The Government of India has notified the Companies Incorporation Amendment Rules 2016 (‘Amended Incorporation Rules’). This legislation makes the method of reservation of name of companies simpler.
Following changes have been made for accelerating the ease of doing business in India
1. Business purpose can be omitted from the name of the company:
As per the existing norms, company’s name needed to be in agreement with principal business purpose as listed in the Memorandum of Association (MOA). New rules allow the company to omit the purpose of the business from its name. For example, A company wants to opt its name as ‘ABC Builders Pvt. Ltd.’ then it is not necessary that its principal purpose should be related to construction and development only. Thus, now with the new amendment, a company is free to choose such name which is not in agreement with principal purpose.
2. Usage of vague or abbreviated names allowed:
As per the existing norms, company name shouldn’t be vague or abbreviated
The latest amendment does away with a restriction on usage of vague and abbreviated names. A company with the name ‘Business analytics Technologies’ can now be named BA TECH/ BA TECHNOLOGIES so on,
Now a company can use either vague or abbreviated names such as ‘ABC limited’ or ’23K limited’ or ‘DJMO’ Ltd.
3. No need to change name with the change in business operations:
As per the existence norms, if any company has changed its activities which are not reflected in its name then it would have to change its name in line with its activities. These restrictions are done away with by the latest amendment.
4. Central registry to deal with 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 of the application for reservation of name was with respective The Registrar of Companies (ROC).
5. Additional opportunity to remove flaws in the name:
Now while going for the fast-track mode of incorporation, the registrar can give the third opportunity to the company to remove such defects or deficiencies.
6. Usage of Name containing Name of another person:
Under the existing norms, in case the keyword 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-No Objection Certificate (NOC) from such other person(s) and the proof of relation were required to be attached, respectively. Now such requirement of furnishing No Objection Certificate and proof of relation has been removed.
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