The name of a limited company may have to be changed for various reasons including change of objective of the business; change of management, rebranding, conversion of private limited to public limited & vice versa, rectification of name etc., The name of limited company can be changed at anytime with the approval of the shareholders.
NAME CHANGE IN GENERAL:
- The name of the company can be changed by a special resolution and with the approval of the Central Government in writing. Approval of the Central Government is not required, in case where the change in the name of the company relates to the addition/deletion of the word ‘Private’ to the name of the company consequent to the conversion of a company into a public company and vice versa. [Section 13(2) & Section 13(6)]
- When any change in the name of a company is made under section 13(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 such change in the name shall be complete and effective only on the issue of such a certificate. [Section 13(3)]
- 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. [Section 4(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. [Section 4(3)]
- 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.[Rule 29(1) the Companies (Incorporation) Rules 2014]
NAME CHANGE DUE TO RECTIFICATION:
- Rectification of the name of the company is required to be carried out if, through inadvertence or otherwise, a company (whether on its first registration or on its registration by a new name) is registered by a name which is identical to or too nearly resembles the name of a company already in existence. The rectification of the name must also be carried out if the Central Government so directs at any point of time after the registration of the company. The direction of the Central Government is required to be complied with by the company within a period of 6 months from the date of issue thereof. [Section 16(1)]
- Further where a company changes its name or obtains a new name under section 16 (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. [Section 16(2)]
- Any default in complying with the direction issued by the Central Government would render the company liable for punishment with fine which may extend to one thousand rupees for every day during which default continues and its officers in default shall be liable for fine which shall not be less than five thousand rupees but which may extend to one lakh rupees. [Section 16(3)]
ADDITIONAL REQUIREMENT BY LISTED COMPANY [REGULATION 45 OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATION, 2015]:
If the listed company 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 three years succeeding the date of change in name.
Further, all listed companies which decide to change their names shall be required to comply with the following conditions:
- A time period of atleast 1 year should have elapsed from the last name change.
- At least 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by the new name, or, the amount invested in the new activity/project (Fixed Assets + Advances + Work in Progress + Inventories + Investments+ Trade Receivables + Cash & Cash equivalents) is at least 50% of the assets of the company. The ‘advances’ shall include only those extended to contractors and suppliers towards execution of project, specific to new activity as reflected in the new name. To confirm the compliance, the company would have to submit auditor’s certificate to the stock exchange.
- The new name along with the old name shall be disclosed through the web sites of the respective stock exchange/s where the company is listed for a continuous period of one year, from the date of the last name change.
If any listed entity has changed its activities which are not reflected in its name, it shall change its name in line with the activities within a period of six months from the change of activities in compliance of provisions as prescribed in the Companies Act, 2013.
- A company shall, in relation to any alteration of its memorandum, file with the Registrar (a) the special resolution passed by the company under section 13 (1) in Form MGT-14; (b) the approval of the Central Government under sub-section (2), if the alteration involves any change in the name of the company. [Section 13(6)]
- 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. [Rule 29(2) the Companies (Incorporation) Rules 2014]
EFFECT OF NAME CHANGE:
- The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it, and any legal proceedings which might have been continued or commenced by or against the company in its former name may be continued by or against the company in its new name.
- However, where a company changes its name and the new name has been registered by the Registrar, the commencing of legal proceedings in the former name is not valid. [Malhati Tea Syndicate Ltd. v. Revenue Officer]
- In spite of a change in name the entity of the company continues. The company is not dissolved nor does any new company come into existence. If any legal proceeding is commenced, after change in the name, against the company in its old name, the company should be treated as if it is not in existence. It is not an incurable defect and the plaint can be amended to substitute the new name [Pioneer Protective Glass Fibre (P) Ltd. v. Fibre Glass Pilkington Ltd.]
- The courts have held that proceedings commenced by the company in its former name can be continued under its new name. [Solvex Oils and Fertilizers v. Bhandari Cross-Fields (P) Ltd.]
- By change of name, the constitution of the company is not changed, only the name changes. It is not similar to the reconstitution of a partnership which means creation of a new legal entity altogether. [In Economic Investment Corporation Ltd. v. CIT (WB)]
Hold Board Meeting:
Company shall pass a board resolution for change of name of the company and for authorizing a Director or Company Secretary, to make an application for ascertaining name availability of proposed name. A resolution to convene an extraordinary general meeting for changing the name of the company, and altering the Memorandum of Association and Articles of Association can also be passed at the same Board meeting or another Board meeting can be held after approval of new name.
Check Proposed Name Availability of Company:
After authorization from Board meeting, the authorized person can make a name application to the MCA, following same procedure as done during incorporation of a new company and keeping in view Naming Guidelines under Companies Act 2013. This can be done by applying for the new name reservation through web service RUN- Reserve Unique Name service to reserve the name of the companies provided on MCA portal. Attachment to RUN: copy of Board resolution passed in the meeting of board of directors of the company.
Hold Extraordinary General Meeting:
After approval of new name by MCA, the Company must conduct an extraordinary general meeting and pass a special resolution for change of company name, and consequential changes to the Memorandum of Association and Articles of Association. [Section 13(1), Section 13(2), Section 14 & Section 5(3)]
Application for approval of Name Change & Issue of New Certificate of Incorporation:
Once the special resolution for change of company name is passed, the special resolution and application for approval of company name change must be filed with the Registrar of Companies. A company shall, in relation to any alteration of its memorandum, file with the Registrar, the special resolution passed by the company under section 13 (1) in Form MGT-14. 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.
Attachment to the INC-24: (a) Certified true copy of minutes of the general meeting of the members where the special resolution was passed for change of name of the company is required to be attached (b) Copy of any approval order obtained from the concerned authorities (such as RBI, IRDA, SEBI etc.) or the concerned department, if any (c) Any other information can be provided as an optional attachment(s. [Section 13(6) & Rule 29(2) the Companies (Incorporation) Rules 2014]
Action required to be taken after getting new certificate of incorporation:
- Every alteration made in the memorandum or articles of a company shall be noted in every copy of the memorandum or articles, as the case may be. [Section 15(1)]
- Arrange printing of fresh copies of Altered Memorandum and Articles of Association with new Certificate of Incorporation.
- Paint or affix its name, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages. [Section 12(3)(a)]
- Have its name engraved in legible characters on its seal;if any. [Section 12(3)(b)]
- Get its name, printed in all its business letters, billheads, letter papers and in all its notices and other official publications. [Section 12(3)(c)]
- Have its name printed on hundies, promissory notes, bills of exchange and such other documents as may be prescribed. [Section 12(3)(d)].
- Where a company has changed its name or names during the last two years, it shall paint or affix or print, as the case may be, along with its name, the former name or names so changed during the last two years as required under clauses (a) and (c). [First proviso to Section 12(3)(d)].
- Arrange new rubber stamps with new name, all the stationary in the new name of the Company.
- Inform the concerned government authorities/person about the name change of the company viz. stock exchanges, NSDL, CDSL, Tax and Excise Authorities, PF & ESI authorities etc.
- Intimate to the bank where company current account is in operation and change the name of company in bank records.
- Make new application for new PAN and TAN of the company.
- Update the new name with basic utility services viz. electricity providers, telephone providers etc.
- Inform all the concerned parties where company have made investment, taken loans, insurance policies, entered into agreements etc.
FORMAT OF RESOLUTION FOR CHANGE OF NAME:
Specimen Board Resolution for Change of Name:
RESOLVED THAT subject to the approval by the Company by a special resolution to be passed at a general meeting and of the Central Government under section 13 of the Companies Act, 2013, the name of the Company be and is hereby changed from ‘….. Ltd.’ to any of the following names in the order of preference:
(i) ‘….. Ltd.’
(ii) ‘…… Ltd.’
or such other name as may be allowed by the Registrar, Central Registration Centre.
RESOLVED FURTHER THAT the Company Secretary be and is hereby authorised to make the application in FORM INC 1 to the Registrar of Companies for ascertaining the availability of the proposed name(s) and an application for approval for the change of name as above and to do such other acts, things and deeds as may be necessary to do to give effect to this resolution.
Specimen of the Special Resolution for Change of Name of the Company:
“RESOLVED THAT subject to the approval of the Central Government, pursuant to the proviso to Section 13 of the Companies Act, 2013, as a consequence of the conversion of the company from a private limited company into a public limited company, the name of the company be and is hereby changed from “………… Private Limited” to “………. Limited”; and
RESOLVED FURTHER THAT clause I (name clause) in the memorandum of association of the company be and is hereby altered by substituting the same with the following:
I. The name of the company is …………………Limited.”
The Board of directors of the company had, at its meeting held on ……., resolved that consequent upon conversion of the company from private limited company to public limited company, the name of the company be changed from “………… Private Limited” to “………………………. Limited” and accordingly clause I (name clause) in the memorandum of association of the company is to be altered by substituting the same with a clause as set out in the notice for approval of the shareholders of the company.
No director is concerned or interested in the proposed resolution.
Note: The above special resolution is a composite one for change of name of the company and also for change of name clause in the memorandum of association of the company. Alternatively, the company may pass two separate special resolutions viz., (i) for change of name of the company and (ii) for change of clause I (name clause) in the memorandum of association of the company. In such a case part (ii) of the resolution need not be incorporated in the above resolution and in addition the following special resolution (Annexure II) may also be passed.
Specimen of the Special Resolution for Altering the Memorandum of Association (Name Clause) of the Company:
“RESOLVED THAT pursuant to Section 13 of the Companies Act, 2013, and consequent upon conversion of the company from a private limited company into a public limited company, clause I (name clause) of the memorandum of association of the company be and is hereby altered by substituting the same with the following:
“Clause I. The name of the company is …………… Limited.”
The Board of directors of the company had, at its meeting held on ……., resolved that consequent upon conversion of the company from private limited company to public limited company, the name of the company be changed from “………… Private Limited” to “………. Limited” and accordingly clause I (name clause) in the memorandum of association of the company is to be altered by substituting the same with new clause I as set out in the notice.
Hence, the proposed special resolution is commended for approval by the members. No director is concerned or interested in the proposed resolution.
- ICSI Study Material (Company Law)