How Do I Pick A Company Name?

It is very important to have an appropriate name for a business, company or startup. It is the first identity that goes out to consumers or investors. Therefore, choosing the right name becomes extremely important and the same should be done meticulously. It does not only involve technical aspects of choosing a name but also certain legalities which if avoided can attract a wide pool of unwanted litigation. The article will cover the following topics: 1. What is a company name? How is it different from a brand name? 2. What are the rules of MCA one should follow while choosing a company name? 3. Some DOs and DON’Ts of choosing a name for your company.

What is a registered company name? How is it different from a brand name?

It is important to understand that the collective name of the products or services of a business (brand name) and that of the company are not always the same. Brand name is more inclined towards appeasing the potential consumers, but the company name is an official name under which an individual or a group of individuals run the business activity. The company name must be registered as per the Companies Act. Every registered company name carries a suffix like pvt ltd or LLP, for example, the famous e-commerce site “Snapdeal” that has a registered company name “Jasper Infotech Private Limited” under which they carry their business activities. Although it’s not necessary for every company to have two separate names – company name and brand name – it is always best for running a successful business.

What are the rules of MCA one should follow while choosing a company name?

The Ministry of Corporate Affairs (MCA) under the Companies Act, 2013 has laid down certain rules on naming a private limited or LLP company. According to the Act, for a company name to be approved, it has to be unique and descriptive and desirable.
Let us explore both these aspects:

  1. Unique Component
  2. Descriptive Component

What is a Unique Component?

This part of the company name totally depends upon the creativity of the owner. Sometimes, people may coin names by just joining the names of the directors. This has nothing to do with the service offered by the company or even have a definite meaning at all. Eg: InfoSys is a combination of two words and has no dictionary meaning, whatsoever. One could choose this part of the company name to be anything, based on the trustees/funders/investors.

What is a Descriptive Component?

If you could not think of any creative names, you can make it direct and descriptive of the service or product you deal with. This means your name communicates with the consumers the area of work or the nature of services offered. For instance, if you own software business, you can choose a name that ends with “Tech” or “Software” hence proving its descriptive nature.

The name you intend to register should not be identical with any existing, registered companies’ names. In order to determine the identical nature, you need to keep in mind the following guidelines drafted by the MCA.

Plural versions of any of the words appearing in the name: The existing names cannot be made plural and registered. For instance, if there is a company called, “Lylo Fashion Pvt Ltd”, you cannot register by just incorporating an “s” and making it sound plural like “Lylo Fashions Pvt Ltd”.

Punctuation marks, type and casing of letters, and spacing between letters: A company name cannot be unique through the way of inserting an extra space or by changing the casing. The company “Lylo Fashion Pvt Ltd” cannot be made “lylo Fashion Pvt Ltd” or “Lylo Fashions Pvt Ltd.”

No joining or separating already-existing words: This does not make a name distinguishable from a name that had been registered. An existing “Lylo Fashion Pvt Ltd” cannot be “Lylofashion Pvt Ltd”.

Using different tense or number: The use of a different tense or number of the same word does not distinguish one name from another. Example, one cannot modify “Lylo Fashion Pvt Ltd” as “Lylo One Fashion Ltd” or Lylo 2 Fashion Pvt Ltd”

Phonetic spellings or spelling variations: A small spelling variation does not distinguish a company’s name from another. For example, “Lylo Fashion Pvt Ltd” is existing then, “Lylo FashN Pvt Ltd” or “Lai Lo Fashion Pvt Ltd” are not allowed.

Using misspelt words: One cannot intentionally misspell a word and try to register it as a company name. For instance, “General Motors” cannot be modified as “Genral Motors”.

Adding names of places and common terms: Some generic terms like Shri, Sri, New, Modern, Sree, Om, The, Sai, etc. and names of places are not allowed. For e.g., “KFC” cannot again be registered as “New KFC” or “The KFC”. Likewise, a name “Genius Foods” cannot be registered as “Genius Mumbai Foods” or Genius Foods Mumbai.

Addition of internet-related designation: The addition of an internet-related designation, such as .COM, .NET, .EDU, .GOV, .ORG, .IN does not make a name distinguishable from another, even where (.) is written as ‘dot’. For e.g., “General” or “General” will not qualify for registration.

Translated words: If the proposed name is the exact translation of an existing reputed company name in English that will not be allowed. For example, Hindustan Steel Industries Ltd. will not be considered if there is already a name registered as “‘Hindustan Ispat Udyog Limited.”

Different combinations of the same words: A name cannot take in different combinations to make it look distinguishable from others. For example, if there is a company in existence as “Scoop and Whoop”, then “Whoop and Scoop” is not allowed.

Some DOs and DON’Ts of choosing a name for your company.

  1. Do not use abbreviations, adjectives and generic words. Therefore, for instance, you should not choose to name your company as ‘ABC Software’, ‘Best Software’ or India Software. These words are generic and usually would not be accepted.
  2. Before you plan to include a few words in the name of your company, you might require approval from the concerned office. For instance, the usage of the words Bank, Exchange, Stock exchange, Nidhi, Venture Capital, Mutual Funds, require approval from RBI or SEBI, as the case may be.
  3. Do thorough research of the existing company names and ensure that your company’s proposed name has not already been taken on MCA’s website or exactly the same as a large foreign entity’s name. You can check the list of the companies on MCA’s website, link given here:
  4. Do check for the usage of the registered trademark in the same name. This can be ensured by checking at the IP India website. Use the link given here;    In case it is impertinent to take up a name which might have a trademark existing, then it is required to get a No Objection Certificate [NoC] from the trademark owner authorising you to use it.
  5. While applying for the name of your company with the MCA, describe separately, the objective or vision behind the name.
  6. Do propose six names, in order of preference, for your business if you opt for the old INC-21 process, but it takes only one suggestion under the faster INC-29 process.
  7. Ensure there is no registered trademark in the same name by checking at the IP India website. If there is one, you can get a NOC from the trademark owner authorising you to use it.
  8. Do not choose a name that is undesirable. It essentially means that the name chosen should not be in violation of the Emblems and Names Act, violates trademark or is inclusive of offensive words.
  9. The name chosen should not include the word ‘State’ unless it is a government-run company. Also, it should not contain the names of the continent, country, state or city such as Holland Limited, Mumbai Ltd, etc. But if it is a foreign company incorporating its subsidiary in India, then the word “India” or name of any Indian state can be added to the original name.
  10. Do not include words that indicate a separate business or legal person like co-operative, trust, shekari, society, etc.
  11. If the proposed name is identical to a company that has been dissolved due to liquidation, the name cannot be taken for a period of 2 years from the date of such dissolution.