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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.
The following is the procedure for change of Company name under the Companies Act 2013:
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.
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.
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.
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:
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.
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.
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.
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.
Read, Also: Shares Listing Procedure in India.