Updated : May 6, 2024MCA guidelines for name approval of companies and LLPs
Overview :Choosing a valid name for your Company and getting it approved by the ROC is one of the most important prerequisites for Company Registration. In this blog, you will learn the principles and guidelines for name approval of company, along with the complete process for name approval by the ROC.
The name of a company/LLP is the most significant aspect of its identity, as it aptly conveys its unique brand and the nature of its business activity. Consequently, reserving a name for the company/LLP is considered the foremost task to be completed before applying for Incorporation of the Company or the Registration of LLP. For this, applicants need to thoroughly understand the company name guidelines and procedures for name reservation of the company or a Limited Liability Partnership (LLP). The objective of this article is to present the name approval guidelines MCA that must be mandatorily followed while reserving the name of a company.
List of What is not allowed as a Company name!
| S.No. | What Can You Not Choose as Your Company’s Name? |
|---|---|
| Nature of Tax | Indirect Tax |
| 1. | A name that carries obscene, vulgar, and offensive words |
| 2. | A name that violates Section 3 or any other provision of the Names and Emblems Act, 1956 |
| 3. | A name that carries words that represent the patronage of Central/State governments |
| 4. | A name that is same, similar or deceptively representative of the name of an existing company/LLP |
| 5. | A name that contains words mentioned as “undesirable” in Rule 8 of Company Incorporation Rules, 2009 |
| 6. | A name that violates section 4 or any other provision of the Trademark Act,1999 |
Well, to understand the statutory principles regarding the reservation of the LLP names and company names, we must understand the relevant provisions of the Trademark Act (1999) and the Companies Act (2013). According to the Trademark Act, the first user of a name or brand is entitled to hold its intellectual property rights. Based on this concept, the Companies Act, 2013 also provides for certain name availability guidelines MCA on what can be desirable/undesirable as company and LLP names.
Can Business Activity Constitute a Company Name?
A company or LLP is always registered for a lawful purpose. Now, a question may arise whether it is mandatory to incorporate a company with a name that is representative of its purpose or business activity. Also, can a company have more than one purpose or carry out more than one business activity?
The answer is yes. Company and LLP names should represent the proposed purpose or business activity of the company. However, the name of the company can only represent one category of business activity pursued by the company. When the application for the company and LLP names is filed, you have to select the main division of industrial activity for the company from a list that appears in the dropdown. You have no choice but to choose only one category.
The business activity should not be reflected in the first word of the company or LLP names. For example, a company with a name like Courier Services Private Limited shall not be allowed. In contrast, a title with a unique prefix like FedEx Courier Services Private Limited is permitted. However, the company or LLP names starting with a coined word which have a reference to the objective are sometimes allowed.
Guidelines for Company Name under the Trademark Act, 1999
A trademark is a word, business name, logo, device, etc., which can identify the origin of goods or services. The trademark law lays down a specific provision protecting the lawful owner of the brand against any potential infringement, and the courts in India award hefty penalties for its breach by an unauthorized user. Hence before considering any name, brand, or logo for your company, it is recommended that you check if it is already registered under the Trademark law. Setindiabiz provides a free trademark search facility across India. Moreover, Rule 8 of the Company Incorporation Rules 2009 states that a name shall be undesirable if it includes words that are already a registered trademark or an applied trademark. However, the trademark shall be valid for use by a new company if the owner of the trademark issues a NOC to the company.
Guidelines for Company Name under the Companies Act, 2013
The Companies Act, 2013 regulates the incorporation of companies & provisions relating to the availability and reservation of the name of the company. The provisions regarding the same are mentioned in section 4 of the Act and rule 8 of its corresponding rules. The provisions are also applicable to an LLP. There are two parts of the provisions that influence the naming of the company. Section 4 of The Companies Act, 2013 states the broad principles for naming a company. These principles intend to prevent the adoption of such a name for a new company that exists for an already registered company in India.
A name that gives an impression to the general public about any government patronage is also forbidden for reserving the name of a new company. The guidelines also mandate the owner to follow the provisions of The Emblems And Names (Prevention Of Improper Use) Act, 1950, while choosing the name of the company. Provisions under Rule 8 of the Company Incorporation Rules 2009 also contain provisions that mention the names that shall be deemed “undesirable” while naming a company. Please read a detailed discussion by clicking here.
| Section - 4 | Statutory Provisions under section 4 of the Companies Act. The detailed substantive guidelines for naming companies in India are mentioned in Section 4 of the Companies Act 2013, which lays down the basic principles to be followed while adopting a particular name by a new company. Rule 8, framed under section 4, lists in detail the dos and don’ts for the same. Based on the guidelines, the name of the company mentioned in its MOA shall not
Besides, the proposed name should not appear to carry patronage of the central, state, or local governments or an entity constituted by the central, state, or local governments. Moreover, certain words mentioned in Rule 8 of the Company Incorporation Rules can be used in the name of the company only after the prior approval of the Central Government. | ||||||||||||||||||||||||||||||||
| Rule - 8 | Rule 8 of the Companies Incorporation Rules, 2014 The rule provides three restrictions in the naming of the company or the LLP apart from what is prescribed in the substantive provision under section 4. These are listed below, with a detailed explanation thereafter.
Following words, if used in the name of the Company, requires the prior approval of the Central Govt. Note: Other mandatory conditions for naming a company include
|
Process for Company Name Approval and Reservation
Once a Company’s name is chosen by following all the above guidelines, it must be approved by the Registrar of Companies (ROC). For this, an application is required to be filed with the proposed names and the application fees. Upon examination and approval of any one of the proposed names, the ROC will reserve it for being used by the concerned company. Note that the approval and reservation will last only for a duration of 20 days, so it is necessary for the applicant company to be incorporated with the name within these 20 days itself.
The procedure for approval and reservation of a company’s name by the ROC has been completely digitized for the convenience of applicant companies. The procedure is extremely quick, easy, and cost-effective now, not just for the applicants but also for government authorities processing the applications. The MCA even provides a free of cost facility for auto-search facility to check if the names being proposed in the application are in fact valid and available for approval or not. The application for Company Name approval and reservation can either be filed in the RUN (Reserve Unique Name) or SPICe Plus (INC-32) form, based on the Incorporation status of the Company. Here’s a detailed guide for your comprehensive understanding.
1. Reserve Unique Name (RUN) Form for Existing Companies / LLPs
RUN is a web-based application which can be used to reserve the name of an existing company/ LLP. The form is applicable for Companies and LLPs looking forward to changing their names to a new one. You can access the form on the MCA website provided you have an account on it. The RUN application gives the applicant an option of proposing two names at a time, with two chances of resubmission if both of them get invalidated. If no valid name is found even after the two chances of resubmissions, the Registrar will reject the application and a fresh form will have to be filed with new names for approval and reservation. However, if any of the names in the application is approved, the ROC will issue a Name Approval Letter to the applicant. The entire process takes only about 2-3 working days to complete. The validity of the approved names extends to 20 days from the date of receiving the acknowledgement letter, within which the company/LLP must be incorporated with the new name. The application fee of filing the RUN application in case of a company is Rs.1,000, whereas in case of an LLP is Rs.200.
2. SPICe Plus / FiLLiP Form for New Companies or LLPs
The SPICe Plus and FiLLiP Forms are used for registering or incorporating companies and LLPs respectively. However, these forms can also be used for getting the names of these new business entities approved by the Registrar of Companies (ROC). As far as SPICE Plus form is concerned, its PART A to be specific, is filed for Company name approval and reservation. It can either be filed separately or along with the entire application for incorporation. The application fee is Rs.1,000 for PART A and the form allows the applicant to propose two names per application with one extra chance of resubmission. Coming to the FiLLiP Form, it is a single integrated application filed together for an LLPs name approval and incorporation. The fee depends upon the authorized capital of the LLP.
Conclusion
Naming a company appears to be a deceptively simple task but involves a lot of complexities, especially when the applicants are unaware of the legal guidelines, rules, and regulations for choosing a valid name. Also, simply choosing the name does not guarantee that you can use it for your company. It must be approved and reserved with the appropriate authority via the prescribed process. Hopefully, this article has explained all the guidelines and processes for your clear understanding. If you still have any queries, you can contact our experts!
