New norms on company names to take effect from 1 September
Premium- The government will change the name of a company if it fails to comply with orders within three months of being asked to do so.
New Delhi: Companies having names deceptively similar to that of a previously registered firm will face strict action from the government unless they comply with a direction to change it within three months.
On Thursday, the Ministry of Corporate Affairs issued two orders giving effect to a provision, introduced in the Companies Act last year, to address the problem of new businesses having names similar to existing ones.
The government will change the name of a company if it fails to comply with orders within three months of being asked to do so. One of the notifications issued by the ministry sets 1 September as the date from which the new rule will become applicable. In another, the ministry brought out the procedures involved in the name change.
Non-compliant companies will be issued a fresh incorporation certificate with the new name which will contain the letters ORDNC (order of regional director not complied). Such companies will have to print the letters ORDNC at all places such as seals, stationery, office premises etc wherever its name is printed.
The norms will cover entities, which in the government’s view have names “identical" to or “too nearly resemble" the name “by which a company in existence had been previously registered."
India has over 13 lakh active companies and the numbers are growing steadily with roughly 10,000-16,000 firms being added every month. Similar names make regulation difficult in addition to causing confusion among consumers. It could also lead to trademark infringements. A trademark holder’s complaint against a company can prompt the ministry to ask it to change its name.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!