One of the most important steps in setting up a company is choosing an appropriate name for it. The naming should be in accordance with the Companies Act, 2013 or Limited Liability Partnership Act, 2008. There are certain naming guidelines for choosing an acceptable name for a Company or LLP.
There are three parts to a name for a company. These are the Name part, the Object part, and the Constitution part. For example, if the name is XYZ Solution Private Limited, then “XYZ” forms the Name, “Solution” is the Object and “Private Limited” will be the Constitution part. Let us look at each of the parts individually.
The Companies Act or the LLP Act suggests that a unique and acceptable name be given to the set up. The name should not resemble to that of an existing entity or LLP or trademark in the same industry. For example, if there is a company called XYZ Beverages Private Limited then there cannot be another company in the same field with the same name or even as XYZ Beverages LLP. However, the same name for a company in a different industry may be allowed. Hence, the founders must ensure the sanctity of the names.
The object part of the name is that which tells us what the company is all about or their nature of business. It defines the company’s activity. Although two companies may share the same name, if there objects are different, the name will be allowed to be registered. However, it is important for the object part to be absolutely clear. Names without an object part or a vague object can be rejected. Some well-known object parts used are as follows. Technology, Textiles, Motors, Power, Steel, Hospital, Hotel, Restaurant, Holding, Construction, Real Estate, Trading, Information, Manufacturing, Financial, Pharmaceuticals, Medicals, Travels, Aviation, Shipping, Energy, Solar Power, Electricals, Containers, Designs, Foods, Garments, Mobiles, Plastics, and Interiors.
This part of the company name defines the type of entity it is. Private Limited Companies are represented by Private Limited Company or Pvt. Ltd Company; One Person Companies are represented by OPC or One Person Company; Limited Companies are represented by LTD Company or Limited Company; and Limited Liability Partnerships are represented by LLP or Limited Liability Partnership.
The Companies Act also lays down certain guidelines when it comes to naming a company. Here is a lowdown on some such points to be kept in mind while choosing a unique and appropriate name.
- It does not make sense to use the Plural Version of any of the words in an already existing company name. You cannot name a company as XYZ Steels Private Limited if a company by the name XYZ Steel Private Limited already exists, for example.
- You cannot change the type, case of letters, or the spacing between letters and punctuation marks of an existing name and make it unique. For example, changing XYZ Steels Private Limited to Xyz Steels Private Limited is not acceptable.
- Do not try joining words or separating words. For Example, do not change XYZ Steels Private Limited to X Y Z Steels Private Limited and so on.
- Changing the tense or number of a word from the name is also not acceptable if the company works in the same industry. Example, XYZ Steels Private Limited cannot be changed to XYZ’s Steels Private Limited.
- The use of different phonetic spellings or spelling variations does not make a name unique.
- You cannot misspell certain words intentionally to make the name unique since the checking is done with the correct words only.
- Do not add internet-related designations such as .com, .net, .edu, .gov, .org, .in to make the name unique.
- Addition of common names or titles or the name of a place cannot be added to make the name sound unique. However, names with places may also be allowed if no objection from the existing company by way of Board resolution is submitted.
- Different combination of the same words is not allowed. Example, Contractors and Dealers cannot be made Dealers and Contractors. The words of an existing should not also be translated to another language.
There are certain criteria which qualify the names as undesirable.
- The proposed name should not violate section 3 of the Emblems Act 1950.
- The proposed name should not violate the name of a registered trade mark or a trade mark which is subject of an application for registration, unless the consent of the owner or applicant for registration is obtained.
- There should not be any word or words offensive to any section of the people.
Nikita Bhatia is the co-founder of VenturEasy, an online platform for Company registration, book-keeping, accounting, tax consultancy and legal compliances in India. A Chartered Accountant and company secretary by profession, she has wide experience in the fields of audit, accountancy, taxation and corporate governance.