Friday, February 5, 2016

6 changes you must know for registration of company’s name under new Rules

The Govt. has notified the Companies (Incorporation) Amendment Rules, 2016 (‘Amended Incorporation Rules’). Now the process of reservation of name of companies has been simplified. Following changes have been made for ease of doing business in India: 

1) Name of company need not to be in consonance with principal object:

Under extant norms, the company’s name was necessarily required to be in consonance with principal object, if such name resembled any object of company. Now as per the amended Rules the name of company will not be considered undesirable even if it is not in consonance with the principal objects of the company as set out in Memorandum of association. Let us understand this condition with the help of an example. Suppose if a company wants to opt its name as ‘ABC Builders Pvt. Ltd.’ then it is not necessary that its principal object should be related to construction and development only. Thus, now company is free to choose such name which is not in consonance with principal object.


2) Usage of vague or an abbreviated name:

Under the extant norms there was restriction on usage of vague and abbreviated name. How many of us knows about ANI Technologies Pvt. Ltd but if one would say ‘OLA’ then most us might have heard of it and even enjoyed its first free ride. ‘OLA’ could have registered its name containing ‘OLA’ if there was no such restriction on usage of abbreviated name. The Amended rules does away with restriction on usage of vague and abbreviated name. Now a company can use either vague or an abbreviated names such as 'ABC limited' or '23K limited' or 'DJMO' Ltd.

3) No need to change name on change in business activity: 

As per the extant norms if any company has changed its activities which are not reflected in its name then it would be required to change its name in line with its activities. However, such requirement has now been done away with under the amended Rules. 
4) Central registry to dispose of name reservation application:

Now an application for the reservation of a name made in INC.1 shall be approved or rejected by the Registrar, Central Registration Centre. Earlier, the authority to dispose application for reservation of name was with respective ROCs.

5) Additional opportunity to remove defects:

Now while going for the fast-track mode of incorporation the registrar can give third opportunity to company to remove such defects or deficiencies.

6) Usage of Name containing Name of other person:

Under the extant norms, in case the key word used in the proposed name of a company is the name of a person other than the name(s) of the promoters or their close blood relatives, then NOC from such other person(s) and the proof of relation were required to be attached, respectively. Now such requirement of furnishing NOC and proof of relation has been removed.
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