Appendix 20
GUIDELINES FOR GIVING SOME PRINCIPLES FOR MAKING NEW NAME AVAILABLE
[Circular No. 10(9)‑RS/61,
dated 5‑5‑1962]
Department's guidelines for deciding cases for availability of names
Superseding all previous
Circulars and Instructions (Circular Letter No. 10(1)‑RS/60, dated I4‑1960
and Circular Letter No. 10/(19)‑RS/61, dated 15‑3‑1962) the
Department of Company Affairs has laid down the following principles for
deciding cases for availability of names:
Guiding instructions for availability of names.‑ The procedure for scrutinising the availability of names for new
companies has recently been re‑examined carefully in this Department,
having taken into account the difficulties experienced by some Registrars in
following the instructions given to them vide Department's Letter No. 10(19)‑RS/
61, dated 15th March, 1962. This letter, together with the enclosed set of
instructions as revised, consolidates, and is in super session of all the
previous instructions issued from time to time by this Department. An
illustrative list of names considered to be undesirable within the meaning of
Section 20 of the Companies Act, has also been given herewith. The guiding
instructions for deciding cases of making a name available for registration are
given in Appendix 'A' to this letter. In addition to these, the Registrars of
Companies are requested to note the following general instructions also:
1. As the Registrars have hitherto been
doing, they should refer only doubtful and hard cases where they might find it
difficult to take a decision, to the Research and Statistics Division at the
Headquarters.
2. Where consultation with the Regional
Director on the spot is possible, Registrars of Companies would take advice
before referring doubtful and hard cases to the Headquarters.
3. In order to find out the availability
of names, the Registrars are advised to consult the All India Index Cards of
companies in their offices, if any kept uptodate or the alphabetical list of
companies contained in the following publications issued by the Department:
(i) Annual Blue Book on Joint Stock
Companies, Part II, 1958‑59 and its supplementaries giving newly
registered companies upto March, 1964.
(ii) All India lists of new company
registrations maintained in the field offices from 1st April, 1964
to date.
(iii) Fortnightly list of names made available
to promoters by the Registrars, circulated from the Research and Statistics
Division.
(iv) List of foreign companies having a place of business in India.
4. The Registrars will prepare separate
slips and not one consolidated list as per specimen given at Appendix 'B'in
respect of each of the name allowed by them and send them in a bunch to the
Research and Statistics Division on the 1st and 16th of every month. A
consolidated list of such new names allowed by the Registrars will be drawn up
here and it would then be circulated among the field offices for their ready
information, and use. The advantage of this arrangement is too obvious to need
emphasis.
5. The Registrars of Companies may ask the
promoters to suggest a panel of three to five names quite distinct from each
other for consideration.
6. The Registrars should adopt a polite
attitude and persuade the Company promoters to suggest names consistent with
the guiding principles. They should explain the difficulties of the
Administration in approving names likely to create confusion in the minds of
the public and harm the interests of the promoters.
7. In case any of the names proposed by
the promoters is not agreed to by the Registrars as available, it should be
open to them to follow up the matter by subsequent letters or application for
the same fee within a reasonable period which may normally be construed to mean
three months from the date of rejection of the name/names proposed.
8. The Registrars may permit the promoters
to use the name of the firm in brackets after the duly approved name as
incorporating or successor to (name of the firm) in order to fulfil the desire
of the promoters to retain the goodwill of their business in cases where the
names of firms seeking registration under the Companies Act is considered as
undesirable within the meaning of section 20 of the Act.
9. Registrars should ascertain from the
promoters if the proposed name/names were applied for to any other Registrar of
Companies and if so, with what result. In case there is some difference of
opinion between the two Registrars in making the name available, then the case
may be referred to the Board for advice.
10. The name of a proposed company allowed
by the Registrars to the promoters for registration under the Companies Act
should not be kept reserved for more than three months (w.e.f. 21‑3‑1995
it is now six months vide amended R. 4A of the Companies (Central Govt.'s)
General Rules & Forms 1956).
11. It is necessary that the 'keywords' of a
proposed name/names are checked separately with the names of the existing
companies beginning with those 'keywords' so as to avoid any possibility of
allowing a name with a little re‑arrangement of the same words of the
existing company which may be said to be closely resembling each other.
I may further add that
although it is not possible to lay down hard and fast rules for determining
whether a particular name or any two names too nearly resemble each other, each
case, however, will be decided on its merits. As already emphasised in the
earlier circular letter of this Department on the subject dated 15th March,
1962, that the various criteria set out in the guiding principles at Appendix
'A' are not exhaustive but only illustrative of what is considered to be
undesirable names under section 20 of the Companies Act and that, by the very
nature of the subject all possible cases could not be covered. It is,
therefore, suggested that where the Registrars find that certain proposed names
could not be judged in the light of the instructions given above and give rise
to doubt, the same may be referred to the Research and Statistics Division at
the Headquarters after availing of the help of the Regional Director if
available on the spot.
The Department has evolved
the following guiding principles for deciding availability of names:
Guiding instructions for deciding cases of making a name available for
registration
A name which falls within
the categories mentioned below will not generally be made available:
(1) If it is not in consonance with the
principal objects of the company as set out in its memorandum of association.
This does not necessarily mean that every name should be indicative of its
objects, but when there is some indication of business in the name then it
should be in conformity with its objects.
(2) If the Company/Companies main business
is finance unless the name is indicative of that particular financial
activities, viz., Chit Funds/Investments/ Loans, etc.
(3) If it includes any word or words which are offensive to any
section of the people.
(4) If the proposed name is the exact Hindi
translation of the name of an existing company in English especially an
existing company with a reputation.
(5) If the proposed name has a close
phonetic resemblance to the name of a company in existence for example, J.K.
Industries, Ltd., Jay Kay Industries Limited.
(6) If the name is only a general one like
Cotton Textile Mills Ltd., or Silk Manufacturing Ltd. and not specific like
Calcutta Cotton Textiles Mills Limited or Lakshmi Silk Manufacturing Company
Limited.
(7) If it includes, the word "Co‑operative",
"Sahakari" or the equivalent of word "Co‑operative"
in the regional languages of the country.
(8) If it attracts the provisions of the
Emblems and Names (Prevention of Improper Use) Act, 1950 as amended from time
to time, i.e., use of improper names prohibited under this Act.
Availability of name‑Instructions regarding item 8
General Circular No. 24 of 2001, dt. 21‑11‑2001.‑ Instruction No. 8 of the
Guiding instructions circulated, vide this Department's letter No. 10(1)‑RS/65,
dated 27th November, 1965, provides that a name in the category mentioned below
will not generally be made available :
"If it attracts the
provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950, as
amended from time to time, i.e., use of improper names, prohibited under this
Act."
2. It is observed from a communication
received from the Department of Consumer Affairs that the above‑said
instructions are not being followed scrupulously.
3. The RoCs are advised to take into
account the provisions of the above said Emblems and Names Act while making
names available to companies under the Companies Act, 1956.
4. All the RoCs are requested to adhere to
the above instructions for strict compliance. [Issued by the Department of
Company Affairs]
(9) If it connotes Government's
participation or patronage unless circumstances justify it, e.g., a name may be
deemed undesirable in certain context if it includes any of the words such as
National, Union, Central, Federal, Republic, President, Rashtrapathi, Small‑Scale
Industries, Cottage Industries and Financial Corporation, etc.
(10) If the proposed name contains the words 'British India.'
(11) If the proposed name implies association
or connection with Embassy or Consulate which suggests connection with local
authorities such as Municipal, Panchayat, Delhi Development Authority or any
other body connected with the Union or the State Government.
(12) If the proposed name is vague like
D.J.M.O. Limited or T.N.V.R. Private Limited or S.S.R.P. Limited.
(13) If a proposed name implies association or
connection with or patronage of a national hero or any person held in high
esteem or important personages who are occupying important positions in
Government so long as they continue to hold such positions.
(14) If it resembles closely the popular or
abbreviated descriptions of important companies like Tisco (Tata Iron &
Steel Company Limited), H.M.T. (Hindustan Machine Tools), I.C.I. (Imperial
Chemical Industries), Texmaco (Textile Machinery Corporation), Wimco (Western
India Match Company), etc. In some cases, the first word or the first few words
may be the key words and care should be taken that they are not exploited. Such
words should not be allowed even though they have not been registered as trade
marks.
(14A) Where the existing companies are stated and
found to be well‑known in their respective fields by their abbreviated
names, these companies may be allowed to change their names, by way of
abbreviation with the prior approval of the Regional Director concerned.
Department's Circular, dated
31‑3‑1993‑The abbreviated name will be considered only in
case of change of name under section 21 of the Companies Act, 1956, with the
prior approval of the Regional Director concerned and should not be allowed for
adoption by new companies. [Circular No. 4/93; F. No. 3/14/93‑CL‑V,
dated 31‑3‑1993]
Press Note, dated 5‑5‑1993.‑As
per existing guidelines, the companies well‑known in their respective
field by abbreviated names, are allowed to change their names by way of
abbreviation (e.g. ABC Ltd.) with the approval of the Department of Company
Affairs after following the requirement of Section 21 of the Companies Act,
1956. It has now been decided that any such change of name will require only
the prior approval of Regional Director concerned. The companies will, however.
continue to make applications in Form No. 1A for availability of the proposed
changed names to the concerned Registrar of Companies. It may be noted that the
abbreviated name will not be allowed for adoption by a new company proposed to
be incorporated under the Act. [No.3/14/93‑CL‑V: Press Note No.
1/93, dated 5‑5‑1993]. The power of Central Government is now
vested with the Registrar.
Department's Circular, dated
16‑2‑1995, Presently, there is a restriction on use of abbreviated
names (like ITC Limited) in case of existing companies requiring approval of
the Regional Director concerned. No such approval of Regional Director will now
be necessary and ROCs may take a final decision on such applications in the
light of existing guidelines. (Para iii). [Circular No. 1/95 F. No. 14/6/94‑CL‑V,
dated 16‑2‑1995]
(15) If it is different from the name/names of
the existing company/companies only to the extent of having the name of a place
within brackets before the word limited; for example, Indian Press (Delhi),
Limited, should not be allowed in view of the existence of the company named
Indian Press Limited. To this rule, however, frequent exceptions are made in
the case of subsidiary and in the case of a company carrying on local business
and in other cases on their merits. As for an example, 'Corner Garage (Delhi)
Private Limited' may be allowed notwithstanding that there is an existing
company 'Comer Garage Private Limited' at Calcutta. So would be 'Regent Cinema
Limited' at Madras, if there is a company by the name Regent Cinema (Delhi)
Limited. These names may also be allowed if they are in the same group or
management.
(16) If the proposed name includes common words
like 'Popular' 'General' 'Janta', if they are in the same State doing the same
business. But in case of companies in different business in the same State and
in all cases when the registered office of the company is in different States,
the name might be allowed. For instance, if there is 'Popular Drug House
Private Limited' existing another company by the name of 'Popular Plastic
Private Limited' should not be objected to.
(17) If it includes a name of registered trade‑
mark unless the consent of the owner of the trademark has been produced by the
promoters. It may not be possible in all cases to check up the proposed name
with the trade mark, however, if the Registrars are in the knowledge or some
interested party/parties bring to their notice a trade mark which is included
in the proposed name then it should not be allowed unless a no‑objection
certificate is obtained from the party who has registered the trade mark in its
own name.
[Note: Section 20(2)/(3) has been amended by the Trade Marks Act,
1999. The amended section now provides statutory protection of trade marks in
the matter of availability of name]
(18) If a name is identical with or too nearly resembles,
the name of which a company in existence has been previously registered. A few
illustrations of closely resembling names are given below for guidance. The
names as proposed in column I should not (normally) be made available in view
of the companies in existence as shown in column 2. However, if a proposed
company is to be under the same management or in the same group and like to
have a closely resembling name to the existing companies under the same
management or group with a view to have advantage of the goodwill attached to
the management or group name such a name may be allowed.
Even in the case
of unregistered companies or firms which have built up a reputation over a
considerable period, the principle (that if a name is identical with or too
closely resembles the name by which a company has been previously registered
and is in existence, it should not be allowed) should be observed as far as
practicable. In view of the difficulty in checking up whether a proposed name
is identical with or too nearly resembles the name of an unregistered company
or a firm of repute, it should at least be ensured that a proposed name is not
allowed if it is identical with or too nearly resembles the name of a firm
within the knowledge of the Registrar. The cases of foreign companies of repute
should also be similarly treated even if there are no branches of such
companies in India.
|
Proposed name |
Existing company too
nearly resembling name |
|
|
1. Hindustan Motor and
General Finance Company. |
Hindustan Motor Limited. |
|
|
2. The National Steel Mfg. Co. Private Limited. |
National Steel Works. |
|
|
3. Trade Corporation of India Limited. |
State Trading Corporation of India Limited. |
|
|
4. Viswakaram Engineering Works Private Limited. |
Viswakaram Engineer (India) Private Limited. |
|
|
5. General Industrial Financing & Trading Co.
Ltd. |
General Financial & Trading Corporation. |
|
|
6. India Land & Finance Limited. |
Northern India Land & Finance Limited. |
|
|
7. United News of India Limited. |
United Newspapers Limited. |
|
|
8. Hindustan Chemicals and Fertilizer Limited. |
Hindustan Fertilizers Limited. |
|
(19) If
it is identical with or too nearly resembles the name of a company in
liquidation, since the name of a company in liquidation is borne on the
register till it is finally dissolved. A name which is identical with or too
closely resembles the name of a company dissolved as a result of liquidation
proceeding should also not be allowed for a period of 2 years from the date of
such dissolution since the dissolution of the company could be declared void within
the period aforesaid by an order of the Court under section 559 of the Act.
Further, as a
company which is dissolved in pursuance of action under section 560 of the Act
can be revived by an order of the Court before the expiry of 20 years from the
publication in the Official Gazette of the company being so struck off, it is
considered desirable to stop or conditionally allow the registration of a
proposed name which is identical with or too nearly resembles the name of such
dissolved company for a period indicated below. Since the period of 20 years as
prescribed under the law is considered an unduly long period, the registration
of a proposed name which is identical with or too nearly resembles the name of
company dissolved in pursuance of section 560 should not be allowed for a
period of first five years only. During the next five years such a proposed
name may be allowed subject to the condition that in the event of the dissolved
company being restored to life by an order of the Court the new company would
have to change its name. After a lapse of ten years, names identical with or
too nearly resembling those of the dissolved companies may be allowed without
any such condition.
(20) If it is different from the name of an
existing company merely by the addition of words like New, Modem, 'Nav' etc.
Names such as New Bata Shoe Company, New Bharat Electronic, etc. should not be
allowed. Different combination of the same words also requires careful
consideration. If there is a company in existence by the name of "Builders
and Contractors Limited" the name "Contractors and Builders
Limited" should not ordinarily be allowed.
(21) If it includes words like,
"Bank", 'Banking', 'Investment', 'Insurance' and 'Trust'. These words
may, however, be allowed in cases where the circumstance justify it. In cases
of banking companies the Reserve Bank of India should be consulted and its
advice should be taken before a name is allowed for registration. The purpose
of such consultation is to prevent small banking companies from misleading the
general public by adopting the names of some well‑established and leading
banks functioning elsewhere than in India. In case of differences of opinion
with the Reserve Bank of India the matter should be referred to the Board for
advice.
(22) If the name includes the word 'Industries'
or 'Business' unless the name is indicative of the business of the proposed
company for otherwise it serves as a lever for the company to diversify its
activities.
(23) If it includes proper name which is not a
name or surname of a director such names should not be allowed except, for
valid reasons. For example, for sometimes reasons, sometimes the names of
relatives such as wife, son and daughter of the director may have to be
allowed, provided one other word suggested makes the name quite
distinguishable.
(24) If it is intended or likely to produce a
misleading impression regarding the scope or scale of its activities which
would be beyond the resources at its disposal. For example, names like Water
Development Corporation of India (Private) Ltd., Telefilm of India (Private)
Ltd., All India Sales Organisation Ltd., Inter‑Continental Import and
Export Company Ltd., etc. should not be allowed, when the authorised capital is
to be only a few lakhs, and the area of operation limited to a State. Words
like "International", "Hindustan", 'India', 'Bharat'
'Continental', 'Asiatic' may be allowed only if the scope and scale of business
of the proposed company justify the use of such words. However, the words 'Jai Hind',
'Jai Bharat', 'Nav Bharat', 'New India' etc., included in the proposed name
need not stand the same test as Hindustan, India etc. (as they do not give the
same sense). Similarly the words, Bharat, India, etc., if stated in the
brackets before the words limited or private limited need not stand the same
test as the words India, etc., put at the beginning of the name. Also the word
'India' or 'Bharat'in brackets before the words limited 6r private limited does
not necessarily mean that the company is an Indian Branch of some foreign
company, such as Marsdon Electricals (India) Private Limited.
(25) If the proposed name includes the word
"State" along with the name of the State such as Kerala State Company
Limited should not be allowed as it would give an impression of the Kerala
State Government participating in the share capital of the proposed company.
However, if the name of a State only is included without the addition of the
word 'State' in the proposed name then it may be allowed as it is not likely to
give the impression that the company has the State Government's interest in it.
(26) If the proposed name includes the word
'Corporation' unless the company could be recorded as a big sized company.
However, the word 'Corporation' and 'Company' may be regarded as closely
resembling for purposes of allowing a new name. For example, a company by the
name of Rajasthan Finance Company should be regarded as undesirable within the
meaning of section 20 of the Act as another company by name "Rajasthan
Finance Corporation" already exists.
(27) If the proposed name includes words like
French, British, German, etc., unless the promoters satisfy that there is some
form of collaboration and connection with the foreigners of that particular
company or place the name of which is incorporated in the name. Thus, the name
'German Tool Manufacturing Company Ltd.', should not be allowed unless the
company has some connection with Germany.
(28) Even where except for the first word all
the other words of the proposed name are similar to those of an existing
company, the first word should be considered to be sufficient to distinguish it
from the name of the existing company. For example, 'Oriental....
Limited." [Circular letter No. 10(1)‑RS/65, dated 27‑11‑1965.
See also Circular No. 10(19)‑RS/61, dated 5‑5‑1962].
The word
"Hindustan" should be kept reserved only for public sector companies.
It may, however, be allowed to be used in the names of the Private Sector
companies in a large way of business. Similarly the word "corporation"
may be allowed in the name of the company in case the authorised capital is
more than Rs. 5 crores. (Circular. No. 16/74‑F.No. 27/9/74‑ CL‑III,
dated 27‑8‑1974).
Judicial review of the Department's Circular.‑ Instruction number 18 of
Circular No.10(a) RS‑61, dated 5‑5‑1962, cited above came up
for consideration before the Bombay High Court in Executive Board of the
Methodist Church in India v. Union of India, (1085) 57 Com Cases 443 (Bom).
MRS. MANOHAR, J. held that where the company, already in existence with a
certain name, had become defunct and the name with which it was registered was
also of misleading character in the sense that it was not a true representative
of the world organisation known as the Methodist Church, the consent of such a
company was not necessary for approving the name of a new company which is the
true representative of the Methodist Church movement in India and which had
necessarily to register itself under that name. The refusal of the Registrar
was wrong. The court accordingly ordered the Registrar to register the company
under the words "Methodist Church" and to strike out the name of the
earlier defunct company. The learned Judge discusses the effect of authorities
as to misleading names at pp. 449, 450 including HALSBURY'S LAWS OF ENGLAND,
Para 130 (4th Edn., Vol. 7): [4th Edn., 1988 Reissue Vol. 7(1), Paras 157‑158]:
4th Edn., 1996 Reissue, paras 159 to 162.
II
[Circular letter No. 27/9/74‑CL.
III (Circular No. 16/74) dated 27‑9‑1974]
Use of the word "Hindustan"
I am directed to say that it
has been observed that some of the Registrars of Companies are having an
impression that while allotting names to the new companies, the word
"Hindustan" should be kept reserved only for public sector companies,
viz., Government companies and that it should not be allowed to be used by
private sector companies. This question has been examined and it has been
decided that the word "Hindustan" may be allowed to private sector
companies provided the scope and scale of business of the proposed company
justify the use of such a word. While disposing of applications in this regard,
the guidelines already issued and their applicability or otherwise in all
aspects to the facts of the cases may be examined in the light of the chifification
now given on the subject.
Use of the word "Corporation" and Criteria for "Big
size" Company
As regards the word
"Corporation" a question has recently been raised as to what should
be the criteria for regarding a company as a "big size" company to
enable the Registrar to allow the word "Corporation" in the name of a
company other than a Government company which is proposed to be registered.
This has been examined in the light of the guiding instruction No. 26 already
issued under this Department's Circular letter No. 10(1)/RS/65, dated the 27th
November, 1965, and it is of the view that for the purpose of treating a
company as a big sized company or not at the time of incorporation, its
authorised capital will have to be taken into consideration. As no specific
limit of capital has been indicated in the aforesaid guiding instructions for a
big sized company to be incorporated,, it is considered necessary to clarify
the position in this regard. It may, therefore, be noted that a company which
is proposed to be registered with an authorised capital of Rs. 5 crores or
above may be regarded as a big sized company and the Registrar may allow the
use of the word "Corporation" in deserving cases while approving the
names of such companies. However, for preparing the broad sheets on big sized
companies, those companies, whose paid‑up capital is Rs. 50 lakhs or more
(and not the authorised capital) are to be regarded as big sized companies
according to the existing practice which should be continued.
A. Guidelines
advising to first ascertain the availability of name before applying for
Industrial Licence etc.
[Copy of circular letter No.
10(9)‑RS/61, dated 20th June, 1961 from the Director of Research and
Statistics, Ministry of Commerce and Industry, Government of India, Department
of Company Law Administration, Reserve Bank Building, Parliament Street, New
Delhi:]
Sub: Availability of names after obtaining industrial licences and
consent orders from the Controller of Capital Issues
"I am to say that this
Department has of late come across instances where some promoters of new
ventures applied for the availability of the names proposed for their new
companies after obtaining licences under the Industries (Development and
Regulations) Act and consents for issue of capital from the Controller of
Capital Issues to the proposed new names. It may be stated that the obtaining
of industrial licences and consent orders from the Controller of Capital Issues
by the promoters does not ensure that the names proposed for registration will
in all cases be available; because in certain cases, where the proposed names
attracted section 20 of the Companies Act, 1956, such names could not be
allowed for registration. According to section 20 referred to above, a proposed
new name cannot be allowed for registration if it is identical with or too
nearly resembles the name with which a company has already been registered.
Apart from the above objections to a proposed name, the use of names prohibited
under the Emblems and Names (Prevention of Improper Use) Act, 1950, names
suggestive of any connection with Government or State patronage or patronage of
a national hero or any person held in high esteem and of proper names which are
not the surnames of the directors, etc. are also not generally allowed for
registration.
In view of the position
explained above, it would be advisable for the prospective promoters to obtain,
in the first instance, a clearance from the Registrar of Companies concerned as
to the availability of the proposed name for their undertaking before they
approach the authorities concerned for issue of industrial licences, consent
orders for issue of capital etc. in that name. I would request you to bring
these facts to the notice. of your constituents.
For the prescribed form of
availability of name under sec. 20 of the Companies Act, 1956, refer Appendix
21, Form No. 1A.
[Copy of Dept. of Company
Affairs Circular No. 27/1/87‑CL.III dated 27‑5‑1988 changed
by Circular No. 4 of 1993 dated 31‑3‑1993 F No. 3/14/93‑CL.
Vprinted below (V)].
Sub : Availability of names by use of abbreviated names.
It is observed that the
existing guidelines (paras 12 & 14 of the guidelines) do not support the
availability of name by using the abbreviated names. However, the Registrars have
allowed use of abbreviated names to existing companies, by way of change of
names under section 21 of the Companies Act, 1956, like HMT limited, DCM
limited, etc. These names have been allowed because the existing companies are
well known by such abbreviated names. It has, therefore, been decided that a
new paragraph "14A" may be added to the guidelines as under:
“14A. Where the existing companies
are stated and found to be well known in their respective fields by their
abbreviated names, these companies may be allowed to change their names by way
of abbreviation, with the prior approval of the Department."
2. The abbreviated names be considered
only in case of change of name u/s. 21 of the Companies Act, 1956, with the
prior approval of this Department and should not be allowed for adoption by the
new companies.
[Copy of Ministry of Law,
Justice and Company Affairs, Department of Company Affairs vide Circular No.
4/93, F. No. 3/14/93‑CL. V, dated 31‑3‑1993].
Delegation of Powers under section 21 of the Companies Act, 1956
I am directed to refer to
Guidelines No. 14A circulated vide this Department's Circular No. 27/1/ 87‑CL.III
dated 27‑5‑1988 and to replace the same as under:
"14A. Where
the existing companies are stated and found to be well‑known in their
respective fields by their abbreviated names, these companies may be allowed to
change their names, by way of abbreviation with the prior approval of the
Regional Director concemed."
The abbreviated name will be
considered only in case of change of name under section 21 of the Companies
Act, 1956, with the prior approval of the Regional Director concerned and
should not be allowed for adoption by new companies.
[Copy of Ministry of
Industry, Department of Company Affairs Circular No. 27/1/89‑CL III dated
17‑2‑1989]
Sub : Availability of names.
I am directed to say that as
per Application Form for availability of names (Form No. IA), prescribed under
rule 4A of the Companies (Central Government's) General Rules and Forms, 1956,
the promoters are, inter alia, required to give the names and addresses of the
prospective directors or promoters, as also the name and address of the
person(s) applying for availability of name. You are requested to advise your
constituents to ensure that the application form is filled up in all respects
and application is made by one or more amongst the promoters. The Registrars of
Companies have been advised to ensure at the time of registration of a new
company that the subscribers to the memorandum and articles of association
tally the list of promoters/first director stated in the application for
availability of name and in case, one or more of the promoters are not
interested to participate in the promotion of a new company at a later stage.
'No objection letter' from such promoter(s) is made available to the Registrar,
while submitting the documents for registration. The Registrars of Companies
are also being advised to dispose of applications for availability of name
ordinarily within 14 days of the receipt of application and to correspond with
the applicant promoter(s), in this behalf.
[Copy of Ministry of
Industry, Department of Company Affairs Circular No. 27/1/87‑CL III dated
13‑3‑1989]
Sub: Guidelines for the use of key words, as part of name‑Clarification
Regarding.
I am directed to say that
with a view to maintain uniformity, following guidelines may be followed in the
use of key words, as part of name, while making available the proposed names
under sections 20 and 21 of the Companies Act, 1956.
|
Key Words |
Required
authorised capital (Rs.) |
|
(1) Corporation |
5 crores |
|
(2) International, Globe, Universal, Continental,
Inter‑ Continental, Asiatic, Asia, being the first word of the name. |
1 crore |
|
(3) If any of the words at (2) above is used
within the name (with or without brackets). |
50 lacs |
|
(4) Hindustan, India, Bharat, being the first word
of the name. |
50 lacs |
|
(5) If any of the words at (4) above is used
within the name (with or without brackets). |
5 lacs |
|
(6) Industries/Udyog. |
1crore |
|
(7) Enterprises, Products, Business,
Manufacturing. |
10 lacs |
2. These narnes with key words at Serial
Nos. (6) and (7) may be considered when the company proposes to deal in various
business activities or the company is already carrying on various business
activities (in the case of change of name).
[Circular No. 1 of 1990,
dated 5‑1‑1990]
Availability of names under section 20 of the Companies Act, 1956‑prevention
of preempting practices
"I am directed to refer
to this Department's Circular No. 27/1/89‑CL.III, dated 17th February,
1989, on the above subject, wherein you were requested to advise your
constituents to ensure that the application form is signed by one or more
amongst the promoters and in case one or more of the promoters are thereafter
no more interested in participating in the promotion of the new company, a no
objection letter from such promoter is made available to the Registrar of
Companies at the time of registration of the new company. Instances came to the
notice of the Department that some promoters are pre‑empting the names,
which is not a healthy practice. It has, accordingly, been decided that, in
future, Registrars of Companies should register the company only in cases where
the promoters, as per availability of name and application, are also the
subscribers to the memorandum and articles of association of the proposed
company at the time of its registration. In case of any change in the name(s)
amongst the subscribers, the changed subscribers are advised to make fresh
application for availability of name. The Registrar may, as per existing
procedure, allow the same name, if otherwise available, after three months from
the date when the name was allowed to the original promoter(s).
2. This may be brought to the notice of your constituents for
information and guidance.
[Circular No. 13 of 1990,
dated 27‑8‑1990]
Sub: Incorporation of venture capital companies. Circular dated 27‑8‑1990.
Incorporation of venture capital companies
"I am directed to say
that as per guidelines issued by the Ministry of Finance, Department of
Economic Affairs, vide Press Release No. S. 11(86)‑CCI/11/87 dated 25‑11‑1989),
only such venture capital companies which abide by these guidelines shall take
advantage of tax benefits. As per guidelines, approval would be given for
establishment of venture capital companies/funds by the Department of Economic
Affairs or such authority as may be nominated by the Government. It is possible
that some promoters may float a company and call it a venture capital company
but may not avail of the tax benefits available to such companies and in such a
situation, a common investor would not be able to distinguish between approved
venture companies. which are within the descipline of the guidelines and
eligible for tax benefits from those who call themselves venture capital
companies, but prefer to remain outside the guidelines and forgo the tax
benefit. To avoid such eventuality, it has been decided that the words
"venture capital/venture capital company/venture capital fund/venture
capital finance company" or such similar name, as part of the proposed
name of a company, be only allowed when the company or the promoters have
obtained approval from the Department of Economic Affairs or such authority as
may be nominated by the Government, in this behalf”.
Press Note dated 5‑5‑1993
Abbreviated Names of Companies
As per existing guidelines,
the companies well‑known in their respective field by abbreviated names,
are allowed to change their names by way of abbreviation (e.g. ABC Ltd.) with
the approval of the Department of Company Affairs after following the
requirement of Section 21 of the Companies Act, 1956. It has now been decided
that any such change of name will require only the approval of Regional
Director concerned. The Companies will, however, continue to make applications
in Form No. 1A for availability of the proposed changed names to the concerned
Registrar of Companies.
2. It may be noted that the abbreviated
name will not be allowed for adoption by a new company proposed to be
incorporated under the Act.
[No. 3/14/93‑CL. V.‑
Press Note No. 1/93 dated 5‑5‑1993 issued by the Ministry of Law,
Justice & Company Affairs, Department of Company Affairs]
[Circular No. 31(96)6 F.No.
3/4/96‑CL‑V, dated 12‑4‑1996]
Use of the word 'Stock Exchange' with prior approval/permission under
Securities Contracts (Regulation) Act, 1956
I am directed to draw your
attention to this Departments Circular No. 27/22/85‑CL‑III, dated
13‑1-1986 and 18‑9‑1991 and Circular No. 27/50/92‑CL‑III,
dated 23‑3‑1993 on the above subject and to enclose a copy of
letter dated 18‑3‑1996 received from the Chairman, SEBI in this
regard. You are, requested to ensure that under no circumstances, a company is
registered with the words 'Stock Exchange’ as part of its name without
obtaining in principle approval/no objection of Securities and Exchange Board
of India. It may kindly be noted that non‑comphance with these
instructions will be viewed very seriously.
[Issued by the Ministry of
Law, Justice & Company Affairs, Department of Company Affairs, vide No.
5/35/98‑CL. V; General Circular No. 6/99, dated 13‑5‑1999]
As ROCs are aware, this
Department had issued exhaustive guidelines on avoiding undesirable names for
companies as mentioned in section 20 of the Companies Act, 1956 through
Circular No. 10(19)‑RS/61 dated 5‑5‑1962. Further guidelines
were also issued through Circular No. 2/90 (No. 1/1/90‑CL‑V‑27/1/89‑CL‑III),
dated 5‑1‑1990.
2. In
recent times, the Department had received a few references which needed further
clarification. The following guidelines/clarifications are accordingly issued.
3. Names starting with
small lettersthaving small letters
3.1. In the past the name‑search
for allowing names for companies used to be a manual search based on list of
names already in existence on a particular date, names made available by
different ROCs (which used to be circulated periodically) etc. The name search
is no longer manual. It has become a computerised operation in all ROC offices.
In view of this, some of the old constraints (like alphabetical listing) which
could be a restrictive factor in the manual system do not exist under the
present computerised system.
3.2 ROCs may therefore now allow
names starting with small alphabets (like i2 Technologies ...... Ltd.' etc.) as
such names are being increasingly used by many companies in other countries. It
should, however, be ensured that the name starting with small alphabets does
not have phonetic or visual resemblance to the name of a company in existence.
4. Change of name by
companies
4.1. In recent times it appears
that quite a few companies whose principal object was not computer software and
who had actually been involved in financing activities have changed their names
to indicate as if they were in the business of computer software. For this
purpose they have included words like ‑ "Infosys; Software; Systems;
Infosystern; Computeres; Cyber; Cyberspace etc." in their names.
4.2. In order that investors are
not mislead by the strategy adopted by a few companies. ROCs are hereby advised
that in future they should allow change of name to companies to reflect the
business of software only if a substantial portion of their income (as
reflected from their audited accounts or accounts certified by a Chartered
Accountant) is derived from software business. If this is not proved then
change of name should not be allowed,
5. Companies in Insurance
Sector
5.1. It may be recalled that in
Guidelines No. 21 you have been advised not to allow the word 'bank',
'banking', 'investment', 'insurance', and 'trust' unless circumstances justify
it. As you may be aware, the Insurance Sector is likely to be opened for entry
by Private Sector. The activities of the Insurance Sector would be regulated by
the Insurance Regulatory Authority which has already been set up.
5.2. In view of this, in partial
modification of the above‑mentioned Guideline, it is hereby clarified
that ROCs may allow companies to be registered by them with the word
'insurance' or 'risk corporation' as part of the name only after consulting the
Reserve Bank of India and Insurance Regulatory Authority (Jeevan Bharti
Building, Tower 1, Cannaught Circus, New Delhi 110 001) as the case may be.
6. Use of Generic Names
6.1. Guideline No. 5 relates to inadvisability
of allowing companies to have only generic names without any other proper noun
preceding/succeeding it. Under this category would come the word 'Y2K' (i.e.
Year 2000).
6.2. It may kindly be noted that
this is a generic one and cannot be allowed for any company as a ‘stand alone'
name.
[PIB Press Release, New
Delhi, dated September 16, 1999]
Changes in company name availability
The Registrars of Companies
(ROC) will now allow company name changes starting with small alphabets like
'i2 Technologies _________ Ltd.", etc., as such names are being used
increasingly by many companies in other countries. It shall, however, be
ensured that the name starting with small alphabets does not have phonetic or
visual resemblance to the name of a company in existence.
In the past, the name‑search
for allowing names for companies used to be a manual search based on list of
names already in existence on a particular date, names made available by
different ROCs, which used to be circulated periodically.
The name‑search is no
longer manual. It has become a computerised operation in all ROC offices. In
view of this, some of the old constraints like alphabetical listing, which
would be a restrictive factor in the manual system, do not exist under the
present computerised system.
[PIB Press Release, New
Delhi, dated l4th February, 2000.]
The Registrars of Companies
(ROCs) have been directed by the Department of Company Affairs not to allow
registration of names with words "mutual funds" forming part of some
Non‑Banking Financial Companies (NBFCs/Nidhis under section 20 of the
Companies Act, 1956), unless such companies are going to be incorporated
actually as mutual funds. ROCs have been informed that companies declared as
nidhis and mutual benefits societies under section 620A of the Companies Act
are not mutual funds. Therefore, names with words "mutual funds"
forming part thereof shall also not be allowed to companies proposed to be
incorporated as "nidhi" or "mutual benefit societies". It
has come to the notice to the Department of Company Affairs that some NBFCs or
nidhis have been registered with words "mutual funds" forming part of
their names, although they are not actually mutual funds. This is likely to
create confusion in the minds of investors. In the cases where NBFCs or nidhis
have already been incorporated with words "mutual funds" in their
names, the ROCs [sic, NBFCs] have been asked to get their names changed under
section 21 of the Companies Act, 1956, within a reasonable time of six months
failing which, report would be sent to the Department of Company Affairs for
initiating action for withdrawal of notification issued in their favour under
section 620A of the Companies Act.
[Circular No. 5, Dated 30‑6‑2000]
Department's Clarification, dated 30‑6‑2000.‑ Attention is invited to this
Department's Circular No. 6 of 1999 (5/35/98‑CL.V), dated 13th May, 1999,
in regard to allowability of names for entrepreneurs seeking to promote
companies for providing insurance services. In terms of the above circular,
such names were being given only after consulting the Insurance Regulatory
Authority until now. Consequent, on the coming into force of the Insurance
Regulatory Development Authority Act, 1999, with effect from 19th April 2000,
the Department has received a reference from the Insurance Regulatory Authority
advising that the embargo on registration of names by new companies could be
lifted. In view of this all ROCs are advised that they may allow names with the
word insurance/assurance or risk corporation as part of the name without any
need to consult the Insurance Regulatory Authority. It is hereby clarified that
such names can be allowed only to new companies and not for change of name as
existing companies are not allowed to carry on any insurance activity.