Companies Act 2013

Section 16: Rectification of name of Company.

Rectification of name of Company.

16. (1) If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which,—
(a) in the opinion of the Central Government, is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose;
(b) on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999, made to the Central Government within three years of incorporation or registration or change of name of the company, whether under this Act or any previous company law, in the opinion of the Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of six months from the issue of such direction, after adopting an ordinary resolution for the purpose.
(2) Where a company changes its name or obtains a new name under sub-section (1), it shall within a period of fifteen days from the date of such change, give notice of the change to the Registrar along with the order of the Central Government, who shall carry out necessary changes in the certificate of incorporation and the memorandum.
(3) If a company makes default in complying with any direction given under sub-section (1), the company shall be punishable with fine of one thousand rupees for every day during which the default continues and every officer who is in default shall be punishable with fine which shall not be less than five thousand rupees but which may extend to one lakh rupees.

This provision is covered by Chapter II on INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO [Section 3 to 22].

Section 16 is brought to force from April 01, 2014.
For this chapter, the Companies (Incorporation) Rules, 2014 (‘the Rules’) are notified with effect from April 01, 2014. However no rule is specified under the Rules.

Corresponding provisions of the Companies Act, 1956:
Section 22

Corresponding provisions of the English Companies Act, 2006:
Sections 67, 68 and 69.

Applicability:
This section is applicable to all companies.

Comments:
This section confers power to the Central Government to order companies to rectify its name where the name is allowed to the company through inadvertence or otherwise which in its opinion is identical with or too nearly resembles with the name
(a) by which a company is already incorporated under the 2013 Act or any previous company law; or
(b) of registered trade mark under the Trade Marks Act, 1999.

(a) Where the Central Government suo motu frames an opinion that either through its inadvertence or otherwise, a company is registered by a name or changes its name, which is identical with or too nearly resembles with the name of another company registered under the Companies Act (of 2013 or earlier Company law), then it may (at its discretion) after giving opportunity of hearing to the company, direct it to change its name.

The Central Government necessarily looks at name application of change of name application, as the case may be, and frames  an opinion as to whether name was allowed inadvertently or otherwise, which should not have been allowed.
Upon receipt of order of the Central Government to change the name, the company shall mandatorily change its name within a period of three months by obtaining consent of shareholders by ordinary resolution.

(b) If a company is registered by a name or changes its name, which is allowed by the Central Government either through inadvertence or otherwise, and is identical with or too nearly resembles a registered trade mark under the Trade Marks Act, 1999, then the owner of such a registered trade mark can  apply to the Central Government to direct such company for rectification of its name. Such application shall be made within 3 years of its incorporation or change of name by a company, as the case may be. [Section 16(1)(b)].
Under 1956 Act, such an application could be made within 5 years of coming to notice of registration of company. Thus, under 2013 Act, lesser time is given to owners of registered trade marks to apply the Central Government.

The Central Government, after giving opportunity of hearing to applicant and the company, need to frame an opinion as to whether the name of the company is identical or too nearly resembles with the registered trade mark or not. After hearing, if the Central Government frames such an opinion, then it may direct the company to change its name.

Upon receipt of order of the Central Government to change the name, the company shall mandatorily change its name within a period of six months by obtaining consent of shareholders by ordinary resolution.  [Section 16(1)(b)]. Under 1956 Act, the company was required to change its name within three months of receipt of order of the Central Government.

Where the Central Government frames an opinion that the name of the company is not identical or too nearly resembles the registered trade mark of the applicant, then it may reject the application. In such cases, applicant is left with civil remedies (injunction including ad interim / temporary injunction, stay, damages, appointing commissioner (akin to an “Anton Pillar Order”) to search, seizure (seal) of goods, accounts etc.) as there is no appeal provision under the Companies Act. It is pertinent to note that the Indian trademark law protects the vested rights of a prior user against a registered proprietor which is based on common law principles.

Within 15 days of changing name, the company shall give notice to the Registrar of Companies along with the order of the Central Government and the Registrar shall carry out necessary changes in the certificate of incorporation and the memorandum (name clause of memorandum).

Penalty:
If order of the Central Government is not obeyed,
(i) the company shall be punishable with a fine of Rs.1000/- for every day until the order of the Central Government is obeyed; and
(ii) every officer of the company who is in default shall be punishable with a fine of not less than Rs.5,000/- and which may extend upto Rs.100,000/-.

Adjudication:
Under Section 454, the officer appointed by the Central Government, not below the rank of Registrar of Companies, may adjudicate and impose monetary penalty for violation of this section. However, before imposing penalty, an opportunity of hearing shall be given to the Company and its officers.

Compounding:
It may be noted that under section 441, where offence is punishable with fine only, the same may be compounded by the National Company Law Tribunal or where the fine does not exceed Rs.5,00,000/- by the Regional Director or any other officer authorised by the Central Government.

Summary of forms and records:
No format of application to the Central Government is prescribed.

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Companies Act 2013

Section 12: Registered Office of the Company.

Chapter II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

Provisions of the Companies Act, 2013:
Section 12: Registered Office of the Company
Rule 2.22 to 2.25 of the Companies Rules, 2013
[Section 12 is not yet brought to force and the Companies Rules, 2013 is not yet brought to force]

Corresponding provisions of the Companies Act, 1956:
Sections 146 and 147

Corresponding provisions of the English Companies Act, 2006:
Sections 86 and 87

Applicability:
This section is applicable to all companies.

A company shall on and from the 15th day of its incorporation and at all times thereafter, have a registered office for receiving and acknowledging all communications and notices as addressed to the company. [Section 12(1)].

Verification of Registered office:
The company shall furnish to the Registrar of Companies (ROC) a verification of its registered office in Form no. 2.25 along with the following documents within 30 days of its incorporation [Section 12(2) r/w rule 2.22]:

1. Registered document of the title of the premises of the registered office in the name of the company; or
2. Notarized copy of lease / rent agreement in the name of the company along with a copy of rent paid receipt not older than one month;
3. Authorization from the owner or authorized occupant of the premises along with proof of ownership or occupancy authorization, to use the premises by the company as its registered office;
4. Document of connection of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner/document as the case may be which is not older than 2 months.
5. the list of all other companies with their CIN, having the same unit/tenement/premises as their registered office address.

 

Publication of Name of the Company: [Section 12(3) r/w rule 2.23]
A company shall paint or affix its name and the address of its registered office outside every office of the company in a conspicuous position in legible characters. Where the name of the company is in language which is not used in that locality, where the registered office of the company is situated, in such case, name and address shall be affixed in that language and also in local language. The Company shall have its name engraved on common seal.

Further, the company shall print its name, registered office address, corporate identity number along with telephone number, fax number, email and website addresses, if any, in all its business letters, billheads, letter papers and in all its notices and other official publications. The company shall print its name on hundies, promissory notes, bills of exchange and such other documents as and when notified by the Central Government.

Where a company has changed its name or names during the last two years, it shall affix or paint or print the former name of the company outside every office of the company in legible characters, and in all its official publications mentioned above.

In case of One Person Company, a company shall affix, print or engrave the words “One Person Company” in bracket below the name of the Company.

 

Notice and verification of change of registered office: [section 12(4) r/w rule 2.24]

1. A company shall give intimation of change in registered office of the company (within the local limits of city, town or village where such office is situated) to ROC within 15 days of such change in Form no. 2.25.

2. Change in / shifting of the registered office of the company within the same State but outside the local limits of city, town or village where such office is situated: [Section 12(5) r/w rule 2.25]

Approval of the members of the company by way of special resolution is required for shifting of the registered office of the company within the same State but outside the local limits of city, town or village where such office is situated.

3. Further, if shifting of the registered office of the company within the same State but outside the local limits of city, town or village where such office is situated results into falling of new registered office within the jurisdiction of another ROC within the same State then prior approval of the Regional Director is also required to be obtained.

Before making an application to the Regional Director, the company shall publish a notice in newspapers as under:

Atleast one month before filing any application with the Regional Director for the change of registered office, notice shall be published:
(a) at least once in a daily newspaper published in English and in the local language where the registered office of the company is situated and
(b) serve individual notice on each debenture holder, depositor and creditor of the company;
clearly indicating the matter of application and stating that any person whose interest is likely to be affected by the proposed alteration of the memorandum may intimate his nature of interest and grounds of opposition to the Regional Director with a copy to the company within twenty one days of the date of publication of that notice:
In case no objection is received by the Regional Director within twenty one days from the date of service or publication of the notice, the person concerned shall be deemed to have given his consent to the change of registered office proposed in the application:
The shifting of registered office shall not be allowed if any inquiry, inspection or investigation has been initiated against the Company or any prosecution is pending against the company under the Act. [2nd proviso to rule 2.225].

As per Section 12(6) & (7), the Regional Director shall give its confirmation within 30 days from the date of receipt of application made by the company. Further, the company shall file the confirmation with ROC within 60 days from the date of confirmation. The Registrar shall certify the same within 30 days from the date of filing of such confirmation and issue certificate of registration and the change shall take effect from the date of said certificate.

4. Shifting of registered office from one State of India to another is covered by provisions of section 13.

Penalty:
If default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of Rs. 1,000 for every day during which the default continues which shall not exceed Rs. 1,00,000 [Section 12(8)]

Nature of offence:
Since officers of company may be punished with imprisonment, it is necessary to decide nature of offence.
As violation of the section 12 is not covered under sub-section 6 of section 212, it is non-cognizable offence as provided in section 439.

Adjudication:
Under Section 454, the officer appointed by the Central Government, not below the rank of Registrar of Companies, may adjudicate and impose monetary penalty for violation of this section, where it decides that no prosecution be launched. However, before imposing penalty, an opportunity of hearing shall be given to the Company and its officers.

Compounding:
It may be noted that under section 441, where offence is punishable with fine only, the same may be compounded by the National Company Law Tribunal or where the fine does not exceed Rs.5,00,000/- by the Regional Director or any other officer authorised by the Central Government.
Both company and every officer who is in default may apply for compounding for violation of section 12.

Summary of forms and records
A verification of its registered office and notice of every change in registered office of the company shall be filed in Form No. 2.25 (Rule 2.22 and Rule 2.24)
An application for obtaining approval of the Regional Director is required to be made in Form no. 2.26 along with the fees (Rule 2.25)

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Companies Act 2013

Section 4 Memorandum

Chapter II Incorporation of a company

Section 4 Memorandum
Rule 2.5 and Rule 2.6
[Section 4 is not yet brought to force. The Companies Rules, 2013 is not yet brought to force.]

Corresponding provisions of the Companies Act, 1956:
Sections 13, 14 and 20.

Corresponding provisions of the English Companies Act, 2006:
Sections 8, 9 and 67

Other laws:
Emblems and Names (Prevention of Improper Use) Act, 1950.

Applicability:
This provision prescribes contents of memorandum of association of a company, standard format thereof and name by which a company may be registered.

The memorandum of a company shall state its:

(a) Name;

(b) Place of registered office;

(c) Objects clause;
(i) objects for which the company is proposed to be incorporated; and
(ii) matters considered necessary in furtherance of objects for which the company is proposed to be incorporated.

(d) Liability clause;

(e) Capital clause and subscription clause; and

(f)  In the case of One Person Company, the name of successor to one member.

 

Name of a company: [Section 4(1)(a)]:
Name of a public limited company shall have the last word ‘Limited’.

Name of a private limited company shall have the last words ‘Private Limited’.

It may be noted that One Person Company shall be a private company [as per Section 3(1)(c)]. And accordingly, name of a One Person Company shall have as last words ‘Private Limited’. Further, under second proviso to clause (d) of sub-section (3) of Section 12, the words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.

Further, in case of a company registered under section 8 (corresponding section 25 of the Companies Act, 1956), need not use words ‘Limited’ or ‘Private Limited’ as last word(s) as part of its name. [Proviso to Section 4(1)(a)].

Draft Rule 2.5(7) provides that for Section 8 Companies, the name shall include the words foundation, Forum, Association, Council and the like.

There is no provision like under Section 15(1) of the Limited Liability Partnership Act, 2008 which allows use of acronym ‘LLP’ and hence acronym ‘Pvt Ltd’ or ‘Ltd’ cannot be used.

If any person uses words ‘Limited’ or ‘Private Limited’ or any contraction or imitation thereof, as part of name of trade or business without registering a company, then such person is punishable with fine ranging from Rs.500 minimum to Rs.2000/- for every day for which the word(s) were used. [Section 453].

 

Name of a company shall not be identical: [Section 4(2)(a)]:
The name of a company shall not be identical with or too nearly resemble with the name of any other company registered either under the Companies Act 2013 or under any previous company law.

It may be noted that if a name remotely resembles with the name of any other company, then such name may be allowed.

Here, it may be noted that, under section 15(2)(b) of the LLP Act, 2008 name of a LLP shall not be identical or too nearly resemble with, inter alia, body corporate. And the term ‘body corporate’ includes a company registered under the Companies Act. However, there is no such corresponding provision under the Companies Act, 2013 prohibiting companies from using names by which LLP are registered!

However, draft Rule 2.5(2)(b)(i) provides that the proposed name which is identical with or too nearly resembles the name of a LLP, then it shall generally be treated as undesirable under section 4(2)(b)(ii).

Also draft Rule 2.5(2)(b)(iv) provides that where the proposed name resembles closely with the popular or abbreviated description of an existing company or limited liability partnership , then it shall generally be treated as undesirable under section 4(2)(b)(ii).

Further draft Rule 2.5(2)(b)(xii) provides that where the proposed name it is identical with or too nearly resembles the name of a limited liability partnership in liquidation or the name of a limited liability partnership which is struck off up to a period of five years , then it shall generally be treated as undesirable under section 4(2)(b)(ii).

Draft Rule 2.5(1) provides for instances, the use of which in a name, shall be disregarded in determining whether a name is identical with another or not.

 

Name shall not be violating any law: Section 4(2)(b):
The name of a company shall not be such that its use by the company will constitute an offence under any law for the time being in force.
Though the language uses words ‘any law’ it means law applicable in India.
Here the Emblems and Names (Prevention of Improper Use) Act, 1950 is relevant.

Further, the name of a company shall not be such that its use by the company is undesirable in the opinion of the Central Government.
Draft Rule 2.5 (2) contains detailed provision on when a name be treated as undesirable.

 

Use of certain name requires Government approval: [Section 4(3)]:
Just because a name passes test of sub-section (2), it does not mean that name will be made available to a company. Sub-section (3) requires that previous approval of the Central Government (i.e. Ministry of Corporate Affairs) is required for use of any words or expression (as part of name):

(a)  which is likely to give impression that a company is either connected in any way with or is having 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)  Which may be prescribed.

Draft Rule 2.5(6) prescribes word or expressions for use of which previous approval is required.

The Central Government has power to delegate its power under section 458.

 

Application for reservation of name: Section 4(4):
An application for reservation of name, either for the proposed company or for change of name by existing company, shall be made to the Registrar of Companies. Form No. 2.7 is prescribed under the draft Rules.

Draft Rule 2.5(3) provides that if any company 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 six months from the change of activities after complying with all the provisions as applicable to change of name.

Upon receipt of application, the Registrar of Companies may reserve the name for sixty days, from the date of application. [Section 4(5)].

The name actually may be available for less than sixty days, as there will be some time taken by the Registrar of Companies in approving the name, after it receives the application!

 

Place of registered office: [Section 4(1)(b)]:
Memorandum shall specify the name of the State of India where registered office of the company is to be situated.

The memorandum needs to disclose only the name of the State and not city or address of registered office and its place of registered office can be anywhere within the State stated in its memorandum.

It may be noted that jurisdiction of Registrar of Companies, for registration of a company, is based on the State where registered office of the company is to be situated.

 

Objects clause: [Section 4(1)(c)]:
The memorandum shall state objects for which the company is proposed to be incorporated.

It shall also state matters considered necessary in furtherance of the objects for which the company is being incorporated.

It is similar to ‘main objects’ and ‘incidental or ancillary objects’ under section 13(1)(d)(i) of the Companies Act, 1956.

 

Liability clause: [Section 4(1)(d)]:
Where a company is to be registered with liability limited by shares, the memorandum shall state that the liability of its members is limited to the amount unpaid, if any, on the shares held by them.

Where a company is to be registered with liability limited by guarantee, the memorandum shall state the amount upto which each member undertakes to contribute:

(A) to the assets of the company in the event of its being wound-up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, as the case may be; and

(B) to the costs, charges and expenses of winding-up and for adjustment of the rights of the contributories among themselves.

A company is limited by guarantee and not having a share capital cannot give a right to participate in the divisible profits of the company otherwise than as a member. And if it does so by providing in either memorandum or articles, it shall be void. [Section 4(7)].

 

Capital Clause and Subscription clause: [Section 4(1)(e)(i)]:
Where a company proposed to be incorporated is having a share capital, then it shall state amount of its authorised share capital with which it is to be registered and division of share capital into fixed amount. It shall also state the number of shares which subscribers have agreed to take, which shall not be less than one share.

A subscription clause shall indicate names of each subscribers and opposite thereto number of shares they intend to take.

 

Name of Successor in case of OPC: [Section 4(1)(e)(ii)]:
Where a company to be incorporated is One Person Company, its memorandum shall also state the name of the person who, in the event of death or incapacity to contract of the subscriber, shall become the member of the company. Under first proviso to Section 3(1), prior written consent of such successor is required.

 

Format of Memorandum: [Section 4(6)]:
The memorandum of a company shall be in the form given in Schedule I, i.e.
For a company limited by shares – Table A
For a company limited by guarantee and not having a share capital – Table B
For a company limited by guarantee and having a share capital – Table C
For a unlimited company and not having share capital – Table D
For a unlimited company and having a share capital – Table E

 

Penalty:
Section 4(5)(ii) provides that if after reservation of name, if it is found that the application furnished wrong or incorrect information, then –

(a) In case of incorporation of company for which name was reserved, shall be cancelled and applicant shall be liable to a monetary penalty not exceeding Rs. 100,000/-

(b) In case the company is incorporated, the Registrar of Companies may, after giving opportunity of hearing to applicant company, take any one of the following action:

(i)           Direct the company to change name, within three months of such direction, after obtaining consent of members by ordinary resolution [section 16 is also relevant]; or

(ii)          Strike off the name of the Company from the register of companies [section 248 is relevant]; or

(iii)        Make petition for winding up of the company. It may be noted that under Section 272(1)(e), the Registrar is empowered to make petition for winding up to the National Company Law Tribunal. However, the Registrar is required to obtain previous approval of the Central Government before presenting a petition of winding up (under second proviso to sub-section (4) of Section 272).

 

There is no time prescribed for cancellation of name and thus it can be concluded that:-

(a) Where the name is reserved for incorporation of a company, it can be cancelled at any time before incorporation; and

(b) Where the company is incorporated, the Registrar may (at its discretion) take any one of the three actions, as stated above.

 
Adjudication:
Under Section 454, the officer appointed by the Central Government, not below the rank of Registrar of Companies, may adjudicate and impose monetary penalty for violation of this section. However, before imposing penalty, an opportunity of hearing shall be given to the Company and its officers.

Compounding:
It may be noted that under section 441, where offence is punishable with fine only, the same may be compounded by the National Company Law Tribunal or where the fine does not exceed Rs.5,00,000/- by the Regional Director or any other officer authorised by the Central Government.

Summary of forms and records:

Form No. 2.7 – name application.

As per draft Rule 2.2(2), in case of OPC, the nomination in Form No. 2.1 along with consent of such nominee obtained in Form No. 2.2.

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