Guiding instructions regarding availability of new names for registration - Companies Law - Letter No. 10(1) RS/65,

Letter No. 10(1) RS/65, dated 27 11 1965, addressed to all Registrars of Companies by the Director of Research Statistics, Department of Company Affairs. Subject:- Guiding instructions regarding availability of new names for registration The procedure for scrutinising the availability of names for new companies has recently been re‑examined carefully in this Department, having taken into account the difficulties experienced by some Registrars in following the instructions given to them vide Letter No. 10(19)‑RS/61, dated 15th March, 1962. This letter, together with the enclosed set of instructions as revised, consolidates and is in supersession of all the previous instructions issued from time to time by this Department. An illustrative list of names considered to be undesirable within the meaning of section 20 of the Companies Act, has also been given herewith. The guiding instructions for deciding cases of making a name available for registration are given in Appendix A to this letter. In addition to these, the Registrars are requested to note the following general instructions also : 1. As the Registrars have hitherto been doing they should refer only doubtful and hard cases where they might find it difficult to take a decision, to the Research and Statistics Division at the Headquarters. 2. Where consultation with the Regional Director on the spot is possible, the Registrars would take advice before referring doubtful and hard cases to the Headquarters. 3. In order to find out the availability of names, the Registrars are advised to consult the All India Index Cards of companies in their offices, if any, kept uptodate or the alphabetical list of companies contained in the following publications issued by the Department : Annual Blue Book on Joint Stock Companies, Part II, 1958‑59 and its supplementaries giving newly registered companies up to March, 1964. All India lists of new company registrations maintained in the field office from April 1, 1964 to date. Fortnightly list of names made available to promoters by the Registrars, circulated from the Research and Statistics Division. List of foreign companies having a place of business in India. 4. The Registrars will prepare separate slips and not one consolidated list as per specimen given at Appendix B [not printed here] in respect of each of the name allowed by them and send them in a bunch to the Research Statistics Division on the 1st and 16th of every month. A consolidated list of such new names allowed by the Registrars will be drawn up here and it would then be circulated among the field offices for their ready information and use. 5. The Registrars may ask the promoters to submit three to five names quite distinct from each other for consideration to avoid possibilities of any delay. 6. The Registrars should adopt a polite attitude and persuade the promoters to suggest names consistent with the guiding principles. They should explain the difficulties of the Administration in approving names likely to create confusion in the minds of the public and harm the interests of the promoters. 7. In case any of the names proposed by the promoters is not agreed to by the Registrars as available, it should be open to them to follow up the matter by subsequent letters or application for the same fee within a reasonable period which may normally be construed to mean three months from the date of rejection of the name/names proposed. 8. The Registrars may permit the promoters to use the name of the firm in brackets after the duly approved name as incorporating or successor to (name of the firm) in order to fulfil the desire of the promoters to retain the goodwill of their business in cases where the names of firms seeking registration under the Companies Act is considered as undesirable within the meaning of section 20 of the Act. 9. Registrars should ascertain from the promoters if proposed name/names were applied for to any other Registrar and, if so, with what result. In case there is some difference of opinion between the two Registrars in making the name available, then the case may be referred to the Board for advice. 10. The names of a proposed company allowed by the Registrars to the promoters for registration under the Companies Act should not be kept reserved for more than three months. 11. It is necessary that the words of a proposed name/names are checked separately with the names of the existing companies beginning with those keywords so as to avoid any possibility of allowing the name with a little re‑arrangement of the same words of the existing company which may be said to be closely resembling each other. 12. I may further add that although it is not possible to lay down any hard and fast rules for determining whether a particular name or any two names too nearly resemble each other, each case, however, will be decided on its merits. As already emphasised in the earlier circular letter of this Department on the subject dated 15th March, 1962, that various criteria set out in the guiding principles at Appendix A are not exhaustive but only illustrative of what is considered to be undesirable names under section 20 of the Act and that by the very nature of the subject all possible cases could not be covered. It is, therefore, suggested that where the Registrars find that certain proposed names could not be judged in the light of the instructions given above and give rise to doubt, the same may be referred to the Research Statistics Division at the Headquarters after availing of the help of the Regional Director, if available on the spot. APPENDIX A GUIDING INSTRUCTIONS FOR DECIDING CASES OF MAKING A NAME AVAILABLE FOR REGISTRATION A name which falls within the categories mentioned below will not generally be made available : 1. If it is not in consonance with the principal objects of the company as set out in its memorandum of association, this does not necessarily mean that every name should be indicative of its object; but when there is some indication of business in the name, then it should be in conformity with its objects. 2. If the company s main business is finance unless the name is indicative of that particular financial activities, viz., chit funds/investments/loans, etc. 3. If it includes any word or words which are offensive to any section of the people. 4. If the proposed name is the exact Hindi translation of the name of an existing company in English especially an existing company with a reputation. 5. If the proposed name has a close phonetic resemblance to the name of a company in existence for example, J.K. Industries Limited, Jay Kay Industries Limited. 6. If the name is only a general one, like Cotton Textile Mills Ltd. or Silk Manufacturing Ltd. and not Lakshmi Silk Manufacturing Co. Ltd. 7. If it includes the word Co‑operative , Sahakari or the equivalent of word Co‑operative in the regional languages of the country. 8. If it attracts the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950, i.e., use of improper names, prohibited under this Act. A copy of this Act with the Schedule is enclosed for information and guidance. 9. If it connotes Government s participation or patronage unless circumstances justify it, e.g., a name may be deemed undesirable in certain context if it includes any of the words such as National, Union, Central, Federal, Republic, President, Rashtrapati, Small Scale Industries, Cottage Industries, Financial Corporation, etc. 10. If the proposed name contains the words British India . 11. If the proposed name implies association or connection with embassy or consulate which suggests connection with local authorities such as Municipal, Panchayat, Delhi Development Authority or any other body connected with the Union or the State Government. 12. If the proposed name is vague like DJMO Ltd., INVR (Pvt.) Ltd. or SSRP Ltd. 13. If a proposed name implies association or connection with or patronage of a national hero or any person held in high esteem or important personages who are occupying important positions in Government so long as they continue to hold such positions. 14. If it resembles closely the popular or abbreviated descriptions of important companies like TISCO (Tata Iron Steel Co. Ltd.), HMT (Hindustan Machine Tools), ICI (Imperial Chemical Industries), TEXMACO (Textile Machinery Corporation), WIMCO (Western India Match Company), etc. In some cases, the first word or the first few words may be the key words and care should be taken that they are not exploited. Such words should not be allowed even though they have not been registered as trade marks. 14A. Where the existing companies are stated and found to be well‑known in their respective fields by their abbreviated names, these companies may be allowed to change their names by way of abbreviation with the prior approval of the Regional Director concerned. The abbreviated name will be considered only in case of change of name under section 21 of the Companies Act, 1956, with the prior approval of the Regional Director concerned and should not be allowed for adoption by new companies. 15. If it is different from the name/names of the existing company/companies only to the extent of having the name of a place within brackets before the word Limited , e.g., Indian Press (Delhi) Limited should not be allowed in view of the existence of the company named Indian Press Limited. To this rule, however, frequent exceptions are made in the case of subsidiary and in the case of a company carrying on local business and in other cases on their merits. For example, Corner Garage (Delhi) (Pvt.) Ltd. may be allowed notwithstanding that there is an existing company Corner Garage (Pvt.) Ltd. at Calcutta. So would be Regent Cinema Ltd. at Madras, if there is a company by the name Regent Cinema (Delhi) Ltd. These names may also be allowed if they are in the same group or management. 16. If the proposed name includes common words like Popular , General , Janta , if they are in the same State doing the same business. But in case of companies in different business in the same State and in all cases when the registered office of the company is in different States, the name might be allowed. For instance, if there is Popular Drug House (Pvt.) Ltd. existing, another company by the name of Popular Plastic (Pvt.) Ltd. should not be objected to. 17. If it includes a name of a registered trade mark unless the consent of the owner of the trade mark has been produced by the promoters. It may not be possible in all cases to check up the proposed name with the trade mark. However, if the Registrars are in the know or some interested party/parties bring to their notice a trade mark which is included in the proposed name, then it should not be allowed unless a no‑objection certificate is obtained from the party who has registered the trade mark in its own name. 18. If a name is identical with or nearly resembles the name by which a company in existence has been previously registered. However, if a proposed company is to be under the same management or in the same group and likes to have a closely resembling name to an existing company under the same management or group with a view to have advantage of the goodwill attached to the management or group name, such a name may be allowed. Even in the case of unregistered companies or firms which have built up a reputation over a considerable period, the principle (that if a name is identical with or too closely resembles the name by which a company has been previously registered and is in existence, it should not be allowed) should be observed as far as practicable. In view of the difficulty in checking up whether a proposed name is identical with or too nearly resembling the name of an unregistered company or a firm of repute, it should at least be ensured that a proposed name is not allowed if it is identical with or too nearly resembles the name of a firm within the knowledge of the Registrar. The cases of foreign companies of repute should also be similarly treated even if there are no branches of such companies in India. A few illustrations of closely resembling names are given below for guidance. The names are proposed in column 1 should not (normally) be made available in view of the companies in existence as shown in column 2. Proposed name Existing company with too nearly resembling names 1 2 The National Steel Mfg. Co. Pvt. Ltd. National Steel Works Trade Corporation of India Ltd. State Trading Corporation of India Ltd. Viswakarma Engineering Works (Pvt.) Ltd. Viswakarma Engineers (India) (Pvt.) Ltd. India Land and Finance Ltd. Northern India Land Finance Ltd. Hindustan Chemicals Fertilizers Ltd. Hindustan Fertilizers Ltd. Ruby Engineering Ltd. Ruby Engineering Corporation Ltd. Hind Finance Ltd. Jai Hind Finance Ltd. Lakshmi Finance Ltd. New Laxmi Finance Ltd. 19. If it is identical with or too nearly resembles the name of a company in liquidation, since the name of a company in liquidation is borne on the register till it is finally dissolved. A name which is identical with or too closely resembles the name of a company dissolved as a result of liquidation proceedings should also not be allowed for period of 2 years from the date of such dissolution, since the dissolution of the company could be declared void within the period aforesaid by an order of the Court under section 559 of the Act. Further, as a company which is dissolved in pursuance of action under section 560 of the Act can be revived by an order of the Court before the expiry of 20 years from the publication in the Official Gazette of the company being so struck off, it is considered desirable to stop or conditionally allow the registration of a proposed name which is identical with or too nearly resembling the name of such dissolved company for a period indicated below. Since the period of 20 years as prescribed under the law is considered an unduly long period, the registration of a proposed name which is identical with or too nearly resembles the name of a company dissolved in pursuance of section 560 should not be allowed for a period of first five years only. During the next five years such a proposed name may be allowed subject to the condition that in the event of the dissolved company being restored to life by an order of the Court, the new company should have to change its name. After a lapse of ten years, names identical with or too nearly resembling those of the dissolved companies may be allowed without any such condition. 20. If it is different from the name of an existing company merely by the addition of words like New Modern, Nav , etc. Names such as new Bata Shoe Company, Nav Bharat Electronics, etc., should not be allowed. Different combination of the same words also requires careful consideration. If there is a company in existence by the name of Builders and Contractors Ltd. the name Contractors and Builders Ltd. should not ordinarily be allowed. 21. If it includes words like Bank , Banking , Investment , Insurance and Trust . These words may, however, be allowed in cases where the circumstances justify it. In cases of banking companies, the Reserve Bank should be consulted and its advice should be taken before a name is allowed for registration. The purpose of such consultation is to prevent small banking companies from misleading the general public by adopting the names of some well established and leading banks functioning elsewhere than in India. In case of difference of opinion with the Reserve Bank, the matter should be referred to the Board for advice. 22. If the name includes the word Industries or Business unless the name is indicative of the business of the proposed company, for otherwise it serves as a lever for the company to diversify its activities. 23. If it includes proper name which is not a name or surname of a director, such names should not be allowed except for valid reasons. For example, for sentimental reasons, sometimes the names of relatives such as wife, son and daughter of the director may have to be allowed, provided one other word suggested makes the name quite distinguishable. 24. 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. For example, names like Water Development Corporation of India (Pvt.) Ltd. , Telefilm of India (Pvt.) Ltd. , All India Sales Organisation Ltd. , Inter‑Continental Import Export Co. Ltd. , etc., should not be allowed, when the authorised capital is to be only a few lakhs, and the area of operation limited to a State. Words like International , Hindustan , India , Bharat , Continental , Asiatic may be allowed only if the scope and scale of business of the proposed company justify the use of such words. However, the words Jai Hind , Jai Bharat , Nav Bharat , New India , etc., included in the proposed name need not stand the same test as Hindustan , India , etc. (as they do not give the same sense). Similarly, the words Bharat , India , etc., if stated in the brackets before the word Limited or Private Limited need not stand the same test as the word India , etc., put at the beginning of the name. Also, the word India or Bharat in brackets before the word Limited or Private Limited does not necessarily mean that the company is an Indian branch of some foreign company, such as Marsden Electricals (India) (Pvt.) Ltd. 25. If the proposed name includes the word State along with the name of the State such as Kerala State Co. Ltd. should not be allowed as it would give an impression of the Kerala State Government participating in the share capital of the proposed company. However, if the name of a State only is included without the addition of the word State in the proposed name, then it may be allowed as it is not likely to give the impression that the company has the State Government s interest in it. 26. If the proposed name includes the word Corporation unless the company could be regarded as a big sized company. However, the words Corporation and Company may be regarded as closely resembling for purposes of allowing a new name. If, for example, a company by the name of Rajasthan Finance Corporation already exists, Rajasthan Finance Company should be regarded as undesirable within the meaning of section 20. 27. If the proposed name includes words like French , British , German , etc., unless the promoters satisfy that there is some form of collaboration and connection with the foreigners of that particular company or place the name of which is incorporated in the name. Thus, the name German Tool Manufacturing Co. Ltd. should not be allowed unless the company has some connection with Germany. 28. Even where except for the first word all the other words of the proposed name are similar to those of an existing company, the first word should be considered to be sufficient to distinguish it from the name of the existing company. For example, Oriental Ltd.