SEBI

Change of Company Name under SEBI Listing Regulations

A company that is incorporated under the registrar of companies (ROC) can change its name for specific reasons. The change in name of the company is influenced by certain features such as the change in mission statement of the company, objectives of the firm and rebranding the products. All companies that are registered under the Companies Act 2013 (CA 2013) or the previous company law (Companies Act 1956). There is a specific procedure for change of name of the company under the Companies Act 2013.

Procedure for Change of Company name

The following is the procedure for change of Company name under the Companies Act 2013:

• Change of company name must be conducted with the approval from the shareholders of the general meeting and consent from the central government. When a company wants to set up a private limited company, then the word ‘Pvt Limited’ must be present in the name of the company. Similarly if the shareholders of the company want to set up a public limited company the words ‘Limited company’ must be present in the name of the company.
• When seeking change of name of the company, the registrar of companies must change the name of the company in the register and issue a fresh certificate of incorporation to the company.  The new name of the company would only become effective on the issue of the new certificate of incorporation.
• The name of the company has to not be the following:
  • Previously used names of the company
  • Name that is undesirable to the government
  • A name which breaches the trademark or copyright of an already used name
  • Name of the company must not be identical or resemble a name of the company

• Change of Company name should not bring about any connection or some form of patronage with the Central Government, State Government or any institution that has connection with the government.
• Change of Company name would not be allowed for a company that has not filed annual return or filed the balance sheet statement. Apart from this the company is not allowed to change its name if it hasn’t paid its deposit or debentures or paid any interest on the deposit of the company. As per Companies (Incorporation) Rules 2014, companies that pay the deposit or debentures or the interest on the debentures are allowed to change the name.

Rectification of the name of the Company

The term rectification is different from changing. Rectify means to correct an error or mistake. A company would require rectifying its name, if there is some adverse response by a third party on the name of the company. Other situations would include where the company has used a similar name of another company.

The company must rectify its name through the Central Government. The rectification of the name must be carried out within 6 months of notice from the Central Government.

When the change of company name takes place when the company alters its memorandum, then the notice of such change must be mentioned within 15 days to the registrar of companies along with an order to the central government. Necessary changes will be made in the certificate and the memorandum of the company.

Contravention of the above provisions would make the company liable to pay a penalty of Rs 1000 and if such contravention continues, the company would pay a penalty of Rs 500 per day of continuing penalty.

What are the legal effects of change of company name?

When a company changes its name any former proceedings or legal proceedings which are brought against the company would remain the same. There will be no form of change in the status of any proceedings which are lodged against the company prior to the change of name.

If Change of Company Name under SEBI and has taken the necessary steps to inform the registrar of such change in name then legal proceedings against the new name will cease to exist. This was considered in the case law of Malhati Tea Syndicate.

A company with a new name would have the same business as the company with the previous name. However the company with a new name is not safe from any form of legal proceedings.

Procedure for Change of Company Name

The company should hold a board meeting with the resolution of changing the name of the company. The directors or the company secretary should ascertain the change in name of the company. In the extraordinary general meeting the proposal for change of name of the company can be passed. Along with this proposal (resolution), the alteration of memorandum of association and articles of association can also be considered by the members of the company.

After the resolution has been passed the concerned individual would make an application regarding the same to the Ministry of Corporate Affairs (MCA). The procedure to be followed for change of company name would be the same as forming a new company under the company’s act 2013.

The name of the company must be first approved by the MCA, and then the company has to hold an extraordinary meeting regarding the same. In the meeting a special resolution has to be passed regarding the change in name of the company and alteration of the memorandum of association and articles of association.

Once this resolution has been approved by the company the same must be filed with the registrar of companies.

Change of Company Name- SEBI (LODR) Regulations 2015

Companies are divided into listed companies and unlisted companies. Listed companies have their shares registered in a particular stock exchange. The securities exchange board of India (SEBI) is the main authority that governs the listing of securities and stocks in stock exchanges in India. Therefore listed companies have to be in conformity with the rules related to the SEBI.

The Government of India has brought out regulations related to managing of securities in a stock exchange. This regulation is known as the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR) Regulations 2015].

The SEBI LODR regulations specify certain disclosure requirements by companies that register their securities in stock exchanges across India. The law related to change of company name is not only present in the Companies Act 2013 and Companies Rules, but it is also included in the SEBI LODR regulations.  SEBI LODR regulations would only be applicable to listed companies in recognised stock exchanges.

Listed Entities can be understood as a company which has its securities listed on a recognised stock exchange. Specific amount of securities which are issued by the company are registered in the stock exchange as per the requirements of the listing agreement between the stock exchange and the company.

According to section 45 of the SEBI LODR regulations, the company has to follow particular conditions:

Listed Entities under this regulation are allowed to change the name of the company. However, the following requirements have to be complied by the listed company:

• There has to be a gap of more than one year since the company changed its name;
• 50% of the revenue of the company in the previous year is accounted due to the fact of change in the name of the company; or
• The amount that is invested as a result of the change of company name has added to 50% of the assets of the listed entity.

If the company has carried out any other activities which do not reflect the new name, then the company has to change its name in line with the new activities that are carried out by the company. This must be carried out within a period of 6 months from the change of activities.

Assets of the company means the entity’s fixed assets, advances, work in progress, trade receivables cash and cash investments by the company. On fulfilling the above requirements, the listed entity would file an application with the ROC. Apart from this the listed entity also has to file an application for name availability in the ROC.

After receiving the confirmation for change of name of the company, the listed company has to seek clarification from the stock exchange for change of name. The listed company has to submit a certificate regarding this certified by a chartered accountant stating the compliance with the above regulations.

Document required to be submitted

Listed entities have to submit documents to the stock exchange first for receiving the In-principal approval from the stock exchange and then separate documents have to be filed for receiving final approval from the stock exchange.

Documents submitted to the stock exchange for in- principal approval:

1. Application for change of name in the recognised stock exchange. In this application the listed entity would require to specify that all the compliances have been met by the company for changing the name in the stock exchange.
2. A certified copy of the resolution which is taken in the extra ordinary general meeting. This resolution is regarding change of name of the listed entity. For changing the name of the company, a special resolution has to be passed by the shareholders and directors of the company.
3. Details and date of the last name change of the company. This would only be applicable if the company has changed its name in the past.
4. The company must provide reasons for such change of name.
5. Along with the documents a confirmation must be provided by the Company Secretary of the company that:
   • At least one year of time has elapsed from the time of the last name change;
   • 50% of the revenue received by the company is due to the fact of the name change of the company; or
   • The amount that is invested in the new activity related to assets ((Fixed Assets+ Advances+ Work In Progress) is at least 50% of the assets of the company. Advances would only include the percentage and sums of money which is extended to contractors and supplied towards the execution of the contract of the company.
6. Confirmation has to also be from the Practicing Chartered Accountant or the Cost Auditor of the Company.
   • The confirmation would include the same confirmation that is given by the practising company secretary of the company.
   • 50% revenue of the company must be from the change of name of the company. The amount of revenue must be from the preceding one year.
   • The amount invested in the new activity must add up to at least 50% of the new assets of the company.
7. Certificate of Confirmation regarding the availability of the name in the ROC.
8. If the company has a trademark for a symbol, the company must also file an application for changing the trademark and the symbol.
9. Along with the application form the fees and tax should be paid by the company.

Documents submitted to the stock exchange for Final approval:

1. Confirmation of change of name with the ROC
2. Certified copy of the notice of holding the annual general meeting and extra annual general meeting of the shareholders. The resolutions taken in the meetings regarding change of name must also be mentioned in the copy.
3. Copy of the resolution that is passed in the Annual General meeting/ extra ordinary general meeting.
4. New Certificate of incorporation with the change of company name.
5. Certified copy of the altered memorandum of association (MOA) and articles of association (AOA).
6. Any form of procedure in which the change of company name must also be included in the share certificate. The following has to be mentioned:
   • Issue of new share certificates;
   • Affixation of Stickers of change of company name on the existing share certificates- with samples of the same;
   • Rubber stamping on existing share certificates.
7. A certificate of confirmation that old share certificates are good.

Apart from the various regulations for changing the company name in the companies act, any listed company would have to follow the above SEBI LODR regulations for changing the name. The SEBI LODR regulations only speak about listed companies but do not provide any clarity on unlisted companies. Change of name for unlisted companies is covered by the companies act. Thus a listed entity has to adhere with all the above provisions regarding the Change of Company Name under SEBI.

Conclusion

A company which is registered under the company’s act 2013 would require following the change in name procedure in accordance to the rules prescribed by the MCA and ROC.  A listed company would have several obligations in change of company name. A listed company would require fulfilling the obligations under the SEBI LODR regulations first, and then follow compliance for change of company name under the companies act.