Common Reasons for Company Name Rejection
Common Reasons for Company Name Rejection
Company name selection is one of the important steps in a private limited company registration process. While applying for names using RUN name approval process to the Ministry of Corporate Affairs, upto two choices can be provided in order of preference and the ROC would accept one of the two choices. The recently introduced SPICe incorporation process integrates the process of obtaining DIN, Name Approval and Incorporation into one single step. However, only one choice of name can be provided while incorporating a company using SPICe Form. If the name provided is similar to an existing company name or LLP name or trademark, then the entire SPICe Form would have to be resubmitted. Therefore, it is important to choose a company that that is inline line with the Companies Act, 2013. In this article, we review the common reasons for company name rejection in India.
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Company Name Structure
Every Company Name (Private Limited Company, One Person Company, Limited Company) must have a prefix, object and constitution. The prefix in a company name is mostly the name of the business or the brand of the business. The object in a company name describes the main activity of the company. The constitution could be private limited or OPC Private Limited or Limited Company. For instance – in the name Acme Motors Private Limited, Acme is the name, Motors is the object and Private Limited is the constitution. If the name doesn’t correspond to the above pattern, it could be rejected.
Common Reasons for Company Name Rejection
The following are the common reasons for company name rejection during the company registration process.
Proposed name is not according to the activities described in Main Objects
The object provided in the company name does not match the main objects mentioned in the name application. An example would be a name application for ACME Hospital Private Limited with the main objects mentioned as “To manufacture or service cars”. Here the company’s name containing hospital and the main activity mentioned in the name application do no match and would be rejected.
Proposed Name is not available in view of the existence of identical or closely resembling companies
The proposed company name is identical or similar to an existing company name or LLP name or trademark. As per Companies Act, 2013 the name of a company cannot be identical or similar to the name of an existing company or LLP or trademark. Hence, if the name is similar or identical to an existing company, the name application will be rejected. It is important to note that a name can also not be SIMILAR, meaning ACME and AACME may be considered similar by the approving authority.
Proposed name is too general without any distinct word or identity
If a proposed company name is too general without any distinct word or identity, it may be rejected. For instance, Super Enterprises Private Limited. In the above name, both the name and the object are very general and do not provide any identity about the company. Further, names such as Super India Private Limited, Best Business Private Limited may be considered as names without any distinct word or identity.
Keywords like Industry/Udyog, Enterprises, Products, Business, Manufacturing
The MCA will allow for the use of words such as Industry, Udyog, Enterprises, Products, Business or Manufacturing only if the company proposes to deal in various business activities and/or the company is already carrying on various business activities. The keywords will not be allowed in names that are into only a particular trade. Further, startups with no track record of doing more than one business may not be able to use the words Industry, Udyog, Enterprises, Products, Business or Manufacturing just because they propose to undertake many activities. A proven track record may be requested.
Proposed name does not include suitable prefix
The prefix in a company name is usually the name part. If the name provided is not suitable, i.e., contains words that are not acceptable, similar to an existing company name or LLP name or trademark, or others – then the name may be rejected.
Keywords like International, Hindustan, India, Bharat, Continental, Asiatic, Corporation
The MCA will allow for the use of words such as International, Hindustan, India, Bharat, Continental, Asiatic, Corporation only if the scope and scale of business justifies the use of such name. Therefore, only well established businesses are allowed to use keywords like International, Hindustan, India, Bharat, Continental, Asiatic, Corporation in their company name.
Proposed name includes words like National, Central, Union, Federal etc which are considered as undesirable
The Ministry of Corporate Affairs does not permit the use of keyword such as National, Central, Union, Federal, etc., as a part of the company name. Any company name with those keywords may be rejected.
Proposed name indicates the partnership or the patronage of any National Leader or of Government.
Any company name that indicates partnership or patronage of any National Leader or of Government will be rejected by the MCA. For instance, Delhi State Hospital Private Limited may be rejected as it shows partnership or the patronage of Government.
