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Amendments to the Company Incorporation Rules

Introduction:

The Central Government vide MCA Notification dated 22nd January, 2016 made the following amendments to the Companies (Incorporation) Rules, 2014. These Rules are called Companies (Incorporation) Amendment Rules, 2016 (herein after referred as ‘Amendment Rules’) which are effective from 26th January, 2016.

(I) Amendment

Undesirable Names: In the Companies (Incorporation) Rules, 20l4 (herein after referred to as the ‘Principal Rules’), Rule 8(2)(b)(ii), Rule 8(2)(b)(x), Rule 8(2)(b)(xvii), Rule 8(3) and Rule 8(4) are omitted.

  • Therefore, now, the proposed name of a Company need not be in consonance with the principal objects set out in its memorandum of association;
  • abbreviated names such as ‘ABC limited’ or ‘DJMO’ Ltd etc., are acceptable;
  • the changed activities of a company need not be reflected in its name;
  • In case the key word used in the proposed name of a company is the name of a person other than the name(s) of the promoters or their close blood relatives, then NOC from such other person(s) and the proof of relation not mandatory;
 

The said omitted rules are given below:

  1. Rule 8(2)(b)(ii): The proposed name of a Company shall be considered undesirable, if it is not in consonance with the principal objects of the company as set out in the memorandum of association.
  2. Rule 8(2)(b)(x): The proposed name of a Company shall be considered undesirable, if it is vague or an abbreviated name such as ‘ABC limited’ or ‘23K limited’ or ‘DJMO’ Ltd: abbreviated name based on the name of the promoters will not be allowed. For example:- BMCD Limited representing first alphabet of the name of the promoter like Bharat, Mahesh, Chandan and David.
  3. Rule 8(2)(b)(xvii): The proposed name of a Company shall be considered undesirable, if it is intended or likely to produce a misleading impression regarding the scope or scale of its activities which would be beyond the resources at its disposal.
  4. Rule 8(3): If any company has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities after complying with all the provisions as applicable to change of name.
  5. Rule 8(4): In case the key word used in the name proposed is the name of a person other than the name(s) of the promoters or their close blood relatives, No objection from such other person(s) shall be attached with the application for name. In case the name includes the name of relatives, the proof of relation shall be attached and it shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the name of the promoters or their relatives.

(II) Amendment

In the principal rules, for Rule 9 the following shall be substituted:

Rule 9: Reservation of name: An application for the reservation of a name shall be made in Form No. INC I along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 which may be approved or rejected, as the case may be, by the Registrar, Central Registration Centre."

Therefore, all applications for reservation of a name will be sent to Central Registration Centre, New Delhi for approval.

(III) Amendment

In the principal rules, in Rule 36(12)(b), the following shall be inserted:

Rule 36(12)(ba): After the resubmission of the documents and on completion of second opportunity, if the registrar still finds that the documents are defective or incomplete, he shall give third opportunity to remove such defects or deficiencies;

Provided that the total period for re-submission of documents shal1 not exceed a total period of thirty days.

In the principal rules, in Rule 36(12)(c), for the words ‘two opportunities', the words 'three opportunities' shall be substituted.

Therefore, forms in connection with incorporation of companies can be re-submitted three times.

(IV) Amendment

Format of Form No.INC-1 has been revised.

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