1.Name of the Company or Name Clause –
This is an important clause because it gives an identity to the company. A company is a separate legal entity must have a name with which it is incorporated and known by others. The word ‘limited’ must be used at the end of the name of the public company and ‘private limited’ should be used by a private company. A non-profit making association formed for promoting commerce, art, science, religion, charity or any other useful object may be registered without adding the word limited or private limited. [Section 4 and 8] Legal provisions to be considered while selecting the names of the company [Section 4(2) and 4(3)]:
1. The name should not be identical or closely resembling an existing company.
2. It should not be in the contravention of the guidelines issued by the department of company affairs (Government of India).
3. The proposed name must not be undesirable in the opinion of the central government.
4. The proposed name should not contain any such word or give such impression that the company enjoys government patronage.
5. Prior permission from the central government should be taken before using the name having prohibited words.
Reservation of Name with Registrar:
The company should present an application in the prescribed form along with the required fees, before the ROC to get the proposed name registered. [Section 4(4)].
After receiving the application, the registrar scrutinises the information and documents furnished along with application form, and if found satisfactory, he reserves that name for the company. The reservation is valid until sixty days. (Section 4(5)]
Reservation of Name on the Basis of Wrong Information and Consequences:
If it is found that name was applied by furnishing incomplete or false information provided by the company, then the following consequences have to be faced – (a) If the company has not been incorporated, the reserved name shall be cancelled and the person making an application under subsection (4) shall be liable to a penalty which may extend to one lakh rupees.
(b) If the company has been incorporated, the registrar may after giving the company an opportunity of being heard –
- Either direct the company to change its name within a period of 3 months after passing an ordinary resolution.
- Take action by striking off the name of the company from the registrar of companies.
- Make a petition for winding up the company.
