Steps to Change of Name of the Company: A Complete Guide

Nowadays, the dynamics of the corporate sector tends to changes swiftly. As a result, every corporate entity is relentlessly trying different way-outs to sustain in the market. One such way-out is the change of name of the company.

Any limited company, whether private or public, can change its name after obtaining the consent of all the shareholders. There can be several reasons behind the change in the name of the company, such as promoters demand, change in vision or mission, branding, change of business structure, conversion from private limited to public limited, merger and amalgamation.

In this learning blog, we will comprehensively discuss the provisions, concept, and procedure for change of name of the company under the Companies Act, 2013.

Concept of Change of Name of the Company

In today’s era, a distinct name not only acts as the building block for a company’s existence but also helps in maintaining the status of a separate legal entity. In a Memorandum of Association (MOA), the first clause deals with the name of the limited company, from which it is recognized in the Public domain.

In the global business market, compromise, arrangements and restructuring play a crucial role in satisfying the changing business needs by mixing the strengths of two or more companies. Therefore, businesses must embrace changes to sustain in the corporate sector; otherwise,they would not only lose the competitive edge but would fail to meet the needs of their loyal customers as well.

The term“change” denotes the change in the company’s name or change in activities. A company needs to obtain the prior consent of its shareholder in the general meeting before undertaking the process of any change.

As per Section 13 of the Companies Act, 2013, a company needs to obtain the prior consent of its shareholders by passing a special resolution in the General Meeting. After that, it needs to alter its MOA (Memorandum of Association) to undergo the process of change of name of the company.

Provisions Applicable to the Change of Name of the Company

The provisions of the Companies Act, 2013, applicable to the procedure for change of the name of the company can be summarised as:

1. Section 13 (2) and (6): A company is eligible to change its name by passing an SR (Special Resolution) in the general meeting and under the written permission of the Central Government. However, the said consent is not needed during the conversion of private limited to public limited and vice-versa, or if the said change relates to the addition or deletion of the words ‘Private’ to the name.
2. Section 13 (3): When a company decides to change or modify its name under section 13(2) of the Companies Act, 2013, the ROC (Registrar of Companies) needs to replace the old name of the company with the new one in its Register. Besides this, the ROC also needs to issue a new COI (Certificate of Incorporation) with the new name. It shall be significant to note that such changes in the company’s name are ineffective and incomplete until the Registrar issues a fresh COI.
3. Section 4 (2): As per section 4 (2) of the Companies Act, 2013 [1] , a company needs to take care of following things while changing the name of the company:
   • The name of the company specified in the memorandum of association shall not be indistinguishable or identical from the name of an already existing company, registered under the provisions of the Companies Act, 2013;
   • The name of the company must not be undesirable or of offensive character in the opinion of the Central Government.
4. Section 4 (3): As per this section, a company is not allowed to be registered with a name that has an expression or word, that indicates a company is associated or has the patronage of the central government/ state government/ local authority or any other body formed by central or state government. Further, a company is not allowed to use any word or expression in its name for which it either requires prior approval from the government or is restricted by the Central Government.

Applicability of the Companies (Incorporation) Second Amendment Rules, 2020 on the Change of name of the Company

According to Rule 29 (1) of the Companies (Incorporation) Second Amendments Rules, 2020, a company who has failed to file the Annual Returns and the financial statements with the ROC (Registrar of Companies) is restricted from changing its name.Moreover, a company who has not paid or repaid matured debentures or deposits or interest thereon is not eligible to change its name.

Forms forthe Change of Name of the Company under Companies Act, 2013

In India, the forms needed to be filed for the Change of Name of the Company under the Companies Act, 2013, can be summarised as:

1. Form MGT -14: After passing the Special Resolution under section 13(1), the directors of the company need to file MGT-14 with the ROC (Registrar of Companies). Further, the company needs to file the approval of the Central Government approval obtained under section 13 (2)to the registrar of companies, if the changes have been incorporated in the Memorandum of Association and the Name of the Company is changed respectively.

Forms for the Change of Name of the Company under Companies (Incorporation) Second Amendment Rules, 2020

As per Rule 29(2) of the Companies (Incorporation) Second Amendment Rules, 2020, forms needed to be filed for the Change of Name of the Company are as follows:

1. Form INC- 24: The directors of the company needs to file form INC- 24 with the ROC together with the fees for the change of the company’s name.
2. Form INC- 25: The ROC will issue a fresh COI (Certificate of Incorporation) in Form INC-25 to the company that has changed its name.

Change of Name of the Company:Guidelines as per Companies Act, 2013

In India, the guidelines concerning the change of name of the company under the Companies Act, 2013, can be summarised as:

1. The company must ensure that its name is not identical to the name of any existing registered company or Trademark. It shall be taken into consideration that mere joining of words or using the plural sense of the existing name does not make it new and unique;
2. The MCA (Ministry of Corporate Affairs) restrict the companies to use names of a general character, such as Jute Company Private Limited;
3. MCA restricts the companies to start their name with the name of an individual, such as Shivam Private Limited;
4. A company needs to make sure that its name and object clause aligns with each other;
5. The last words of a “Private Company” shall end with “Private Limited”;
6. The last words of a “One Person Company”must end with “OPC Private Limited”;
7. The last word of a “Public Limited Company”shall end with the word “Limited”;
8. Lastly, the proposed name of a company shall be considered undesirable if it falls under any of the conditions as follows:
   • Violates the provisions of the Emblem and Name Act;
   • Violates a registered Trademark;
   • Includes Misleading and Offensive words.

Change of Name of the Company: Obligations on the Listed Companies

In India, as per Regulation 45 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, any listed company which has changed its name because of the addition of new business line needs to fulfil the certain obligation as follows:

1. It needs to disclose its Net Sales, Income and Expenditure and PAT (Profit After Tax) that belongs to the new business line, separately in the Financial Accounts. Further, it needs to disclose these details for three consecutive years, starting from the date of the change in name, along with all the other compliance that the listed companies need to comply with;
2. A company cannot change its name again until a minimum of one has passed from the date of the last name change. Further, the company must have earned at least half of its total revenue in the previous financial year from the new activity endorsed by the new name, or by the investment in the new project, or the project (Fixed Assets + WIP [Work in Progress] + Advances + Inventory + Investments and Trade Receivables + Cash and Cash equivalents) is at least 50% of the company’s assets.
3. The term “Advances” shall include only those amounts which has been paid out to the suppliers and contractors for the proper execution of project concerning the new activity as reported in the new name. Besides this, to make sure the company is appropriately adhering to all the compliances, the directors need to submit an auditor’s certificate in the stock exchange.
4. The new name of the company shall be notified together with the company’s old name through the official websites of the recognised stock exchanges [2] , where the company has been listed for at least one year from the date of its last change in name;

Effects of the Change of Name of the Company

In India, the effects of the change of name of the company can be summarised in the cases as:

• Malhati Tea Syndicate Ltd. v. Revenue Officer:

As per this case, any change of name of the company shall not affect any rights and duties of the company. Apart from this, it shall also not affect any legal proceedings commenced by or against the company, which means that such legal proceedings will be continued in the company’s new name.

• Pioneer Protective Glass Fibre (P) Ltd. v. Fibre Glass Pilkington Ltd:

According to this case, any legal proceedings initiated in the former name of the company after the change of name of the company shall be treated as invalid.

• Solvex Oils and Fertilizers v. Bhandari Cross-Fields (P) Ltd:

A company continues to subsist even after the change of its name if its new name has been registered by the ROC (Registrar of Companies). Moreover, the company cannot be considered as dissolved after the change in its name. However, if any legal proceeding has been commenced against the company in its old name, then the said company shall be treated as not existing, and in such a situation court ask the party filling the complaint to amend his petition.

• In Economic Investment Corporation Ltd. v. CIT [WB]:

The legal proceedings commenced in the company’s old name can even be carried in its new name.

Procedure for the Change of Name of the Company

The procedure for the change of name of the company can be summarised as:

1. Hold a Board Meeting: The directors of the company needs to hold a board meeting for passing a board resolution for changing of the name of the company and authorising the Director or Company Secretary, to file an application to for the availability of the name proposed. Further, the directors can also pass a resolution to hold an EGM for the purposes as follows:
   • To modify the name in the AOA and MOA of the company;
   • To take approval from the Shareholders for the process of change of name of the company.
2. File E-Form RUN: The Directors of the Company Secretary needs to file an application with the MCA together with the copy of the resolution passed to confirm the availability of the proposed name.Further, the proposed name can easily be reserved by filling an E-Form RUN (Reserve Unique Name) available on the MCA portal [3] .
3. Name of Approval Certificate: The company needs to obtain a name approval certificate from the ROC (Registrar of Companies) for the proposed name. If in case, an objection is raised by the Registrar of Companies in the proposed name, then one more chance of re-submission will be granted to the company for filing that RUN form.
4. Convene an EGM: To pass an SR (Special resolution) for changing the company name, the directors need to hold an EGM (Extraordinary General Meeting) after receiving the approval certificate from the ROC. In this meeting, the directors shall decide about the effect of the name change on the company’s AOA and MOA as well. This step is governed and regulated by section 13(1), Section 13(2), Section 14 and Section 5(3) of the Companies Act, 2013.
5. Filing of Special Resolution with the Registrar: Next, the directors of the company need to file the documents with the ROC (Registrar of Companies) as follows:
   1. Form MGT – 14: A copy of the special resolution (SR) passed by the company in the Extraordinary General Meeting under section 13 (1) in Form MGT-14.
   2. Form INC- 24:Application made in Form INC- 24 together with the fees for change of name of the company. Further, the directors need to attach the documents with Form INC- 24 as follows:
      • Notice of the meeting along with Explanatory Statements;
      • A duly certified copy of the minutes of the EGM (General Meeting) held among the members to pass the special resolution for the company’s name change;
      • A copy of the Altered MOA and AOA;
6. Obtaining a new Certificate of Incorporation: Lastly, the Registrar of Companies will issue a new COI (Certificate of Incorporation) to the company in Form INC-25 after its name change.

Conclusion

After discussing in detail about the provision and process of change of name of the Company, it is crystal clear that it mandatory for a company to obtain the prior permission of its shareholders. Further, the procedure of changing name is a time-consuming and backbreaking task, as it not only involves lengthy documentation procedure but requires in-depth knowledge and experience as well. Therefore, a company must hire professionals for making the process easier and straightforward.

Also, Read:Want to Give your Company a New Name, Know How to do With Experts Help