A brief analysis of companies (incorporation) fifth amendment rules, 2019

The Ministry of Corporate Affairs, on 10^th May, 2019,  revised the Companies (Incorporation) Fifth Amendment Rules, 2019 majorly amending Rule 8: Names which resemble too nearly with name of existing company.

As this is one of the common issues Companies are facing these days due to rejection of Proposed names due to some minor errors in the Names. For providing ease and clarifying various doubts regarding the rule 8, MCA has taken this step by substituting the old rule with the new one and by providing the stakeholders with various illustrations in order to understand the rule in a better sense.

According to the Revised Rule 8: Names which resemble too nearly with name of existing company, of Companies Act, 2013, A name applied for shall be deemed to resemble too nearly with the name of an existing company, if, and only if, after comparing the name applied for with the name of an existing company by disregarding the below mentioned matters, the names are same.

Following are the matters that shall be ignored while comparing the proposed name with any of the existing names:

1. the words like Private, Pvt, Pvt., (P), OPC Pvt. Ltd., IFSC Limited, IFSC Pvt. Limited, Producer Limited, Limited, Unlimited, Ltd, Ltd., LLP, Limited Liability Partnership, Company, and Company, & Co, & Co., Co., Co, Corporation, Corp, Corpn, Corp or Group;
2. the plural or singular form of words in one or both names;
3. type and case of letters, spacing between letters, punctuation marks and special characters used in one or both names
4. use of different tenses in one or both names
5. use of different phonetic spellings including use of misspelled words of an expression
6. use of host name such as ‘www’ or a domain extension such as ‘net’, ‘org’, ‘dot’ or ‘com’ in one or both names
7. the order of words in the names
8. use of the definite or indefinite article in one or both names
9. a slight variation in the spelling of the two names including a grammatical variation thereof
10. complete translation or transliteration, and not part thereof, of an existing name, in Hindi or in English
11. addition of the name of a place to an existing name, which does not contain the name of any place
12. addition, deletion, or modification of numerals or expressions denoting numerals in an existing name, unless the numeral represents any brand

Illustrations of the above mentioned cases:

Rule 8A: Undesirable names

As per Rule 8A, the name shall be considered undesirable, if any of the following situations happen:

(Note that provisions of Rule 8 shall apply mutatis mutandis in the necessary situations)

1. it is prohibited under the provisions of the Emblems and Names (Prevention and Improper Use) Act, 1950 (12 of 1950), unless a previous permission has been obtained;
2. it includes a trade mark registered under the Trade Marks Act, 1999 in the same class of goods or services, unless the consent of the owner of the trade mark has been obtained;
3. it includes any offensive words to any section of the people;
4. it is identical with the popular or abbreviated description of an existing company or LLP;
5. it is identical with a name which is presently reserved in accordance with rule 9 of Companies (Incorporation) Rules, 2019.
6. where company’s main business is financing, leasing, chit fund, investments, securities or combination thereof, but the proposed name is not indicative of such related financial activities or visa-versa;
7. it is identical with the name of a company or LLP incorporated outside India and reserved by such company or LLP with the Registrar. Further, if a foreign company is incorporating its subsidiary company in India, then the same original name of the holding company may be allowed with the addition of word India or name of any Indian State or city, if otherwise available:
8. it includes the words indicative of a separate type of business constitution or legal person etc;
9. it contains the words ‘British India’ or contains the name of an enemy country;
10. it implies association or connection with an embassy or consulate of a foreign government;
11. it includes or implies association or connection with or patronage of a national hero or important personages who occupied or are occupying important positions in the Government;
12. it is identical to the name of a company dissolved due to liquidation and 2 years have not elapsed from the date of such dissolution. [Note: If the proposed name is identical with the name of a company struck off u/s 248 of the Companies Act, 2013 or u/s 560 of the Companies Act, 1956 then the same name shall be allowed only after expiry of 20 years from being struck off];
13. it is identical with the name of LLP in liquidation or the name of a LLP which is struck off up to a period of 5 years;
14. It include words like ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual Fund’, etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA, etc. have been complied with by the applicant;
15. it includes the word "State", if the Company is not a Government company;
16. it contains only the name of a continent, country, State, city such as Asia limited or Mysore Limited;
17. it merely consists of commonly used words to describe an activity;
18. it includes name of any foreign country or any city in a foreign country.

[Note: The same shall be allowed if the applicant produces any proof of significance of business relations with such foreign country like MOU with any company of such country]:

[Note: The name combining the name of a foreign country with the word India shall be allowed if there is a government to government participation or patronage]

19. In case of section 8 company, it does not include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust and the like, etc.
20. In case of a Nidhi company, it does not have the last words “Nidhi Limited” as a part of its name.
21. it has been released from the register of companies upon change of name of a company and 3 years have not elapsed.

[Note: The applicant shall declare whether he is using or has been using in the last 5 years, the proposed name in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and provide details of the same along NOC from other partners and associates for use of such name and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not.]

Rule 8B: Word or expression which can be used only after obtaining previous approval of Central Government:

1. 1. Board;
   2. Commission;
   3. Authority;
   4. Undertaking;
   5. Nation, National, Union or Central;
   6. Federal;
   7. Republic;
   8. President or Rashtrapati;
   9. Small Scale Industries;
   10. Khadi and Village Industries Corporation;
   11. Financial Corporation and the like;
   12. Municipal;
   13. Panchayat;
   14. Development Authority;
   15. Prime Minister or Chief Minister or Minister;
   16. Forest corporation;
   17. Development Scheme;
   18. Statute or Statutory;
   19. Court or Judiciary;
   20. Governor;
   21. the use of word Scheme with the name of Government, State, India, Bharat or any Government authority or in any manner resembling with the schemes launched by Central, State or local Governments and authorities; and
   22. Bureau.”

[Further, link of Companies (Incorporation) Fifth Amendment Rules, 2019 is provided below: http://www.mca.gov.in/Ministry/pdf/AmendmentRules_08052019.pdf]