Change of name of company – One Person Company Registration
Section 21 of Companies Act, 1956 – Change of name of company
Section 21 of the 1956 Act prescribes a special resolution and approval of the Central Government for changing the company’s name. (Note: Under the 2013 Act, s. 13(2) and (3) read with the relevant rules in Company (Incorporation) Rules 2014, will govern the process for change of name of companies). The provision to s. 21 of the 1956 Act dispenses with the approval of the Central Government when the only change occurring in the name is the deletion or addition of the word ‘private’ consequent upon the conversion of the company from private to public and vice versa. (Note: The proviso to s. 13(2) of the 2013 Act also does the same. However the provision also explicitly mentions that such change is subsequent to the company converting from one class of companies to another as provided in the 2013 Act). It should be noted that in the context of the 2013 Act, a public company can be converted into a private company with the approval of the Tribunal. The approval of the Central Government need not be previous approval and it can be obtained even after the change of name. If it is discovered after the certificate is issued embodying the altered name, that a special resolution required by the act was not properly passed, an application may be made to the Registrar to vacate the company registration. Where a company’s business was nationalized it was not allowed to change its name to enable it to carry on the same business.
Change of name of Banking Company
In the case of a banking company a certificate of ‘no objection’ for the changee of name is also required from the Reserve Bank before approval of the Central Govemment is granted. See s. 49-B of the Banking Companies (Amendment) Act, 1959.
Change of name through sanctioned scheme of amalgamation, etc.,
The name of the transferor company became changed because of the sanctioned scheme of amalgamation. The ROC refused to record the new name because the formal requirements of s. 21 of the 1956 Act were not complied with. This was held to be not justified. Such schemes are approved and then sanctioned by the court. The Central Government is always under information about such schemes.
Department’s Guidelines regarding change of name issued under Companies Act, 1956
In considering applications for change of name not from conversion of private into public or public into private company. the Central Government considers the following points:-
(1) Whether the reasons are sufficient,
(2) Whether the proposed name is in consonance with the principal objects of the company and with the kind or kinds of business actually carried on, and
(3) Whether the proposed name is not undesirable.
A company seeking to change its name or the promoters of a company under a proposed may make application to the Registrar of Companies of the State in which the registered office of the company or of the proposed company is or is to be situate, for information as to whether the changed name or the name with which the proposed company is to be registered, as the case may be, is undesirable within the meaning of section (s. 20 of the 1956 Act).
Where the Registrar of Companies informs the company or the promoters of the company that the changed name or the name with which the proposed company is to be registered, as the case may be, is not undesirable, such name shall be available for adoption.
(a) By the said company for a period of six months or
(b) By the said promoters of the company for a period of six months from the date of intimation by the Registrar.
Deletion of foreign trade name
Where respondent company had the trade name of a foreign company as a part of its name and the respondent company went into liquidation and the license granted by the foreign company had been withdrawn, the foreign company could seek for deletion of its trade name from the name of the respondent company on the ground that the continued use of its name by the company under liquidation would be prejudicial to its interests.
Approval policy about change of name on adoption of new business-Department’s Instructions
In case the change in the name of the company is being proposed with a view to undertaking a new line of business not presently authorized by the memorandum, the change of name should be allowed only after necessary amendments have been made in the memorandum of association and duly approved by the Company Law Board.
Department’s Guidelines as to change of name
Generally it is advisable to consult the Registrar of Companies before taking the contemplated step to change the name and seeking Central Government’s approval therefor.
Guidelines regarding change of names. Section 21 of the 1956 Act lays down that a company may, by special resolution and with the approval of the Central Government signified in writing change its name. A reference is also invited to this Department letter No. 8/21/56-PR, dated the 6th February, 1957, informing that for any change of name of a company involving the deletion or addition, as the case may be, of the word ‘Private’ as a result of its conversion from a private limited company into a public limited company or vice versa, the approval of the Central Government should be obtained under section 21 of the 1956 Act. As it has been observed that applications under this section received in the Department do not always contain full particulars necessary to enable Government to take decision without further reference to the parties concerned the nature of the information/documents required to be furnished by the applicants is indicated in the succeeding paragraphs for the information and guidance of all concerned. In considering an application for change of name not resulting from conversion, the Central Government generally examines it from the following angles
(i) Whether the reasons adduced by the company for the change of name are sufficient.
(ii) Whether the proposed name is in consonance with the principal objects of the company as set out in its memorandum of association and with the business actually carried on by it, where such consideration is relevant; and
(iii) Whether the proposed name is not undesirable.
As regards (i) and (ii), the question is decided on the merits of each case. As regards (iii) the proposal is considered in the light of the principles set out in Annexure ‘A’ [Annexure A not reproduced as irrelevant] to this letter. These principles are however, not exhaustive but only illustrative, their main object being to ensure that a company does not adopt a name likely to mislead the public, that the proposed name is inoffensive and is consistent with the resources and objects of the company. The companies will therefore be well-advised to consult the Registrar of Companies concerned in the first instance with a view to ascertaining whether the name proposed to be adopted by them would be available for registration.
In the case of a Banking company, if it desires to change its name as a result of its decision to give up the business of Banking, it is required first to alter its memorandum of association so as to eschew the business of banking as defined in section 5(1)(b) of the Banking Companies Act, 1949 and apply to the Central Government under section 21 of the Companies Act only after effecting the said alteration in accordance with the requirements of law. In such cases, the applicant company should also attach a copy of a certificate from the Reserve Bank of India that the Bank has no objection to the proposed change.
AIl applications for change of name, not resulting from conversion should be made after passing the necessary special resolution and accompanied by the following particulars:
(a) Detailed reasons for the change of name
(b) An up-to-date copy of the memorandum and Articles of association;
(c) A copy each of the balance-sheet and profit and loss account for the last two financial years,
(d) A certified copy of the communication received from the Registrar in token of his having recorded the special resolution in terms of section 192 of the Act, and
(e) Where the change is as a result of alterations in the objects of the company as set out in its memorandum of association, whether or not a certified copy of the Court’s order under section 17 has been filed with the Registrar and the requisite certificate of registration obtained from him under section 18 of the Act.
As regards the change of name due to conversion, it has been decided that in future the company concerned should furnish all the particulars set forth in Annexure C’ to this letter. It is also required to pass a separate special resolution in terms of section 21 of the 1956 Act.
Effect of change of name
The change of name does not affect the entity of the company or its continuity as the same entity. It remains for all practical purposes the same entity with the same rights, privileges and liabilities as before. This becomes further clear from the fact that the courts have been holding that proceedings commenced by the company in its former name can be continued under its new name. While the 2013 Act does not specifically state in s. 13 that the change of name does not affect the entity or the continuity of the legal entity of the company, the position will be the same under 2013 Act as well.
Deletion of trade name from name of a company in liquidation
Where a company which had been permitted to use the trade name of the respondent as a part of its name went into liquidation and was not operational, then when the respondent filed an application for deletion of its trade name from the name of the company, the respondent would be justified in seeking deletion of its trade name and s. 21 of the 1956 Act cannot have application for, it was not company that had moved for change of its name.
Listing companies to notify stock exchange
Where the company’s shares are listed on any stock exchange, the change of name must be notified to the exchange, under clause 29 and clause 36(1) of the Listing Agreement.
Section 23 of Companies Act, 1956
The effect of change of name of a company as discussed below in the context of s. 23 of the 1956 Act will provide guidance under the 2013 Act as well.
Effect of change of name upon legal proceedings [Section 23(3) of Companies Act 1956]
Section 23(3) of the 1956 Act protects only the continuance of pending legal proceeding which had been commenced by the company in its former name. It will not protect legal proceedings commenced in such former name, after the change of name has been effected and registered in the register of joint stock companies by the Registrar, even though the mistake was bona fide.
The change of name does not affect the entity of the company or its continuity as the same entity. It remains for all practical purposes the same entity with the same rights, privileges and liabilities as before. Even where a proceeding has been instituted in the old name, it will not be regarded as a proceeding instituted in the name of a company which not in existence. It would be a mere case of misdescription of name. All these authorities clearly demonstrate that a change of name does not bring into existence a new company. The company remains the same entity as it was before and only its name changes. A new certificate of incorporation has no doubt to be issued but that does not incorporate a new company. The same principles apply where a private company converts itself into a public limited company. It may continue its existing proceedings in its new name. A private company, deemed to be a public company under s. 43A and therefore changing its name by dropping the word ‘Private’ can continue the existing proceedings under its altered name. Where the change of address of the company was not communicated to the Registrar, the absence of service of notice at the old address could not be excused.
Mutation of name in other company’s register of members
The company which has changed it name would be entitled to ask those companies in which it is holding share to substitute a company’s new name in their register of members in place of the old name. For more clarification about One Person Company Registration Process kindly visit our site and feel free to contact us. Thanks for Reading!!!!