and require following a well-defined legal procedure. The process involves obtaining approvals, filing forms with the Registrar of Companies (ROC), and updating statutory records. Failure to adhere to these steps can lead to penalties.
This comprehensive guide explores the reasons for changing a company name, the necessary documents, and the step-by-step process for implementing the change.
Memorandum of Association (MoA)
The Memorandum of Association (MoA) is the foundational document of a company, outlining its constitution and key operational aspects. It acts as a charter, defining the fundamental conditions under which the company operates. The MoA typically contains the following clauses:
1. Name Clause:
- Specifies the company’s legal and official name.
- Public limited companies use “Limited” at the end, while private limited companies end with “Private Limited.”
2. Registered Office Clause:
It specifies the location of the company’s registered office, thereby determining the ROC’s jurisdiction.
3. Objects Clause:
It defines the primary objectives and incidental activities of the company.
4. Liability Clause:
It specifies the extent of liability for company members, often limited to unpaid share amounts.
5. Capital Clause:
It outlines the company’s authorized capital and its division into shares.
6. Association or Subscription Clause:
It declares the intention of subscribers to form the company.
7. Nomination Clause (for One Person Company):
This clause is mandatory for the One Person Company (OPC) as it specifies the nominee for continuity in case of the sole member’s death or incapacity.
The Need for a Company Name Change
Companies change their names for various reasons, including rebranding, mergers, acquisitions, or regulatory compliance. Understanding the specific reasons helps in planning the name change process efficiently. The common reasons include:
- Rebranding
- Expansion of the Operations of the business
- Alignment with new business activities
- Trademark Infringement
- Misleading or Offensive Name
- Misleading or Offensive Name
- Mergers and acquisitions
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.
Documents Required for Changing the Name Clause
- Board Resolution: Document approving the proposed name change.
- Special Resolution: Approval from shareholders during a general meeting.
- Amended Memorandum of Association (MOA)
- Amended Articles of Association (AOA)
- Form MGT-14: Filing the special resolution.
- Form INC-24: Seeking approval from the central government.
Step-by-Step Procedure for Changing the Company Name
Step 1: Convene a Board Meeting
- Issue a notice to all directors, specifying the agenda for discussion of the name change.
- Pass a Board Resolution to:
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- Approve the proposed new name.
- Authorize a director or company secretary to check the name availability with the Registrar of Companies (ROC).
- Call for an Extraordinary General Meeting (EGM) to seek shareholder approval.
Step 2: Check Name Availability
- Apply for the availability of the proposed name through the RUN (Reserve Unique Name) service on the MCA portal.
- Once the desired name is approved, secure the Name Approval Letter from the ROC.
Step 3: Hold an Extraordinary General Meeting (EGM)
- Issue a notice to shareholders at least 21 days before the EGM, including:
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- The date, time, and venue of the meeting.
- The special resolution for changing the name clause.
- At the EGM, pass a Special Resolution with a 75% majority of votes to approve the new name.
- Prepare and record the Minutes of the EGM.
Step 4: File the Special Resolution with ROC
File Form MGT-14 within 30 days of passing the special resolution, along with:
- A certified copy of the special resolution.
- The amended MoA reflects the new name.
- The Name Approval Letter from the ROC.
- A copy of the Board Resolution.
- A copy of the EGM Notice and Minutes.
Step 5: Application for Name Change
- File Form INC-24, which is an application for approval from the central government for a change of name, with the ROC.
- Attach the amended Memorandum of Association (MoA), Articles of Association (AoA), and the ROC’s name approval.
- Include the SRN (Service Request Number) of Form MGT-14.
- Pay the prescribed statutory fees.
Step 6: ROC Verification and Approval
- The ROC will examine the application and verify the documents.
- If everything is in order, the ROC will issue a Certificate of Incorporation with the new name.
- The official name of the company will change from the date of issuance of the certificate.
Post Name Change Compliance
Once your company name is changed, it is important to make necessary updates in:
- Company’s letterheads, invoices, and stationery.
- PAN, TAN, GST Registration, and other statutory documents.
- Bank accounts, licenses, and contracts.
- Inform statutory authorities, clients, and stakeholders about the change.
Penalties for Non-Compliance
1. Delay in Filing Form MGT-14:
- Fines ranging from ₹1 lakh to ₹5 lakh can be imposed on the company.
- Fines ranging from ₹50,000 to ₹1 lakh will be imposed on officers in default.
2. Non-Filing of Form INC-24:
- The name change will not be registered.
- Legal issues may arise in company operations.
3. Failure to Update Statutory Records:
- Discrepancies in official documents.
Conclusion
Changing a company’s name requires thorough planning and compliance with established regulations. By carefully following the prescribed procedures and keeping all stakeholders informed, businesses can ensure a smooth and hassle-free transition. Staying legally compliant not only protects the company from penalties but also strengthens its professional reputation in the market.
