Change in name of the company as per SEBI LODR 2015 AND Companies Act, 2013
During the tenure of the company there are many reasons for change in name of the company like change in object clause or convert itself from one form of company to other form, rectification of name of the company or through any other reason. For a company, if the name is changed than it needs to go through a legal procedure mentioned in Companies Act, 2013 and if the same is listed entity, then it needs to comply SEBI (LODR), 2015 regulations as well. Let’s have a look for the same as per Companies Act and as per SEBI (LODR) 2015.
As per Companies Act, 2013
Section 13(2) of Companies Act, 2013 states that: –
Any change in the name of a company shall be subject to the provisions of sub-sections (2) and (3) of section 4* and shall not have effect except with the approval of the Central Government in writing:
Provided that no such approval shall be necessary where the only change in the name of the company is the deletion therefrom, or addition thereto, of the word “Private”, consequent on the conversion of any one class of companies to another class in accordance with the provisions of this Act.
Example: – If PQR Private limited wants to convert itself to public limited company, it needs to have PQR Limited in its name. If such change is there, there is no need of getting approval from Central Government.
(3) When any change in the name of a company is made under sub-section (2), the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name and the change in the name shall be complete and effective only on the issue of such a certificate.
Explanation: – This means that change of name of company shall have effect only after getting Certificate of Incorporation from Registrar. Till then, company cannot use its new name.
*Section 4(2) and 4(3) states that:
(2) The name stated in the memorandum shall not—
(a) be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or
(b) be such that its use by the company—
(i) will constitute an offence under any law for the time being in force; or
(ii) is undesirable in the opinion of the Central Government.
(3) Without prejudice to the provisions of sub-section (2), a company shall not be registered with a name which contains—
(a) any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or
(b) such word or expression, as may be prescribed,
unless the previous approval of the Central Government has been obtained for the use of any such word or expression.
Change of name shall not be allowed in the following cases: –
(1) The change of name shall not be allowed to a company which has not filed annual returns or financial statements due for filing with the Registrar or which has failed to pay or repay matured deposits or debentures or interest thereon:
Provided that the change of name shall be allowed upon filing necessary documents or payment or repayment of matured deposits or debentures or interest thereon as the case may be.
(2) An application shall be filed in Form No.INC.24 along with the fee for change in the name of the company and a new certificate of incorporation in Form No.INC.25 shall be issued to the company consequent upon change of name.
As per SEBI (LODR) 2015
REGULATION 45 states that
Change in name of the listed entity.
(a) a period of at least 1 year has elapsed from the last name change.
(b) at least 50% of the total revenue in the preceding 1year period has been accounted for by the new activity suggested by the new name; or
(c) the amount invested in the new activity/project is atleast 50% of the assets of the listed entity:
Provided that if any listed entity has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of 6 months from the change of activities in compliance of provisions as applicable to change of name prescribed under Companies Act, 2013.
(2) On satisfaction of conditions at sub-regulation (1), the listed entity shall file an application for name availability with Registrar of Companies.
(3) On receipt of confirmation regarding name availability from Registrar of Companies, before filing the request for change of name with the Registrar of Companies in terms of provisions laid down in companies Act, 2013 and rules made thereunder, the listed entity shall seek approval from Stock Exchange by submitting a certificate from chartered accountant stating compliance with conditions at sub-regulation (1)
If the listed entity has changed its name suggesting any new line of business, it shall disclose the net sales or income, expenditure and net profit or loss after tax figures pertaining to the said new line of business separately in the financial results and shall continue to make such disclosures for the 3 years succeeding the date of change in name:
Provided that the tax expense shall be allocated between the said new line of business and other business of the listed entity in the ratio of the respective figures of net profit before tax, subject to any exemption, deduction, or concession available under the tax laws.
Practical aspect for change in name: –
1. Hold Board meeting.
2. Check name availability with ROC.
3. Hold EOGM.
4. Filing of necessary forms with ROC
5. Get Certificate of Incorporation
6. As it is material event it needs to inform to BSE and intimated to BSE.
7. If the entity is listed, file application for the approval of Stock exchange for change in name, along with CA certification.