Superseding all previous Circulars and Instructions (Circular Letter No. 10(1)–RS/60, dated 01-04-1960 and Circular Letter No.  10 / (19)-RS/61, dated 15-03-1962) the Department of Company Affairs has laid down the following principles for deciding cases for availability of names:

Guiding instructions for availability of names:-The  procedure  for  scrutinizing  the  availability  of  names  of  new  companies  has recently been re-examined carefully in this Department, having taken into account the  difficulties  experienced  by  some  Registrars  in  the  following  the  instruction given to them vide Department’s Letter No 10/(19)-RS/61, dated 15-03-1962. This letter together with the enclosed set  of instructions as revised, consolidates,  and is  in  suppression  of  all  the  previous  instruction  issued  from  time  to  time  by  this Department. An illustrative  list  of  names  considered to  be  undesirable  within  the meaning  of  Section  20  of  the  Companies  Act,  has  also  been  given  herewith.  The guiding instructions for deciding cases of making a name available for registration are given in Appendix A to this letter.  In addition to these, the Registrars of Companies are requested to note the following general instructions also.

1.   As  the  Registrars  have  hitherto  been  doing,  they  should  refer  only  doubtful and  hard  cases  where  they  might  find  it  difficult  to  take  a  decision,  to  the Research and Statistics Division at the Headquarters.

2.   Where  consultation  with  the  Regional  Director  on  the  spot  is  possible, Registrars of Companies would take advice before referring doubtful and hard cases to the Headquarters.

3.   The  Registrars  of  Companies  may  ask  the  promoters  to  suggest  a  panel  of three to five names quite distinct from each other for consideration.

4.   The  Registrars  should  adopt  a  polite  attitude  and  persuade  the  Company promoters  to  suggest  names  consistent  with  the  guiding  principles.  They should explain the difficulties of the Administration in approving names likely to  create  confusion  in  the  minds  of  the  public  and  harm  the  interest  of  the promoters.

5.   In  case  any  of  the  names  proposed  by  the  promoters  is  not  agreed  to  by the Registrars as available, it should be open to them to follow up the matter by subsequent letters or application for the same fee within a reasonable period which  may  normally  be  construed  to  mean  three  months  from  the  date  of rejection of the name/names proposed.

6.   The  Registrars  may  permit  the  promoters  to  use  the  name  of  the  firm  in brackets  after  the  duly  approved  names  as  incorporating  or  successor  to (name of the firm) in order to fulfill the desire of the promoters to retain the goodwill  of  their  business  in  cases  where  the  names  of  firms  seeking registration under  the  Companies Act is  considered  as  undesirable  within the meaning of Section 20 of the Companies Act.

7.   Registrars  should  ascertain  from  the  promoters  if  the  proposed  name/names were  applied  for  to  any  other  Registrar  of  Companies  and  if  so,  with  what result. In case there is some difference of opinion between the two Registrars in making the name available, then the case may be referred to the Board for advice.

8.   The  following  guidelines  were  substituted  vide  amended  Rule  4A  of  the Companies  (Central  Governments)  General  Rules  &  Forms  1956)  Notification G.S.R 720(E) dated 16th November 2007.

8a.The  Registrar  shall  cause  to  examine  the  application  as  to  whether the changed  name  or the name with  which  the proposed company is to  be  registered,  as  the  case  may  be,  is  undesirable  within  the meaning of section 20. In case the name is undesirable, he may reject the  same  or  ask  for  resubmission of  the  application  with  new names or  calls  for  further  information,  ordinarily  within  three  days  of receipt of the application.

8b.The  applicants  shall  be  given  only  upto  two  opportunities  for  re-submission of their proposal against the fee paid in the first instance for  name  availability  after  the  original  application  is  filed.  In  the event  the  registrar  does  not  find  the  proposals  so  submitted  and resubmitted  as  fit  for  approval,  he  shall reject the  application  after the second re-submission. However, the applicant will be at liberty to file fresh application along with prescribed fee.

8c. The Registrar of Companies informs the company or the promoters of the  company  that  the  changed  name  or  the  name  with  which  the proposed  company  is  to  be  registered,  as  the  case  may  be,  is  not undesirable,  such  name  shall  be  available  for  adoption  by  the  said company  or  by  the  said  promoters  of  the  company  for  a  period  of sixty days from the date the name is allowed.

8d.If the name so allowed is not adopted on or before the expiry of the period  of  sixty  days  from  the  date  it  is  allowed,  the  applicant  may apply for extension for retention of such name for a further period of thirty days on payment of fifty per cent of the fee prescribed for the application  at  the  initial  stage.  No further  extension will  be  granted after expiry of ninety days from the date the name is allowed in the first  instance.  The name allowed shall lapse after expiry of sixty or ninety days, as the case may be, from the date it is allowed first.

8e.The  name  allowed  by  the  Registrar  before  the  date  of  this notification  comes  into  force,  if  not  adopted,  shall  lapse  after  the expiry of a period of six months from the date on which the name was initially allowed or renewed. However, in case the name has not been renewed  earlier, the  applicant  on  or before  the  date  of  expiry, may apply  for  one  time  extension  of  such  name  for  a  further  period  of thirty days on payment of fifty per cent of the fee prescribed for the application at the initial stage.

9.   It  is  necessary  that  the  “keyword”  of  proposed  name/names  are  checked separately  with  the  names  of  the  existing  companies  beginning  with  those “keywords”  so  as  to  avoid  any  possibility  of  allowing  a  name  with  a  little rearrangement  of  the  same  words  of  the  existing  company  which  may  be said to be closely resembling each other.

It  may  be  further  added  that  although  it  is  not  possible  to  lay  down  hard  and fast  rules  for  determining  whether  a  particular  name  or  any  two  names  too nearly resemble each other, each case, however, will be decided on its merits.

As  already  emphasized in  the  earlier circular letter  of this Department  on the  subject  dated  15th March  1962  that  the  various  criteria  set  out  in  the  guiding principles  at  Appendix  “A”  are  not  exhaustive  but  only  illustrative  of  what  is considered to be undesirable names under Section 20 of the Companies Act and that, by the very nature of the subject all possible cases could not be covered.

It is therefore, suggested  that where  the Registrars find that certain proposed names  could  not  be  referred  to  the  Research  and  Statistics  Division  at  the Headquarters after availing of the help of the Regional Director if available on the spot.

Guiding instructions for deciding cases of making a name available for registration

Departments’ guiding principles

The  Department  has  evolved  the  following  guiding  principles  for  deciding availability of names:

A name which falls within the categories mentioned below will not generally be made available:

1.   If  it  is  not  in  consonance  with  the  principal  objects  of  the  company  as  set out in its memorandum of association. This does not necessarily mean that every name should be indicative of its objects.  But  when  there  is  some indication  of  business  in  the  name  then  it  should  be  in  conformity  with  its objects.

2.   If  the  Company  /  Companies  main  business  is  finance  unless  the  name  is indicative  of  that  particular  financial  activities.  Viz.  Chit Funds / Investments / Loan, etc.

3.   If  it  includes  any  word  or  words  which  are  offensive  to  any  section  of  the people.

4.   If  the  proposed  name  is  the  exact  Hindi  translation  of  the  name  of  an existing  company  in  English  especially  an  existing  company  with  a reputation.

5.       If the proposed name has a close phonetic resemblance to the name of the company  in  existence  for  example,  J.K  Industries  Ltd.,  Jay  Kay  Industries Limited.

6.   If  the  name  is  only  a  general  one  like  Cotton  Textile  Mills  Ltd.,  or  Silk Manufacturing  Ltd.,  and  not  specific  like  Calcutta  Cotton  Textiles  Mills Limited or Lakshmi Silk Manufacturing Company Limited.

7.   If it includes, the word “Co-operative”, Sahakari or the  equivalent of  word “Co-operative” in the regional languages of the country.

8.   If  it  attracts  the  provisions  of  the  Emblems  and  Names  (Prevention  of Improper Use) Act, 1950 as amended from time to time, i.e. use of improper names prohibited under this Act.

Department of Company Affairs Circulars

General Circular No: 24 of 2001, dated 21-11-2001

Instruction  No.  8  of  the  Guiding  instructions  circulated,  vide  this Department’s  Letter  No.  10(1)-RS/65,  dated  27th November  1965  provides that  a  name  in  the  category  mentioned  below  will  not  generally  be  made available:

1).  “If  it  attracts  the  provisions  of  the  Emblems  and  Names  (Prevention  of Improper  Use)  Act,  1950  as  amended  from  time  to  time.  i.e.  use  of improper names, prohibited under this Act.”

2).  It  is  observed  from  a  communication  received  from  the  Department  of Consumer Affairs that the above said instructions are not being followed scrupulously.

3).  The  ROCs  are  advised  to  take  into  account  the  provisions  of  the  above said Emblems and Names Act while making names available to companies under the Companies Act, 1956. All the ROCs are requested to adhere to the above instructions for strict compliance.

9.   If it connotes Government’s participation or patronage unless circumstances justify it. E.g., a name may be  deemed undesirable  in certain context if it includes  any  of  the  words  such  as  National,  Union,  Central,  Federal, Republic, President, Rashtrapathi, Small-Scale Industries, Cottage Industries and Financial Corporation etc.

10.If the proposed name contains the words “British India”

11.If  the  proposed  name  implies  association  or  connection  with  Embassy  or Consulate  which  suggests  connection  with  local  authorities  such  as Municipal,  Panchayat,  Delhi  Development  Authority  or  any  other  body connected with the Union or the State Government.

12.If  the  proposed  name  is  vague  like  D.J.M.O  Limited  or  T.N.V.R  Private Limited or S.S.R.P Limited.

13.If a proposed name implies association or connection with or patronage of a national  hero  or  any  person  held  in  high  esteem  or  important  personages who  are  occupying  important  positions  in  Government  so  long  as  they continue to hold such positions.

14.If it resembles closely the popular or abbreviated descriptions of important companies  like  TISCO  (Tata  Iron  and  Steel  Company  Limited),  HMT (Hindustan  Machine  Tools),  ICI  (Imperial  Chemical  Industries),  TEXMACO (Textile  Machinery  Corporation),  WIMCO  (Western  India  Match  Company) etc. In some cases, the first word or first few words may be the key words and care should be taken that they are not exploited. Such words should not be allowed even though they have not been registered as trademarks.

a.   Where the existing companies are stated and found to be well known in  their  respective  fields  by  their  abbreviated  names,  these companies  may  be  allowed  to  change  their  names,  by  way  of abbreviation  with  the  prior  approval  of  the  Regional  Director concerned.

Department’s Circular, dated 31-03-1993

The abbreviated name will be considered only in the case of change of name under section 21 of the Companies Act, 1956, with the prior approval of the Regional Director concerned and should not be allowed for adoption by new companies. [Circular No. 4/93: F. No. 3/14/93-CL V, dated 31-03-1993]

Press Note, dated 05-05-1993

As  per  existing  guidelines,  the  companies  well  known  in  their  respective field  by  abbreviated  names  are  allowed  to  change  their  names  by  way  of abbreviation  (e.g.  ABC  Limited)  with  the  approval  of  Department  of Company  Affairs  after  following  the  requirement  of  Section  21  of  the Companies  Act,  1956.  It  has  now  been  decided  that  any  such  change  of name  will  require  only  the  prior  approval  of  Regional  Director  concerned.

The  company  will,  however,  continue  to  make  applications  in  Form  1A  for availability changed names to the concerned Registrar of Companies. It may be  noted  that  the  abbreviated  name  will  not  be  allowed for adoption  by  a new company proposed to be incorporated under the Act [No 3/14/93-CL V: Press Note No. 1/93, dated 05-05-1993]. The power of Central Government is now vested with the Registrar.

Department’s Circular, dated 16-02-1995

Presently,  there  is  a  restriction  on  use  of  abbreviated  names  (like  ITC Limited)  in  case  of  existing  companies  requiring  approval  of  the  Regional Director  concerned.  No  such  approval  of  Regional  Director  will  now  be necessary  and  ROCs  may  take  a  final  decision  on  such  applications  in  the light of existing guidelines. (Para iii) [Circular No. 1/95 F. No. 14/6/94-CL V, dated 16-02-1995]

15.If  it  is  different  from  the  name/names  of  the  existing  company/companies only to the extent of having the name of a place within brackets before the word  limited;  for  example,  Indian  Press  Limited.  To  this  rule,  however, frequent exceptions are made in the case of the subsidiary and in the case of a company carrying on local business and in other cases on their merits. As for an example, “Corner Garage (Delhi) Private Limited” may be allowed notwithstanding  that  there  is  an  existing  company  “Corner  Garage  Private Limited”  at  Calcutta.  So  would  be  “Regent  Cinema  Limited”  at  Madres,  if there  is  a  company  by  the  name  Regent  Cinema  (Delhi)  Limited.  These names may also be allowed if they are in the same group of management.

16.If  the  proposed  name  includes  common  words  like  “Popular,  General, Janta”, if they are in the same State doing the same business. But in case of companies in different business in the same State and in all cases when the registered  office  of the company  is in different  States,  the  name  might  be allowed.  For  instance,  if  there  is  “Popular  Drug  House  Private  Limited” existing,  another  company  by  the  name  of  “Popular  Plastics  Private Limited” should not be objected to.

17.If  it  includes  a  name  of  registered  trade-mark  unless  the  consent  of  the owner of the trade-mark has been produced by the promoters. It may not be possible  in  all  cases  to  check  up  the  proposed  name  with  the  trade  mark. However, if the Registrars are in the knowledge or some interested party / parties bring to their notice a trade mark which is included in the proposed name  then  it  should  not  be  allowed  unless  a  no-objection  certificate  is obtained from the party who has registered the trade mark in its own name.

[Note:  Section  20(2)/(3)  has  been  amended  by  the  Trade  Marks  Act,  1999. The  amended  section  now  provides  statutory  protection  of  trade  marks  in the matter of availability of name]

18.If  a  name  is  identical  with  or  too  nearly  resembles,  the  name  of  which  a company in  existence has  been  previously registered.  A few illustrations of closely resembling names are given below for guidance.  The names  as proposed in column 1 should not (normally) be made available in view of the companies  in  existence  as  shown  in  column  2.  However, if a  proposed company is to be under the same management or in the same group and like to have a closely resembling name to the existing companies under the same management  or  group  with  a  view  to  have  advantage  of  the  goodwill attached to the management or group name such a name may be allowed. Even  in  the  case  of  unregistered  companies  or  firms  who  have  built  up  a reputation  over  a  considerable  period,  the  principle  (that  if  a  name  is identical  with  or  too  closely  resembles  the  name  by  which  a  company  has been  previously  registered  and  is  in  existence,  it  should  not  be  allowed) should  be  observed  as  far  as  practicable.  In  view  of  the  difficulty  in checking  up  whether  a  proposed  name  is  identical  with  or  too  nearly resembles  the  name  of  an  unregistered  company  or  a  firm  of  repute,  it should  at  least  be  ensured  that  a  proposed  name  is  not  allowed  if  it  is identical  with  or  too  nearly  resembles  the  name  of  a  firm  within  the knowledge of the Registrar. The cases of foreign companies of repute should also be similarly treated even if there are no branches of such companies in India.

Proposed Name Existing Company too nearly resembling name
Hindustan Motor and General Finance Company Hindustan Motor Limited
The National Steel Mfg. Co. Private Limited National Steel Works
Trade Corporation of India Limited State Trading Corporation of India Limited
Viswakaram Engineering Works Private Limited Viswakaram Engineer (India) Private Limited
General Industrial Financing & Trading Co. Ltd. General Financial & Trading Corporation
India Land & Finance Limited Northern India Land & Finance Limited
United News of India Limited United Newspaper Limited
Hindustan Chemicals and Fertilizer Limited Hindustan Fertilizers Limited

19.If  it  is  identical  with  or  too  nearly  resembles  the  name  of  a  company  in liquidation,  since  the  name  of  a  company  in  liquidation  is  borne  on  the register  till  it  is  finally  dissolved.  A  name  which  is  identical  with  or  too closely resembles the name of a company dissolved as a result of liquidation proceeding should also not be allowed for a period of 2 years from the date of  such  dissolution  since  the  dissolution  of  the  company  could  be  declared void within the period aforesaid by an order of the Court under section 559 of the Act.

Further,  as  a  company  which  is  dissolved  in  pursuance  of  action  under section  560  of  the  Act  can  be  revived  by  an  order  of  the  court  before  the expiry  of  20  years  from  the  publication  in  the  Official  Gazette  of  the company  being  so  stuck  off,  it  is  considered  desirable  to  stop  or conditionally  allow  the  registration  of  a  proposed  name  which  is  identical with  or  too  nearly  resembles  the  name  of  such  dissolved  company  for  a period indicated below. Since the period of 20 years as prescribed under the law is considered an unduly long period, the registration of a proposed name which  is  identical  with  or  too  nearly  resembles  the  name  of  the  company dissolved in pursuance of section 560 should not be allowed for a period of first five years  only.  During the  next  five  years  such a  proposed  name may be  allowed  subject  to  the  condition  that  in  the  event  of  the  dissolved company  being  restored  to  life  by  an  order  of  the  Court  the  new  company would  have  to change its  name.  After  a  lapse  of ten  years,  name  identical with  or  too  nearly  resembling  those  of  the  dissolved  companies  may  be allowed without any such condition.

20.If  it  is  different  from  the  name  of  an  existing  company  merely  by  the addition of words like New Modern, Nay etc. Names such as New Bata Shoe Company,  New  Bharat  Electronic  etc  should  not  be  allowed.  Different combination of the same words also requires careful consideration. If there is  a  company  in  existence  by  the  name  of  “Builders  and  Contractors Limited” the name “Contractors and Builders Limited” should not ordinarily be allowed.

21.If it includes words  like  “Bank”,  “Banking”,  “Investment”, “Insurance”  and “Trust”.  These  words  may,  however,  be  allowed  in  cases  where  the circumstance justify it.  In  cases  of  banking companies  the  Reserve  Bank  of India  should  be  consulted  and  its  advice  should  be  taken  before  a  name  is allowed  for  registration.  The  purpose  of  such  consultation  is  to  prevent small banking companies from misleading the general public by adopting the names  of  some  well  established  and  leading  banks  functioning  elsewhere than  in  India.  In  case  of  differences  of  opinion  with  the  Reserve  Bank  of India the matter should be referred to the Board for advice.

22.If the name includes the word “Industries” or “Business” unless the name is indicative  of  the  business  of  the  proposed  company  for  otherwise  it  serves as a lever for the company to diversify its activities.

23.If  it  includes  proper  name  which  is  not  a  name  or  surname  of  a  director  – such names should not be allowed except for valid reasons. For example, for sentimental reasons, sometimes, the name of the relatives such as wife, son or daughter of the director may have to be allowed provided one other word suggested makes the name quite distinguishable.

24.If  it  is  intended  or  likely  to  produce  a  misleading  impression  regarding  the scope  or  scale  of  its  activities  which  would  be  beyond  the  resources  at  its disposal. For  example,  names  like  Water  Development Corporation  of India (Private)  Limited,  Telefilm  of  India  (Private)  Limited,  All  India  Sales Organization  Limited,  Inter  Continental  Import  and  Export  Company Limited,  etc.  should  not  be  allowed.  When  the  authorized  capital  is  to  be only  a  few  lakh  and  the  area  of  operation  limited  to  a  State,  words  like “International”, “Hindustan”, “India”, “Bharat”, “New India” etc., included in the proposed name need not stand the same test as Hindustan, India etc. (as they do not give the same sense). Similarly the words, Bharat, India etc. If stated in the bracket before the words limited or private limited need not stand  the  same  test  as  the  words  India,  etc.,  put  at  the  beginning  of  the name.  Also  the  word  “India”  or  “Bharat”  in  brackets  before  the  words limited or private limited does not necessarily mean that the company is an Indian Branch of some foreign company, such as “Marsdon Electricals (India) Private Limited”.

25.If the proposed name includes the word “State” along with the name of the State  such  as  Kerala  State  Company  Limited  should  not  be  allowed  as  it would  give  an  impression  of  the  Kerala  State  Government  participating  in the share capital of the proposed company. However, if the name of a State only  is  included  without  the  addition  of  the  word  “State”  in  the  proposed name  then it may be  allowed  as it is not likely to  give the impression that the company has the State Government’s interest in it.

26.If the proposed  name  includes  the  word  “Corporation”  unless  the  company could be recorded as a big sized company. However, the word “Corporation” and  “Company”  may  be  regarded  as  closely  resembling  for  purposes  of allowing  a  new  name.  For  example,  a  company  by  the  name  of  Rajasthan Finance  Company  should  be  regarded  as  undesirable  within  the meaning  of section  20  of  the  Act  as  another  company  by  name  “Rajasthan  Finance Corporation” already exists.

27.If  the  proposed  name  includes  words  like  French,  British,  German,  etc., unless  the  promoters  satisfy  that  there  is  some  form  of  collaboration  and connection  with  the  foreigners  of  that  particular  company  or  place  the name  of which is incorporated in  the  name. Thus, the name “German Tool Manufacturing Company Limited” should not be allowed unless the company has some connection with Germany.

28.Even  where  except  for  the  first  word  all  the  other  words  of  the  proposed name are similar to those of an existing company, the first word should be considered  to  be  sufficient  to  distinguish  it  from  the  name  of  the  existing company.  For  example,  “Oriental….  Limited”.  [Circular  Letter  No.  10(1)-RS/65,  dated  27-11-2965.  See  also  Circular  No.  10(19)-RS/61,  dated  05-05-1962]

The  word  “Hindustan”  should  be  kept  reserved  only  for  public  sector companies.  It  may,  however,  be  allowed  to  be  used  in  the  names  of  the private  sector  companies  in  a  large  way  of  business.  Similarly  the  word “Corporation”  may  be  allowed  in  the  name  of  the  company  in  case  the authorized  capital  is  more  than  Rs.  5  crores.  [Circular  No.  16/74  –  F.No. 27/9/74-CL-III dated 27.08.1974]

Further Guidelines for availability of names

Departmental Circular dated 13-05-1999

1.As  ROCs  are  aware  this  Department  has  issued  exhaustive  guidelines  on avoiding undesirable names for companies as mentioned in section 20 of the Companies  Act,  1956  through  Circular  No.  10(19)-RS/61  dated  05-05-1962. Further  guidelines  were  also  issued  through  Circular  No.  2/90  (No  1/1/90-CL-V-27/1/89-CL-III) dated 05-01-1990.

2.   In  recent  times  this  Department  had  received  a  few  references  which needed  further  clarification.  The  following  guidelines  /  clarifications  are accordingly issued.

3. Names starting with small letters / having small letters / alphabets

3.1 In  the  past  the  name  search  for  allowing  names  for  companies  used  to be  a  manual  search  based  on  list  of  names  already  in  existence  on  a particular date, names made available by different ROCs (which used to be circulated periodically) etc. The name search is no longer manual. It has become a computerized operation in all RoC offices. In view of this some  of  the  old  constraints  (like  alphabetical  listing)  which  could  be  a restrictive  factor  in  manual  system  do  not  exist  under  the  present computerized system.

3.2 ROCs may therefore now allow names starting with small alphabets (like i2 Technologies Ltd., etc) as such names are being increasingly used by many  companies  in  other  countries.  It  should  however  be  ensured  that the name starting with small alphabets does not have phonetic or visual resemblance to the name of a company in existence.

4. Change of name by companies on Computer Software Business

4.1 In  recent  times  it  appears  that  quite  a  few  companies  whose  principal object  was  not  computer  software  and  who  had  actually  involved  in financing activities have changed their names to indicate as if they were in  the  business  of  computer  software.  For  this  purpose  they  have included  words  like  –  “Infosys;  Software;  Systems;  Infosystem; Computers; Cyber; Cyberspace etc” in their names.

4.2 In order that investors are not misled by the strategy adopted by a few companies  ROCs  are  hereby  advised  that  in  future  they  should  allow change of name to companies to reflect the business of software only if a  substantial  portion  of  their  income  (as  reflected  from  their  audited accounts  or  accounts  certified  by  a  Chartered  Accountant)  is  derived from  software  business.  If  this  is  not  proved then  such change of  name should not be allowed.

5. Companies in Insurance Sector

5.1 It  may  be  recalled  that  in  Guideline  No.  21  (printed  above)  you  have been  advised  not  to  allow  the  word  “Bank”,  “Banking”,  ”Investment”, ”Insurance” and “Trust” unless circumstances justify it. The activities of the  Insurance  Sector  are  being  regulated  by  the  Insurance  Regulatory Authority.

5.2 In  view  of  this,  in  partial  modification  of  the  above  mentioned Guideline,  it  is  hereby  clarified  that  ROCs  may  allow  companies  to  be registered  by  them  with  the  word  “Insurance”  or  “Risk  Corporation”  as part  of  the  name  only  after  consulting  the  Reserve  Bank  of  India  and Insurance Regulatory and Development Authority.

Department’s Clarification, dated 30-06-2000

Attention  is  invited  to  this  Department’s  Circular  No.  6  of  1999 (5/35/98-CL-V)  dated  13th May  1999,  in  regard  to  allow  ability  of names for entrepreneurs seeking to promote companies for providing insurance  services,  in  terms  of  the  above  circular,  such  names  were being  given  only  after  consulting  the  Insurance  Regulatory Development Authority Act, 1999, with effect from 19th April 2000 the Department  has  received  a  reference  from  the  Insurance  Regulatory Authority advising that the embargo on registration of names by new companies  could  be  lifted.  In  view  of  this  all  ROCs  are  advised  that they  may  allow  names  with  the  word  insurance  /  assurance  or  Risk Corporation  as  part  of  the  name  without  any  need  to  consult  the Insurance Regulatory Authority. It is hereby clarified that such names can be allowed only to new companies and not for change of name as existing companies are not allowed to carry on any insurance activity. [Circular No. 5, Dated 30-06-2000]

Department’s circular dated 25-04-2003

In partial modification of General Circular No. 5/2000 dated 30th June 2000 it is hereby further clarified that since the Insurance Regulatory and Development Authority has been notified (Insurance Regulations, 2002  permitting  private  sector  companies  to  carry  on  the  insurance business,  the  Registrar  of  Companies  may  permit  change  of  name  of existing  companies  on  their  changing  the  objects  to  undertake  the business  of  insurance  brokers  also.  [Circular  No.  19/2003,  dated  25-04-2003, F. No. 5/6/2003-CL-V]

6. Use of Generic Names

6.1 Guideline  No.  5  relates  to  inadvisability  of  allowing  companies  to  have only  generic  names  without  any  other  proper  noun  preceding  / succeeding  it.  Under  this  category  would  come  the  word  “Y2K”  (i.e. Year 2000)

6.2 It may kindly be noted that this is a generic one and cannot be allowed for  any  company  as  a  “Stand  Alone”  name  [Issued  by  DCA,  vide  No. 5/35/98-CL-V: General Circular No. 6/99, dated 13-05-1999]

Use  of  Name  of  “Chamber  of  Commerce”  in  UK  –  In  England  the  Company and Business Names (Chamber of Commerce, etc) Act 1999 restricts the use of the name chamber of commerce by companies.

Guidelines as to use of Key words

1. “With  a  view  to  maintain  uniformity,  the  following  guidelines  may  be followed  in  the  use  of  keywords,  as  part  of  name,  while  making  available the proposed names under section 20 and 21 of the Companies Act, 1956

S.No. Key Words Required Authorized Capital
1 Corporation Rs. 5 Crore
2 International, Globe, Universal, Continental, InterContinental, Asiatic, Asia being the first word of thename Rs. 1 Crore
3 If any of the words at (2) above is used within the name(with or without brackets) Rs. 50 Lakh
4 Hindustan, India, Bharat being first word of the name Rs. 50 Lakh
5 If any of the words at (4) above is used within the name(with or without brackets) Rs. 5 Lakh
6 Industries / Udyog Rs. 1 Crore
7 Enterprises, Products, Business, Manufacturing Rs. 10 Lakh

2.   These  names  with  key  words  at  Serial  Nos.  (6)  And  (7)  may  be  considered when  the  company  proposes  to  deal  in  various  business  activities  or  the company  is  already  carrying  on  various  business  activities  (in  the  case  of change  of  name).  F.  No.  27/1/87-CL-III  dated  13-03-1989:  (1989)  65  com cases 536 (St.)

No objection from applicants who do not sign memorandum & articles

I.   Department’s Circular

“As per Application Form for availability of names (Form No. 1A) prescribed under  rule  4A  of  the  Companies  (Central  Governments)  General  Rules  and Forms, 1956, the promoters are, inter alia, required to give the names and addresses  of  the  prospective  directors  or  promoter,  as  also  the  name  and address of the person(s) applying for availability of name. You are requested to advise your constituents to ensure that the application form is filled up in all respects and application is made by one or more amongst the promoters.

The  Registrars  of  Companies  have  been  advised  to  ensure  at  the  time  of registration of a new company that the subscribers to the memorandum and the  articles  of  association  tally  with  the  list  of  promoters  /  first  director stated in the application for availability of name and in case, one or more of the  promoters  are  not  interested  to  participate  in  the  promotion  of  a  new company  at  a  later  state.  “No  objection  letter”  from  such  promoter(s)  is made  available  to  the  Registrar,  while  submitting  the  documents  for registration.  The  Registrars  of  Companies are  also  being  advised  to  dispose of  applications  for  availability  of  name  ordinarily  within  14  days  of  the receipt of application and to correspond with the applicant promoter(s), in this  behalf”  No. 27/1/89-CL-III  dated  17-02-1989: (1989)  65 Com Cases  575 (St.)

II.  Department’s Circular

“I  am  directed  to  refer  to  this  Department’s  Circular  No.  27/1/89-CL-III dated 17th February 1989 [Printed above] on the above subject, wherein you were  requested  to  advise  your  constituents  to  ensure  that  the  application form  is  signed  by  one  or  more  amongst  the  promoters  and  in  case  one  or more of the promoters are thereafter no more interested in participating in the  promotion  of  the  new  company,  a  no  objection  letter  from  such promoter  is  made  available  to  the  Registrar  of  Companies  at  the  time  of registration  of  the  new  company.  Instances  came  to  the  notice  of  the Department that some promoters are pre-empting the names, which is not a healthy  practice.  It  has,  accordingly,  been  decided  that,  in  future, Registrars  of  Companies  should  register  the  company  only  in  cases  where the  promoters,  as  per  availability  of  name  and  application,  are  also  the subscribers to the memorandum and articles of association of the proposed company at the time of its registration. In case of any change in the name(s) amongst the subscribers the changed subscribers are advised to make fresh application  for the availability  of name.  The  Registrar  may,  as  per  existing procedure, allow the same name, if otherwise available, after three months from  the  date  when  the  name  was  allowed  to  the  original  promoter(s)”. Circular No. 1 of 1990 dated 5th January 1990; (1990) 67 Com Cases 230 (St.)

III. Department’s Circular dated 16-02-1995

The Department vide Circular No. 27/1/89/CL-III dated 17-02-1989 [Printed above] advised the ROCs to ensure that at the time of registration of a new company,  the  subscribers  to  the  Memorandum  of  Association  should  tally with  the  list  of  promoters  /  first  directors  stated  in  the  application  for availability  of  name  and  in  case  one  or  more  of  the  promoters  are  not interested  in  participation  in  the  promotion  of  a  new  company  at  a  later stage,  a  “no  objection”  letter  from  such  promoter(s)  is  made  available  to RoC. This circular was amended on 05-01-1990 (No. 1/90) [Printed above] to the  effect  that  ROCs  should  register  the  company  only  in  case  where  the promoters as per the availability of name application are also subscribers to the  Memorandum.  On  reconsideration  it  has  now  been  decided,  in  partial modification  of  the  above  circular,  that  so  long  as  there  is  at  least  one promoter common both in name availability application and the subscription clause  of  Memorandum  &  Articles  of  Association,  and  others  have  no objection,  the  company  may  be  registered.  (Para  ii)  [Circular  No.  1/95,  F. No. 14/6/94-CL-V dated 16-02-1995].

Incorporation of Stock Exchanges, advance approval of name by SEBI

I  am  directed  to  draw  your  attention  to  this  Department’s  Circulars  No. 27/22/85-CL-III  dated  13-01-1986  and  23-03-1993  on  the  above  subject  and  to enclose  a  copy  of  letter,  dated  18-03-1996  [Printed  below]  received  from  the Chairman,  SEBI  in  this  regard.  You  are  requested  to  ensure  that  under  no circumstance a company is registered with the words “Stock Exchange” as part of its name without obtaining in principle approval / no objection of Securities and Exchange Board of India. It may kindly be noted that non-compliance with these instruction will be viewed very seriously.

Copy of SEBI’s letter, dated 18-03-1996

It  has  come  to  our  notice  that  certain  companies  calling  themselves  Stock Exchanges  are  enrolling  members  and  collecting  substantial  deposits  from them. The companies who have  not  obtained  permission to operate as a stock exchange  under  section  19  of  Securities  Contracts  (Regulation)  Act,  1956  or have not been granted recognition by Central Government / SEBI under section 4 of the above Act are collecting such deposits in violation of the provisions of the  said  Act.  Section  19(1)  of  Securities  Contracts  (Regulation)  Act,  1956 prohibits  organizing  or  assisting  in  organizing  any  stock  exchange  without  the permission of the Central Government / SEBI.

In this regard, we request you not to allow such names to new companies which have  the  words  “Stock  Exchange”  in  them  unless  they  have  been  given  in principle  approval  of  “No  objection”  from  SEBI.  This  would  ensure  that  the investors  are  not  misled  by  such  names  into  dealing  with  members  of unrecognized  stock  exchanges  [Circular  No.  3/96,  vide  No.  3/4/96-CL-V  dated 12-04-1996] .

Incorporation of Venture Capital Companies

Department’s Circular

As  per  guidelines  issued  by  the  Ministry  of  Finance,  Department  of  Economic Affairs vide press release No: S 11(86)-CCI/11/87,  dated 25-11-1988, only such venture capital companies which abide by these guidelines shall take advantage of tax benefits. As per guidelines, approval would be given for establishment of venture  capital  companies  /  funds  by  the  Department  of  Economic  Affairs  or such  authority  as  many  be  nominated  by  the  Government.  It  is  possible  that some promoters may float a company and call it a Venture Capital Company but may  not  avail  of  the  tax  benefits  available  to  such  companies  and  in  such  a situation,  a  common  investor  would  not  be  able  to  distinguish  between approved  venture  companies  which  are  within  the  discipline  of  the  guidelines and  eligible  for  tax  benefits  from  those  who  call  themselves  Venture  Capital Companies, but prefer to remain outside the guidelines and forego tax benefits. To avoid such eventuality, it has been decided that the words “Venture Capital / Venture Capital Company / Venture Capital Finance Company” or such similar name  as  part  of  the  proposed  name  of  a  company  be  only  allowed  when  the company  or  the  promoters  have  obtained  approval  from  the  Department  of Economics Affairs or such authority as may be nominated by the Government on this behalf”. Circular No. 13/90 dated 27-08-1990.

Incorporation of Asset Management Companies (AMCs) other intermediaries

Guidelines for registration of AMCs

Department’s Circular I

The  following  guidelines  are  issued  in  respect  of  registration  of  Asset Management  Companies  (AMCs)  in  consultation  with  the  Securities  and Exchange Board of India:

(a) Approval  of  AMC  by  SEBI:  As  per  guidelines,  AMC  shall  be  authorised  for business  by  SEBI  on  the  basis  of  certain  criteria  and  the  memorandum  and articles  of  association  of  the  AMC  would  have  to  be  approved  by  SEBI. Accordingly,  you  are  advised  not  to  register  any  company  under  the Companies  Act  1956,  without  the  memorandum  and  articles  of  association being approved by SEBI.

(b) Authorized Capital of AMC: The primary objective of setting up of an AMC is to manage the assets of the mutual funds and other activities which it can carry out, such as, financial services consultancy which do not conflict with the  fund management activity and  are  only secondary  and  incidental. That being  so,  it  may  not  be  practical  to  expect  a company  to  be set  up with  a paid-up capital of Rs. 5 crores to carry on only incidental activities, without any assurance of its receiving an approval from SEBI to act also as an Asset Management  Company  for  a  mutual  fund.  You  should,  therefore,  not  have any  objection  in  registering  an  AMC  is  the  authorized  capital  of  such  a company is approved by SEBI.

3.   A  copy  of  these  guidelines may also  be  placed on  the  notice  board  of  your office  for  general  information.  (Department’s  Circular  No.  4/92;  F.  No. 3/14/92-CL-V dated 02-09-1992, addressed to Registrar of Companies)

Department’s Circular II

“Some Registrars are insisting upon the promoters proposing to carry on  the  activity  as  merchant  bankers,  registrars  to  an  issue, investment advisers, portfolio managers, etc to obtain prior approval of  SEBI  before  making  available  the  proposed  name  or  incorporation of  a  company.  In  this  connection,  it  may  be  pointed  out  that  under section  12  of  the  SEBI  Act,  1992  the  intermediaries  associated  with securities  market  are  required  to  seek  registration  by  making  an application to SEBI, as per regulation made there under, which inter alia require the applicant to state the date and place of registration, details  of  directors,  as  also  to  furnish  Memorandum  and  Articles  of Association,  if  the  applicant  is  a  company.  However  in  terms  of Regulation  18(2)  of  the  SEBI  (Mutual  Fund)  Regulations,  1993,  Asset Management  Companies  (AMCs)  are  required  to  submit  to  SEBI  their respective  Memoranda  and  Articles  of  Association  for  approval.

Therefore, unlike the Memoranda and Articles of Association of other intermediaries, it would be in the interest of concerned AMC’s to get their  Memoranda  and  Articles  of  Association  cleared  by  SEBI  before the same are presented to the concerned Registrar of Companies for registration.  In  view  of  the  above,  you  are  requested  not  to  insist upon seeking prior approval of SEBI for registration of intermediaries like  merchant  bankers,  Registrar  to  an  issue,  investment  adviser, portfolio manager etc. However, this Department’s Circular No. 4/92 (No. 3/14/92-CL-V) dated 02-09-1992 will continue to be in force and you  may  register  an  AMC  only  after  its  draft  Memorandum  and Articles of Association is cleared by SEBI” (Department’s Circular No. 5/94; f. No. 3/14/92-CL-V dated 15-04-1994, addressed to Registrars of Companies)

User of the words “NIDHIS” or “Mutual Funds” as part name

The  Registrars  of  Companies  (ROCs)  have  been  directed  by  the Department  of  Company  Affairs  (DCA)  not  to  allow  registration  of names with words “mutual funds” forming part of some Non-Banking Financial  Companies  (NBFCs  /  NIDHIS  under  Section  20  of  the Companies  Act,  1956)  unless  such  companies  are  going  to  be incorporated actually as mutual funds. ROCs have been informed that companies  declared  as  NIDHIS  and  mutual  benefits  societies  under section 620A of the Companies Act are  not  mutual funds. Therefore, names with words “mutual funds” forming part thereof shall also not be  allowed  to  companies  proposed  to  be  incorporated  as  “NIDHI”  or “mutual benefit societies”. It has come to the notice of the DCA that some  NBFCs  or  NIDHIS  have  been  registered  with  words  “mutual funds”  forming  part  of  their  names,  although  they  are  not  actually mutual  funds.  This  is  likely  to  create  confusion  in  the  minds  of investors. In case where NBFCs or NIDHIS have already been asked to get their names changed under section 21 of the Companies Act, 1956 within a reasonable time of six months failing which report would be sent  to  the  DCA  for  initiating  action  for  withdrawal  of  notification issued in  their favour  under section 620A of the companies  Act. [PIB Press Release New Delhi dated 14th February 2000]

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0 responses to “Guidelines for deciding cases for availability of names for formation of Companies under Companies Act, 1956”

  1. SWATI says:

    WHAT WILL BE THE AUTHORISED CAPITAL WHEN THE WORD INDIA IS ADDED ON THE NAME OF THE COMPANY

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