Choosing the right name for your company is a crucial step in the incorporation process. The Ministry of Corporate Affairs (MCA) has established a set of rules under the Companies (Name Availability) Rules, 2011, to ensure that company names are unique, non-deceptive, and compliant with Indian laws. This guide is divided into two sections:
1. General Guidelines – Covering broad principles applicable to all company names.
2. Specific Rules & Restrictions – Detailing specific naming conventions, prohibited words, and additional requirements.
Part 1: General Guidelines for Naming a Company
Covering broad principles applicable to all company names
1. Uniqueness & Avoiding Similarity
A company name should not be identical or too like an existing company or LLP. The name should not infringe on a registered trademark or a pending trademark application under the Trademarks Act, 1999. Slight spelling variations, phonetic similarities, or changes in punctuation are not considered distinct.
2. Compliance with Legal Provisions
The name should not violate the Emblems and Names (Prevention of Improper Use) Act, 1950. It should not contain offensive words or terms that insult any ethnic group, religion, or gender. It should not suggest government affiliation unless explicitly permitted.
3. Digital & Trademark Considerations
The addition of domain-related terms like ".com," ".net," ".org," does not make a name unique. Misspelled or intentionally altered words (e.g., "Kwik" instead of "Quick") do not count as distinct.
4. Declaration by Applicant
When applying for a company name, the applicant must declare that: They have checked for name availability on the MCA portal. The name does not infringe on trademarks. The name complies with all legal guidelines.
Part 2: Specific Rules & Restrictions for Naming a Company
Detailing specific naming conventions, prohibited words, and additional requirements.
1. Words That Are Not Considered for Uniqueness
The following elements are disregarded when determining the uniqueness of a name:
a. Common business suffixes: Private, Pvt, Ltd, LLP, Limited Liability Partnership.
b. Generic terms: Company, Co., Corporation, Corp., Industries.
c. Changes in spacing, punctuation, or letter cases: Example – "Tech-Solutions" and "TechSolutions" are considered identical.
d. Phonetic similarities: "J&K Industries" is the same as "J and K Industries" or "Jay Kay Industries."
e. Translation of names: If "Hindustan Steel Industries Ltd." exists, "Hindustan Ispat Udyog Ltd." will not be allowed.
2. Restrictions on Specific Words & Phrases
Certain words require special approvals or conditions:
a. Financial Terms: Names including "Bank," "Stock Exchange," "Venture Capital," "Nidhi," or "Mutual Fund" need regulatory approval from RBI, SEBI, or other authorities.
b. Government-Related Terms: The word "State" is restricted to government-owned companies.
c. Geographical Names: A company name cannot solely consist of a place name, such as "Delhi Pvt Ltd" or "Asia Ltd."
d. Use of a Foreign Parent Company’s Name: A wholly owned subsidiary of a foreign company may use its parent's name with "India" or a location reference.
3. Mandatory Capital Requirements for Certain Words
The MCA has set minimum capital requirements for names containing specific words:
|
Words (In Name) |
Minimum Authorised Capital Required (INR) |
|
Corporation, Corp. Corpn |
INR 25 Crore |
|
International, Global, World, Overseas |
INR 5 Crore (If First Word) / INR 2 Crore (If within Name |
|
Hindustan, India, Bharat |
INR 2 Crore (If First Word) / INR 25 Lakh (If within name) |
|
Industries, Udyog |
INR 5 Crore |
|
Enterprises, Products, Business |
50 Lakh |
4. Name Approval & Reservation
Once approved, a name is reserved for 15 days. If not used within the validity period, the name becomes available to other applicants.
5. Post-Incorporation Name Change & Withdrawal
Even after incorporation, the government can direct a company to change its name if it closely resembles an existing company or trademark. A name can be withdrawn before incorporation if it is later found to violate any rules. The applicant will be given an opportunity to present their case before withdrawal.
6. Professional Certification for Name Approval
If a name application is certified by a Chartered Accountant, Company Secretary, or Cost Accountant, it may be approved instantly. If the name is later found to be non-compliant, the certifying professional may face penalties under the Companies Act.
7. Conclusion
Choosing a company name is a critical step that requires careful attention to legal guidelines. Entrepreneurs should conduct a thorough search on the MCA portal and check for trademark conflicts before applying. By following the general principles and specific rules outlined in this guide, businesses can avoid unnecessary delays and ensure smooth incorporation.
For further assistance on company registration and compliance, feel free to reach out to One-Startup.
Source: https://www.mca.gov.in/Ministry/pdf/Companies_rules_15Mar2011.pdf