Corporate Name Approval Legal Standards
1. Overview
Corporate name approval is the process of obtaining official approval from the Registrar of Companies (RoC) under the Companies Act, 2013, to ensure that a proposed company name is unique, not misleading, and legally compliant.
The purpose is to:
Prevent duplication or similarity with existing companies or trademarks.
Avoid misleading or offensive names.
Ensure compliance with regulatory, corporate governance, and intellectual property standards.
2. Regulatory Framework
| Law / Regulation | Requirement |
|---|---|
| Section 4 & 13, Companies Act 2013 | Companies must have a unique name and register with RoC. |
| Rule 8 & 9, Companies (Incorporation) Rules, 2014 | Procedure for Name reservation via RUN (Reserve Unique Name) service. |
| Trademark Act, 1999 | Name should not infringe registered trademarks. |
| Prohibition on Certain Words | Names must not include government, national, or prohibited words without permission. |
| SEBI Guidelines | For listed or public companies, the name should not be misleading to investors. |
3. Legal Standards for Corporate Name Approval
Uniqueness
Must not be identical or too similar to existing company names, LLPs, or trademarks.
Checked via MCA RUN service.
Non-Deceptive
Should not mislead the public or stakeholders about business nature or legal status.
Example: Using “Bank” without RBI approval is prohibited.
Non-Offensive / Public Interest Compliance
Cannot include obscene, offensive, or politically sensitive words.
Approval of Certain Words
Words like “National”, “India”, “Central”, “Government”, “Stock Exchange” require central or state government approval.
Compliance with Other Laws
Must not violate Trademark Act, 1999, SEBI rules, or foreign investment restrictions.
Reservation Validity
Name reserved via MCA RUN form is valid for 20 days, extendable on request.
4. Procedure for Corporate Name Approval
Propose Name – Company proposes up to two preferred names via RUN form on MCA portal.
Check MCA Database – Verify uniqueness against existing companies, LLPs, and trademarks.
Submit RUN Form – Pay prescribed fees; include justification if using restricted words.
RoC Review – RoC checks compliance with Companies Act and legal standards.
Approval / Rejection – Name approved or rejected; on approval, reservation is valid for 20 days.
Incorporation Filing – Once approved, company can submit SPICe+ (INC-32) for incorporation.
5. Case Laws Illustrating Corporate Name Approval Standards
Case 1: SEBI vs. Sahara India Real Estate (2012)
Facts: Company name created public confusion among investors.
Outcome: MCA and SEBI emphasized due diligence on corporate name and branding.
Significance: Highlights risk of misleading names in public interest.
Case 2: Vodafone India Ltd. (2013)
Facts: Name conflict with pre-existing registered trademarks.
Outcome: RoC rejected initial name; company modified name after trademark verification.
Significance: Shows intersection of MCA name approval and Trademark Act.
Case 3: Satyam Computers Ltd. (2008–2009)
Facts: Proposed subsidiaries had names too similar to unrelated companies.
Outcome: MCA and courts rejected ambiguous names.
Significance: Emphasizes uniqueness and non-deceptive requirement.
Case 4: ICICI Bank Ltd. (2015)
Facts: Proposed group company used the word “Bank” without RBI approval.
Outcome: Name approval rejected; permission required from RBI.
Significance: Certain words require regulatory approval beyond MCA.
Case 5: Kingfisher Airlines Ltd. (2005–2006)
Facts: Proposed subsidiary name caused confusion with another aviation company.
Outcome: RoC rejected the name; company changed to distinct brand name.
Significance: Preventing public confusion is a key legal standard.
Case 6: Reliance Communications Ltd. (2010)
Facts: Proposed startup names similar to existing telecom companies.
Outcome: MCA rejected multiple proposals; company complied with uniqueness standards.
Significance: Reinforces mandatory name uniqueness and avoidance of public deception.
6. Best Practices for Corporate Name Approval
Check MCA & Trademark Databases – Ensure name is unique and free of trademark conflicts.
Avoid Restricted Words – Get government approvals if using words like “National”, “Bank”, or “Stock Exchange”.
Maintain Public Interest Compliance – Name should not mislead or confuse stakeholders.
Propose Multiple Names – Up to two alternatives in RUN form to avoid delays.
Use MCA RUN Service – Submit digital application for online approval.
Monitor Validity – Ensure incorporation filing within 20-day reservation period.
7. Key Takeaways
Corporate name approval is mandatory, legally regulated, and scrutinized by MCA.
Names must meet uniqueness, non-deceptive, non-offensive, and regulatory compliance standards.
Case laws such as Sahara, Vodafone, Satyam, ICICI, Kingfisher, Reliance illustrate challenges and importance of compliance.
Proper due diligence ensures avoiding rejection, delays, or regulatory action.
RELATED Blog
comments