Memorandum of Association is charter document of a company, a proof of the company’s identity. It defines the very purpose of a company’s existence. Every company whether for business or charitable purposes has to be incorporated with memorandum of association. Every member to the memorandum is assumed to have read the contents of the memorandum. A company cannot assume any business outside the purview of its memorandum. The memorandum contains the clause relating to the name of the company, registered office, objects, liability, capital and subscription.
In the lifetime of a company, it may so happen that there is a need to change the name of the company. Change of name of the company would be required due to change in business activity or operations of the company, change association with the holding company, change in name of the holding company (in India or abroad), etc. Under the Companies Act, 2013 (the Act), there is a specific procedure for changing the name of the company. This article provides a comprehensive compliance checklist for the procedure for change of name of the company (not by conversion of public company into private company or vice versa).
In Pioneer Protective Glass Fibre (P) Ltd. v. Fibre Glass Pilkington Ltd., it was held that on a change of its name of a company, it does not stand dissolved nor any new company comes into existence. It follows that after change of its name, if any legal proceeding is commenced or instituted by a company in its old name, it would be a case of mere misdescription and not a case of initiation of a proceeding by a person not in existence.
In Wasava Tyres v. Printers (Mysore) Ltd., it was held that the consequences of plaintiff company becoming a public limited company was of no consequence insofar as the rights and obligations of the company were concerned, nor did it render defective any legal proceedings by or against it, by virtue of the provisions of Section 23(3) of the Companies Act, 1956.
- Applicable provisions with respect to the name of company.—According to Section 4 of the Act, the name of the company should be, with the last word “limited” in the case of a public limited company, or the last words “private limited” in the case of a private limited company. However, the said provisions are not applicable to a company registered under Section 8 of the Act. 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.
- Applicable provisions w.r.t. change of name of company.—Any change in the name of a company shall be subject to the provisions of sub-sections (2) and (3) of Section 4 of the Act and shall not have effect except with the approval of the Central Government (powers delegated to Registrar of Companies) in writing. However, no such approval shall be necessary where the only change in the name of the company is the deletion therefrom, or addition thereto, of the word “private”, consequent on the conversion of any one class of companies to another class in accordance with the provisions of this Act.
- Application for name availability.—A person may make an application, in such form and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out in the application as—(a) the name of the proposed company; or (b) the name to which the company proposes to change its name. Upon receipt of the said name application, the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of 20 days from the date of approval or such other period as may be prescribed. In case of an application for reservation of name or for change of its name by an existing company, the Registrar may reserve the name for a period of 60 days from the date of approval.
According to Rule 9 of the Companies (Incorporation) Rules, 2014, an application for reservation of name shall be made through the web service available at <www.mca.gov.in> by using web service SPICe+ (Simplified pro forma for incorporating company electronically plus: INC-32), and for change of name by using web service RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing resubmission of such web form within 15 days for rectification of the defects, if any.
- Board approval.—The agenda for change of name of the company shall be first approved or transacted by the Board of Directors of the company. A Board meeting shall be duly convened in accordance with the provisions of Section 173 of the Act after giving proper notice, ensuring presence of quorum and passing of the resolution with requisite majority. According to Rule 29 of the Companies (Incorporation) Rules, 2014, 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. However, 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. Along with the application, the Board may submit the said declaration to that effect.
- Application for name reservation.—After confirming the above conditions and passing a Board resolution to the effect, the Board of Directors shall make an application through the reserve unique name (RUN) facility provided by the Ministry of Corporate Affairs on its portal. Depending upon the reasons for change of name of the company, the company shall submit an application for change of name, resolution passed by Board of Directors for change of name, declaration w.r.t. compliance of Rule 29 of the Companies (Incorporation) Rules, 2014, details of change of name of holding company (if applicable), revised certificate of incorporation of holding company (if applicable), resolution of joint venture company (if applicable), NOC/resolution of person own the trade mark of the new name, note for change of name of the company (e.g. change in regulations under SEBI/ IRDA), etc.
- Some important pointers for making name application.—(a) the name stated in memorandum shall not be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; (b) the chosen name shall not constitute an offence under any law for the time-being in force; (c) the name is not undesirable in the opinion of the Central Government (powers delegated to Registrar of Companies); (d) the name should not contain any words or expressions which give an impression that the company is connected with or receives patronage from 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; (e) the name should not be prohibited under the Emblems and Names (Prevention of Improper Use) Act, 1950; (f) the name should not include a registered trade mark in its name, unless the owner of the trade mark has consented to usage of the same; (g) the name should not be identical to the name of LLP; and (h) the Board of Directors shall ensure compliance of Rules 8, 8-A, 8-B of the Companies (Incorporation) Rules, 2014.
- Name approval from Central Government.—An application for change of its name by an existing company, the Registrar may reserve the name for a period of 60 days from the date of approval. In this period, the company shall obtain the approval of the shareholders. In closely held private companies or public companies, the shareholders’ meeting can be called by passing a circular resolution or in other cases, a Board meeting may be called and convened. The name approval letter shall be placed before the Board and the shareholders’ meeting shall be called in accordance with the provisions of the Act and articles of association of the company.
- Shareholder Approval.—Any alteration in the memorandum of association requires the approval of the shareholders by way of a special resolution. Such approval may be sought either at an extraordinary general meeting or an annual general meeting. The said special resolution shall be filed through e-form MGT-14 within 30 days of passing of the resolution with the Registrar of Companies. The attachments to e-form MGT-14 shall be: (i) notice and explanatory statement of the shareholders’ meeting; (ii) shorter notice consent of shareholders, if applicable; (iii) an application, highlighting the reasons for change of name; (iv) name approval letter received from the MCA; (v) declaration by chairman, where the shareholder meeting was held through video conferencing and other audio visual means (if applicable); and (vi) copy of memorandum of association.
- Application to Central Government.—After filing e-form MGT-14 with the MCA, the company shall then file e-form INC-24 with the MCA. The said e-form relates to “application for approval of Central Government for change of name”. The attachments to e-form MGT-14 shall be: (i) notice and explanatory statement of the shareholders’ meeting; (ii) shorter notice consent of shareholders, if applicable; (iii) name approval letter received from MCA; (iv) 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; (v) declaration with respect to the compliance of Rule 29 of the Companies (Incorporation) Rules, 2014; and (vi) copy of any approval order obtained from the authorities concerned (such as RBI, IRDA, SEBI, etc.) or the Department concerned.
- Registration of the new name of the company.—After perusal of the e-forms and attachments, the Registrar of Companies shall register the new name of the company and will issue a fresh certificate of incorporation in form INC-25 for the company. The change in the name of the company shall be complete and effective only on the issue of such a certificate.
- Compliances post change of name.—After the name change procedure is complete i.e. after receiving the certificate of incorporation with the new name, following compliances shall be conducted; (i) each and every copy of the memorandum of association should reflect the change of name as approved by the Registrar of Companies; (ii) the company should print its new name along with the old name on all letterheads, bills, documents and records; (iii) new name along with old name needs to be displayed outside the registered office; (iv) all relevant bank accounts, licences from different authorities need to be updated with the new name; and (v) in case of a listed company, the old name and the new name should be displayed for a continuous period of 1 year from the date of name change on its website.
Gaurav N Pingle, Practising Company Secretary, Pune. He can be reached at email@example.com.
[This article was first published in the Practical Lawyer Magazine, March Issue 2021. Republished with the kind permission of Eastern Book Company.]