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MCA guidelines for name approval of companies and LLPs

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 appropriate guidelines and procedures for name reservation of the company or a Limited Liability Partnership (LLP). The objective of this article is to present the statutory principles and relevant laws that must be mandatorily followed while reserving the name of a company.

List of What is not allowed as a Company name!

S.No List
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 name of a company/LLP, 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 limitations on what can be desirable/undesirable as names of a company/LLP.

Table of Contents

Activity as Part of 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; the name of the company 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 name 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 name of the company or the LLP. 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 names starting with a coined word which have a reference to the objective are sometimes allowed.

Trademark Provisions on Name

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.
Professional Name Search & Main Object Drafting
Place online request for professional name search and availability analysis report and drafting of the main object for the company or LLP incorporation in India.
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Companies Act Guidelines

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
  1. be the same, similar, or deceptively identical to the name of an existing and registered company or LLP
  2. is such that its use by the company will constitute an offence under any law in force, for the time being.
  3. is undesirable in the opinion of the Central Government.
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.
  1. A detailed illustrative explanation as to what is identical
  2. List of names that are undesirable
  3. A list of words, if used in the name of the company, requires prior approval of the Central Government.
Principles that govern identical words
According to rule 8, the names of companies shall be considered as same or similar, even if they contain word/s with different
  • If only the word that defines the legal status of the company is differently spelt.
  • grammatical numbers (singular or plural)
  • case (upper or lower)
  • Definite and indefinite articles
  • tense
  • numbers
  • special characters
  • Domain extensions
  • Spelling and grammar
  • Complete translations in Hindi or English
However, companies with identical names but different legal statuses shall be considered different. Such names will be valid for a new company if the existing company with the identical name issues a No Objection Certificate.
List of undesirable words
Rule 8A mentions ‘undesirable names’ for companies, the provisions for which have been listed below. Such names have been considered undesirable for all companies, which
  • are obscene, vulgar, or offensive to a particular community
  • are prohibited under section 3 of the Names and Emblemb’s Act, 1950,
  • are registered as trademarks under the Trademarks Act,1999
  • Resembles the popular name or abbreviation of an existing company
  • Resembles the name of a foreign company that has reserved its name with a Registrar in India.
  • Implies connection or association with a foreign embassy, consulate, or government.
  • Carries patronage of the government and important national and international personalities
  • Identical to the name of a company dissolved not less than 2 years ago, as a result of liquidation proceedings
  • Contains the name of a country, continent, state, or city only.
Note:Other mandatory conditions for naming a company include
  • the company’s name should be reflective of its business activity, especially if it carries out financial activities like funding, investment, chit fund, leasing, etc.
  • If the difference between the names of an existing company and a new company is an added name of a place only, the latter shall be considered invalid.
  • If a company has been struck off under section 560 of the Companies Act 1956, its name shall not be available for 20 years from the date of striking off.

Following words, if used in the name of the Company, requires the prior approval of the Central Govt.

Board
Federal
Municipal
Forest Corporation
Commission
Republic
Panchayat
Development Scheme
Authority
President
Development Authority
Statute/Statutory
Undertaking
Rashtrapati
Prime Minister
Court/ Judiciary
National
Small Scale Industries
Chief Minister
Governor
Union
Khadi and Village Corporation
Minister
Scheme, with words that are representative of the Government, like State, Bharat, Indian, etc.
Central
Financial Corporation
Nation
Name of a scheme launched by the Central or State Government

Process for Name Reservation.

The procedure for reserving the name of a company/LLP has been completely digitised for the convenience of applicants. The procedure is extremely quick, easy, and cost-effective, both for the applicants and authorities. The MCA even provides the free of cost facility for auto-search of a valid name for the company/LLP. For reserving the name of a new company, the applicant may use the following forms:
  1. RUN- RUN is a web-based service which can be used to reserve the name of a new company/ LLP or change the name of an existing company/LLP. The service is available on the MCA website. It provides an option of proposing two names at a time, with two chances of resubmission if they are invalidated. After the two chances of resubmission are over, the Registrar (CRC) either rejects or accepts the application If rejected, the applicant will have to file a new application with new names proposed, whereas, if accepted, the applicant shall receive an acknowledgement letter for the same. 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. The application fee of RUN for a company is Rs.1,000, whereas for an LLP is Rs.200.

  2. SPICe+/ FiLLiP– These are forms for application for incorporation of a company/LLP. The name of a company can be reserved by filling out PART-A of the online SPICe+, while the name of an LLP can be reserved using the online FiLLiP form. Both the forms can either be submitted alone or along with the complete application for incorporation. In the former case, the applicant can propose two names at a time, while in the latter case, only a single name can be proposed at a time.

How can SetIndiabiz Help?

The name of a startup is one of its most significant aspects, and it must be chosen after considering all the legal provisions regarding the same. Searching for the availability and validity of a name on Google is neither enough nor appropriate. You may submit your proposed name to our expert team at setindiabiz, and we shall come up with a feasibility report for the same without any charges.
Our team also carries the legal and technical expertise in company registration, backed by years of experience, and with fully functional offices all over India, we are one of the most popular agencies in India. Our robust customer support system is quick to respond during working hours. If you wish to avail of our services, you may use the above link to chat with us on WhatsApp.

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 that must be followed while choosing and reserving the name of the company/LLP. This article emphasises the details of all such mandatory principles and hence, is of immense help to our readers, especially those planning to establish a new company/LLP in the near future.

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.

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