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Common Reasons for Company Name Rejection in India
Common Reasons for Company Name Rejection in India

Formation of a Company Name

One of the crucial phases in registering a private limited business is choosing the company name. Up to two selections may be offered in order of preference when requesting names through the Ministry of Corporate Affairs’ RUN name approval process, and the ROC will accept one of the two options. The procedure of acquiring a DIN, getting a name approved, and incorporation are all combined into one step by the recently established SPICe incorporation process. However, when establishing a business using the SPICe Form, only one name option may be given. The whole SPICe Form would need to be filed again if the specified name is identical to an already existing business name, LLP name, or trademark. Consequently, it is crucial to pick a business that complies with the 2013 Companies Act. In this article, we examine the typical explanations given in India for rejecting a company name.

Process of Company Name Registration?

Company Registration– Prefix, object, and constitution are required for each type of company name (Private Limited Company, One Person Company, Limited Company). The prefix in a corporate name is often the name of the firm or its brand. The primary function of a firm is indicated by the object in its name. The constitution may be limited company, OPC private limited, or private limited. For example, Acme is the name, Motors is the object, and Private Limited is the constitution in the name Acme Motors Private Limited. The name could be disregarded if it doesn’t fit the aforementioned pattern.

Common justifications in India for rejecting company names

These are the typical explanations for business names being 

The proposed name deviates from the Main Objects’ descriptions of the activities.

The primary objects listed in the name application do not correspond to the object given in the business name. A title application for ACME Hospital Private Limited with the primary objectives “To manufacture or service autos” might serve as an illustration. Here, the company name contains the word “hospital,” which is inconsistent with the primary activity listed in the name application.

Due to similar or identical firms already existing, the proposed name is not accessible.

The proposed business name is the same as or confusingly similar to an already-used trademark, LLP name, or company name. According to the Companies Act of 2013, a company’s name cannot be the same as or confusingly similar to the name of an existing company, LLP, or trademark. Therefore, the name application will be denied if the name is the same as or similar to that of an existing business. It’s important to remember that a name cannot also be SIMILAR, which means the approving authority might deem ACME and AACME to be similar.

The proposed name lacks any distinctive words or identities and is too vague!!

A proposed company name could be rejected if it lacks any distinctive words or identities and is too vague. Super Enterprises Private Limited, as an example. Both the name and the item in the aforementioned name are exceedingly vague and include no information regarding the company’s identity. Additionally, names without a clear word or identity, like Super India Private Limited and Best Business Private Limited, may be regarded as names.

Such as enterprises, products, business, manufacturing, industry/udyog

The MCA will only permit the use of terms like “industry,” “udyog,” “enterprises,” “products,” “business,” or “manufacturing” if the firm plans to engage in, or is currently engaged in, many commercial activities. The use of keywords in names that are limited to one industry will not be permitted. Additionally, just though a company intends to engage in several activities does not automatically qualify it to use the terms industry, udyog, enterprise, products, business, or manufacturing. A track record of success could be required.

Company registration- Typically, the name portion of a corporate name is the prefix. The name may be rejected if it is unsuitable, that is, if it contains unacceptable terms, is similar to an already existing business name, LLP name, trademark, or other name, among other things.

International, Hindustan, India, Bharat, Continental, Asian, and Corporation are examples of related keywords

Only if the size and breadth of the firm warrants the use of names like International, Hindustan, India, Bharat, Continental, and Asiatic Corporation will the MCA permit their use. Only well-established companies are thus permitted to include phrases like “International,” “Hindustan,” “India,” “Bharat,” “Continental,” “Asian,” and “Corporation” in their corporate names.

The proposed name contains words like “National,” “Central,” “Union,” “Federal,” and other unfavourable terms.

The Ministry of Corporate Affairs prohibits using words like “National,” “Central,” “Union,” or “Federal” as part of a corporate name. Any business name containing such keywords may be disregarded.

The proposed name implies a relationship with or endorsement by a National Leader or by the government.

The MCA will reject any business name that suggests a relationship with or support from a National Leader or the government. For instance, Delhi State Hospital Private Limited can be turned down because it demonstrates government favouritism or collaboration.

The applicant is obliged to provide his preferred names for the prospective firm throughout the formation procedure. It is not necessary to approve the applicant’s chosen name. The ministry of corporate affairs may reject a trademark application for a number of reasons.

As crucial as naming a kid is giving the firm the appropriate name. The company’s name, like a genuine person, gives it a distinctive identity that sets it apart from other businesses. A revolutionary corporate name approval form called as a reserve unique name (RUN) was launched on January 26th, 2018. The applicant can request approval of the suggested name well in advance after its introduction. In the first stages of introduction, RUN could only get one name preference. The applicant can now choose two name selections, though. If the ministry is happy with one of the two names submitted, it will authorise that name. If the office is not satisfied with both names submitted, the applicant will be asked to resubmit, and if during the second submission, the applicant is still unable to satisfy the office, a new form will need to be submitted.

Through the SPICE incorporation, you may also request name approval. The procedure of acquiring a DIN, getting a name approved, and incorporation are all combined into one step through SPICE incorporation. One of the main disadvantages of using this form to request name clearance is that only one name choice may be specified. The entire form must be submitted again if the ministry is dissatisfied with the name submitted.

It is crucial that you select a name that is distinctive and capable of being authorized by the government in order to prevent the headaches of having to reapply for the name. In this article, we’ll examine the typical justifications for rejecting a business.

The suggested name conflicts with the actions listed in the primary objects

The suggested name will be rejected by the ministry if it conflicts with the primary objectives listed in the application for company registration. As an illustration, the firm is called “XYZ Manufacturing Private Limited” and its primary goals are “Providing business consultancy services.” This will be disregarded due to the name and items being wholly inconsistent.

The proposed name is the same as or confusingly similar to the current company’s name.

Two names that sound the same are frequently used to trick the general public. No two firms or corporations can be registered with similar names and trademarks, according to the regulations of the Companies Act of 2013. The proposed name will be rejected if it sounds too much like an already-used name. Another crucial point to keep in mind is that the approving authorities will view names with a similar pronunciation, such as BAN and BAAN, as being similar.

The suggested name is too broad.

Only distinctive objects are permitted reservations. The same applies to name reservations. The name will be rejected if the authorising authority decides it is too broad. For instance, cement private limited and successful private limited are both highly generic names that lack any distinguishing qualities.

Unfavorable adjectives like national, central, union, and federal are included in the proposed name.

Private limited company registration– The ministry deems it undesirable when terms like national, central, union, and federal are included in corporate names. Therefore, names containing these terms will be rejected by the government.  The suggested name suggests a relationship with or government’s endorsement of any National Leader.

The ministry will reject any proposed name that suggests a relationship between the business and a national leader or the government unless it is strongly substantiated by supporting documentation. For instance, the government will only reject the Delhi City Hospitals Private Limited on this basis.

How Muds Management helps you in Company Name Registration?

Companies can register their business entities with MUDS with the assistance of competent legal counsel, a streamlined procedure requiring less paper work, access to a variety of services at affordable prices, and availability of account opening.

Nevertheless, as long as you have MUDS on your side, you need not be concerned about the incorporation of the firm. You get assistance from our experts with the company registration procedure.

Conclusion

Usually, the name of the business or its brand appears as the prefix in the company name. It is crucial that a name have the appropriate prefix in order to be approved. Prefixes that are similar to trademarks or company names already in use, as well as those that are inappropriate, may result in a rejection from the ministry of corporate affairs.

If you pick a name after considering all of these factors, there is a good probability that it will be accepted straight away. To avoid being rejected by the ministry of corporate affairs, it is strongly advised to get expert advice in this respect.

 

 

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