COMMON REASONS FOR REJECTION OF COMPANY NAMES
Selecting an appropriate name for a company is a crucial step in the business incorporation process. However, many proposed names are often rejected due to regulatory requirements and naming conventions. Here are the most common reasons for rejection of company names:
1. Misalignment with Main Objects
The proposed name must align with the activities described in the company's main objects. Names unrelated to the core business activities are likely to be rejected.
2. Name Already Exists
Names that are identical or closely resemble existing company names are not allowed. This ensures clear differentiation in the marketplace.
3. Generic or Non-Distinctive Names
A name that is too general, without a unique or distinct word, lacks the required identity and is usually rejected.
4. Use of Restricted Keywords
Certain keywords like "Industry," "Udyog," "Enterprises," "Products," or "Business" are scrutinized, especially if the company proposes to operate in specific trades or activities. Misuse of these keywords often leads to rejection.
5. Lack of a Suitable Prefix
Proposed names must include a suitable prefix that provides a distinct identity to the company.
6. Usage of Certain Words Without Justification
Words such as "International," "India," "Bharat," "Corporation," and similar terms are restricted unless the company demonstrates a scope or scale of business that justifies their use.
7. Undesirable Words
Names including terms like "National," "Central," "Union," or "Federal" are generally considered undesirable unless specific evidence or approval is provided.
8. Association with Government or National Leaders
Proposed names indicating a partnership with government entities or referencing national leaders must be supported by necessary documentation and evidence.
9. Requirements for Companies Taking Over Partnerships
If the company is taking over a partnership firm's business, detailed documentation, including the partnership deed, financial statements, and an affidavit, must be submitted.
10. Non-compliance During Change of Name
For name changes, the following are required:
- A board resolution approving the name change.
- Updated Memorandum of Association.
- Proof of compliance with annual reporting and financial filing requirements. Failure to provide these documents can result in rejection.
11. NBFC Registration
Companies intending to include financial activities in their name must clarify whether they are registered with the Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC).
12. Incorrect Filing of Application
Issues with the application process, such as:
- Missing digital signatures.
- Incorrect promoter details.
- Incomplete address information for the registered office.
- Failure to meet minimum paid-up capital requirements for private and public companies.
Conclusion
To avoid rejection, ensure the proposed name reflects the company’s activities, adheres to naming conventions, and complies with regulatory requirements. Detailed planning and preparation during the application process can significantly improve the chances of approval.
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