8 most frequent reasons for company name rejection
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One of the crucial phases in registering a Private Limited Company is choosing the company name. When requesting names through the Ministry of Corporate Affairs’ RUN name approval process, an applicant has two options for submitting a company name in order of preference, and the ROC will accept one of the two options. The process of obtaining a DIN (Director Identification Number), getting a name approved, and incorporation are all combined into one step by the recently established SPICe+ incorporation process. If a company name matches with any LLP name or a Trademark Name or any company name, then there is a need to resubmit the company name approval form. This article will focus on the reasons for Company Name Rejection.
Let’s take a quick look at “How to Form a Company Name” before learning about “What are the reasons for Company Name Rejection?” so that it will aid you in coming up with unique Business name ideas for your Company.
Formation of a Company Name
The Constitution, Prefix, and Object must all be considered while choosing a company name for a Private Limited Company, One Person Company, LLP (Limited Liability Partnership), or any other type of company.
- Prefix: The prefix in a company name is typically the name of the company or its brand.
- Object: The primary activity of a company is indicated by the object in the company name.
- Constitution: The constitution could be OPC (One Person Company) or Private Limited Company or Limited Liability Partnership.
What are the reasons for Company Name Rejection?
The 8 most frequent grounds for company name rejection throughout the company registration procedure are explained below:
The suggested name conflicts with the actions listed in the primary objects.
The suggested name will be rejected by the ministry if it conflicts with the primary objectives listed in the application for company incorporation. For example, the company is called “ABC Manufacturing Private Limited” and its primary goals are “Providing business consultancy services.” This will be disregarded due to the name and items being wholly inconsistent.
The suggested name is very general.
Only distinctive objects are permitted reservation. The same applies to name reservations. The name will be rejected if the approving authority decides it is too general. For instance, cement private limited and successful private limited are both highly generic names that lack any distinguishing qualities.
Unfavorable adjectives like central, union, and federal are included in the proposed name.
MCA (Ministry of Corporate Affairs) deems it undesirable when terms like national, central, union, and federal are used in company names. Therefore, names containing these terms will be rejected by the ministry of corporate affairs.
The proposed name is the same as or confusingly similar to the current company’s name.
Two names that sound alike are frequently used to trick the public. No two firms or companies can be registered with similar names and trademarks, according to the regulations of the Companies Act of 2013. The proposed name will be rejected if it sounds too much like an already-used name. Another crucial factor to keep in mind is that the authorizing authorities will view names with a similar pronunciation so that company name does not sound familiar or creates any confusion in the minds of people.
The proposed name lacked a suitable prefix.
Usually, the name of the business or its brand appears as the prefix in the company name. It is crucial that a name contains the appropriate prefix in order to be approved. Prefixes that are similar to trademarks or company names already in use, as well as those that are inappropriate, may result in a rejection from the Ministry of Corporate Affairs.
Word include such as enterprises, products, business, manufacturing, industry/udyog.
The MCA will only permit the use of terms like “industry,” “udyog,” “enterprises,” “products,” “business,” or “manufacturing” if the company proposes to engage in, or is currently engaged in, many commercial activities. The use of keywords in names that are limited to one industry will not be permitted. Additionally, just though a company intends to engage in numerous activities does not automatically qualify it to use the terms industry, udyog, enterprise, products, business, or manufacturing. A track record of success might be required.
Keywords like “Hindustan,” “India,” “Bharat,” “International,” and “Continental,” are present in the suggested name.
Words like “International,” “Hindustan,” “Bharat,” “India,” “Continental,” and “Asian Corporation” may only be used when the size and breadth of the enterprise warrant it. Therefore, if the volume or scope of the activity is deemed to be modest, the ministry will reject names including these phrases.
The proposed name implies a relationship with or endorsement by a National Leader or by the government.
The MCA will reject any business name that suggests a relationship with or support from a National Leader or the government.
It is crucial that you select a unique business name and capable of being approved by the ministry in order to prevent the headaches of having to reapply for the name. The aforementioned information will assist you in choosing a company name that will not be rejected by the MCA (Ministry of Corporate Affairs).
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