Rule 8 of the Companies (Incorporation) Rules, 2014 provides for the exceptions and circumstances when a name shall be regarded as undesirable. Ministry of Corporate Affairs (MCA) has made surprising amendments to Rule 8 by deleting various clauses when a name shall be considered as undesirable. By making these amendments MCA has put a serious question mark on the idea behind deleting the prohibitions whereby abbreviated, vague and misleading names would now be allowed which were considered as undesirable hitherto.

The summary of the deleted clauses is as under:

Rule/clause	Existing Rule
8(2)(b)(ii)	The name shall also be considered undesirable, if it is not in consonance with the principal objects of the company as set out in the memorandum of association; Provided that every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum;
8(2)(b)(x)	The name shall also be considered undesirable, if- The proposed name 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: Provided that existing company may use its abbreviated name as part of the name for formation of a new company as subsidiary or joint venture or associate company but such joint venture or associated company shall not have an abbreviated name only e.g. Delhi Paper Mills Limited can get a joint venture or associated company as DPM Papers Limited and not as DPM Limited: Provided further that the companies well known in their respective field by abbreviated names are allowed to change their names to abbreviation of their existing name after following the requirements of the Act;
8(2)(b)(xvii)	The name shall also 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
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.
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

The Notification reads as under:

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS

Notification

New Delhi, the 22nd January, 2016

G.S.R. (E)-In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Incorporation) Rules, 2014, namely:-

1. Short title and commencement.-(1) These rules may be called the Companies (Incorporation) Amendment Rules, 2016. (2) They shall come into force from 26s day of January, 2016.

(2) They shall come into force from 26s day of January, 2016.

2. In the Companies (Incorporation) Rules, 2014 (herein after referred to as the principal rules), in rule 8,-
(i) in sub-ru1e (2)

(a) sub-clause (ii) of clause (b) shall be omitted;
(b) sub-clause (x) of clause (b) shall be omitted; and
(c) sub-clause (xvii) of clause (b) shall be omitted.

(ii) sub-rule (3) shall be omitted.
(iii) sub-rule (4) shall be omitted.

3. In the principal rules, for Rule 9 the following shall be substituted namely: -

"9. Reservation of name - An application for the reservation of a name shall be made in Form No. INC.1 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."

(4) In the principal rules, in rule 36, in sub-rule (12),-

(i) after sub-clause (b), the following shall be inserted.-
'(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 shall not exceed a total period of thirty days.

(ii) in sub-clause (c), for the words 'two opportunities', the words 'three opportunities' shall be substituted.

(5) In the principal rules, for the existing Form No.INC-1, the following form no. INC- I shall be substituted. namely:-

(F. No. 1/13/2013-CL-V-Part-II)

Amardeep Singh Bhatia
Joint Secretary

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