KNOW YOUR LAW #5 - ESSENCE OF NAME OF A COMPANY

PROVISION COVERED	Section 4
RULE COVERED	Rule 8 of the Companies (Incorporation) Rules, 2014
CONCEPT COVERED	Name reservation of Company

NAME OF THE COMPANY – THE ESSENCE:

Every Company is clothed with the character of being a distinct entity from its members and directors and distinguishable from other companies domiciled in India in terms of its name and scope of operation. The Andhra High Court in the case of “Walnut Packaging Private Limited v. The Sirpur Paper Mills Limited (2008)” held that “In Company Law, separate legal entity of incorporated body has to be maintained for reasons more than one.” Therefore, the legal status of company is established and beyond a reasonable doubt, the company being a separate legal entity shall contract with its stakeholders in its own name. Though the members are contributories and directors are the agents, yet the Company undertakes every transaction in its own name. This is essence of bestowing name upon every company.

The Company law also outlines ‘the capacity to sue’ as one of the traits of an incorporated company. The characteristic can be interpreted to mean that a company being a separate personality becomes competent to sue others and be sued by others in its own name. The Gujarat High Court in “Floating Services Ltd. v. MV 'San Fransceco Dipalola' (2004)” postulated that “Incorporation brings into existence a legal person which develops into its own separate existence as a business or enterprise. Companies incorporated under the Act are capable of suing and being sued in their corporate names.”

NAME RESERVATION – THE PRE-REQUISITIES:

It is imperative that since a company contracts in its own name, such name applied for by a company under incorporation shall not resemble with a name that is used by an existing company incorporated under Companies Act, 1956 or 2013 as the case may be. A company shall not use such name that is against the public policy, that causes injury on the reputation of another company or person, that shall be construed as an offence under any other law or when such name is considered undesirable by the central government. A company shall also not apply and use such name that is likely to cause a belief that such company is connected to any state government or central government or any local authority, corporation or body constituted by the Central Government or any State Government under any law. Rule 8 of the Companies (Incorporation) Rules, 2014 stipulates what shall be considered to construe as resembling names, what categories of name shall be considered undesirable by the central government and words to be inducted into the name of the company for which prior approval of central government is required. 

WHAT RESEMBLES NAME OF ANOTHER COMPANY?

A company’s name may contain certain letters, characters, words, numerical etc. which may also be present in the name of another company. In this circumstance, the pertinent question is will these attributes be considered to hold that a company’s name resembles with another. Following reproduced are the at attributes that shall not be considered and completely be disregarded while comparing the names of the company that is to say that even if the following matters are present in the names of the company or the names of the company have been constituted with the following mentioned attributes, then such attributes or matters shall be ignored and the name of the companies shall be deemed to resemble each other:

·     Words like Private, Pvt, Pvt., (P), OPC Pvt. Ltd., IFSC Limited, IFSC Pvt. Limited, Producer Limited, Limited, Unlimited, Ltd, Ltd., LLP, Limited Liability Partnership, company, and company, & co, & co., co., co, corporation, corp, corpn, corp or group the plural or singular form of words in one or both names;

·     Type and case of the letters, spacing between letters, punctuation marks and special characters used in one or both names;

·         Use of different tenses in one or both names;

·         Use of different phonetic spellings including use of misspelled words of an expression;

·      *Use of host name such as ‘www’ or a domain extension such as ‘net’, ‘org’, ‘dot’ or ‘com’ in one or both names;

·        *The order of words in the names;

·        *Use of the definite or indefinite article in one or both names;

·        A slight variation in the spelling of the two names including a grammatical variation thereof;

·       Complete translation or transliteration, and not part thereof, of an existing name, in Hindi or in English;

·      *Addition of the name of a place to an existing name, which does not contain the name of any place;

·    *Addition, deletion, or modification of numerals or expressions denoting numerals in an existing name, unless the numeral represents any brand.

* shall not be disregarded while comparing the names, if a no objection by way of a Board resolution has been provided by an existing company with which the name applied for a new applicant is compared with.

(NOTE: The concept dealt under Section 4 and Rule 8 with respect to inter alia name reservation and what shall be the circumstances that would warrant to construe a name of a company as undesirable shall be posted under post #6 of Know Your Law blog series)

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