Introduction: In the realm of company law, the process of naming a company and subsequently altering its name holds immense legal and strategic significance. The Companies Act, 2013, a pivotal legislation governing the functioning of companies in India, outlines distinct provisions for name availability at the time of incorporation and the process to change a company’s name post its incorporation. This article elucidates the disparities between these two processes, underlining the legal nuances and practical implications associated with each.
Section 7 of the Companies Act, 2013 (hereinafter ‘the Act’) deals with the Incorporation of Company. Where an application is filed to Registrar of Companies (ROC) along with supportive documents mentioned therein the said Section.
First step to incorporate the Company is to keep a name of the Company in order to give identity to Company.
SECTION 4 OF THE ACT
The name can end with the last word as ‘Limited’ in case of Public Company or ‘Private Limited’ in case of Private Company in compliance of Section 4(1)(a) of the Act.
Clause I of the Memorandum of Association of the Company states the Name Clause. The Company seeking its name whether at time of incorporation or after incorporation, the application shall be made with Central Registration Centre (CRC). The name of the Company shall be in compliance of Section 4 of the Act read with Rule 8 & 9 of the Companies (Incorporation) Rules, 2018.
One of the restriction to have a name of the Company is that- The name of the Company shall not be similar to other existing Companies and to distinguish the Companies, Name Availability needs to checked on Ministry of Corporate Affairs ‘MCA21’ Portal.
For Example: An application is made to reserve name ‘Gupta Traders Private Limited’, which is similar to existing Company i.e. ‘Gupta Trader Private Limited’. The name would not be approve as both are very similar to one another and may create confusion in minds of investors of the existing Company.
Thus, the name of the Company shall be distinct to name of other Companies, however, shall be similar to the business activities to be carried by the proposed Company.
Further, if the Company desires to change its name after its incorporation, then an application shall be in compliance of Section 13(2) of the Act in order to reserve the new name of the existing Company.
In lateral interpretation, there is a difference in process to avail and reserve a name of the Company and to change and reserve new name of the Company.
Following is a difference for your better understanding:
DIFFERENCE BETWEEN NAME AVAILABILITY AND CHANGE OF NAME
The dissimilarities between the processes of name availability and change of name are evident in various facets:
|S. No||Basis||Name Availability||Change of Name|
|1||Section||Section 4 (1) (a)||Section 13(2)|
|2||Form to be filed||Spice+ Part A||Reservation of Unique Name i.e. RUN|
|3||When applied||Before/at time of Incorporation||After the Incorporation.|
Conclusion: The divergence between name availability and change of name processes in the Companies Act, 2013, emphasizes the legal intricacies and practical considerations that businesses must navigate. The choice of a company name sets the tone for its journey, while a name change reflects the company’s adaptability and evolution. Comprehending these distinctions is vital for entrepreneurs, legal professionals, and stakeholders to ensure compliance and effective decision-making in the dynamic corporate landscape.