Preliminaries in company formation

The adman of a company may be an single entrepreneur or a body corporate or a group of them or bodies corporate involved in efforts to bring into being a company. They have the power of defining the unit of the company and deciding various matters for the interval regulation of the company proposed to be incorporated. The various steps which a promoter will have to take for company registration are explained below.

Selecting a name – Section 20

Basically a company cannot register itself by a name which, in the idea of the central government is undesirable. Normally it will be not consider to register a company name is already registered. A company is not have the rights to choose their new name which is same or already registered company name.

Confirmation regarding name from the registrar

Pursuant to section 20 of the act read with rule 4A of the companies (central governments) General Rules and Forms, 1956. The promoter of a company under a proposed name or an existing company seeking to change its name shall make an application to the Registrar of Companies of the State in which the company registered office is suggested to be placed. The other matters to be borne in mind are explained below :

(a) The procedure for making the application has been amended by notification No. G.S.R 720 (E), dated 16-11-2007.

(b) The registrar will consider whether the suggested name or the changed name is not undesirable with in the meaning of section 20.

(c) In case the name is not awful, the registrar, usually within 3 days of the receipt of the application, may reject the proposed name.

(d) The applicant will be given two chances to resubmit the application with new names against the fee paid with the old application. In other words there is no need for fresh fee for two re submissions after the first application.

(e) Where the registrar rejects the first application and two re submissions, the company may submit a fresh application in Form 1A along with the prescribed fee of Rs.500.

(f) Where the registrar informs the promoters or the company his confirmation that the name is not undesirable, action shall be taken by the adman to company registration or by the existing company to change the name within 60 days of receipt of the Registrars confirmation.

(g) If the name is not adapted within sixty days, the applicant may on application, be allowed extensions for 30 days more on payment of 50% of the application fee.

(h) The name once allowed will lapse after 60 days or after 90 days where extension is allowed.

Non-banking Finance Companies proposing to do mutual funds business

The registrars of companies have been placed by the erstwhile section does not permit the names of registration with the name “Mutual Funds” any non-banking finance company or nidhi company is registered as mutual funds. The Departments Press Release dated 14-02-2000 is quoted below.

1. The Roc have been managed by the division of company affairs are does not permit the registration of names with ‘mutual funds’ registering a division of some non-banking financial companies (NBFCs)/under the companies act 1956 (‘the act’) of section 20.

Intimation of availability of name in 7 days

The central government has notified vide notification mentioned above that where an application for proposed name is made complete in all respects, the registrar shall furnish the confirmation that the name is not considered undesirable within presumably 3 days of the receipt of the application instead of 7 days laid down earlier.

Validity period of confirmation of Registrar

As stated above, once the registrar has confirmed that submitted name is not considered undesirable, the company concerned shall be registered, the name within sixty days (as against six months earlier) from the date of intimation by the registrar.

Change in name of an existing company

The guidelines and the procedure for changing the name of an existing company are explained later separately in another chapter.

Name availability guidelines – changes

The department of company affairs has issued a general circular no.6/99 dated 13-5-1999.F-5/35/98-CLV (partially amended on 30-6-2000) regarding changes in name availability guidelines which is quoted below for information.

Companies in insurance sector

The Guideline No.21 as in Appendix 2.1 the following words are not used in your company name like “bank”, “insurance”, “banking”, “investment”, “trust” unless circumstances justify it.


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