Company Incorporation Amendment Rules 2016

This article makes a comparison between company incorporation amendment rules 2016 and 2014 and will help you understand the changes that have been incorporated.

The Companies Incorporation Amendment Rules, 2016 had been released on the 22nd of January 2016, and it came into effect on the 26th of January 2016.

The Indian Government has shown its initiative to make business easier in India by introducing some effective measures in the Startup India Action Plan 2016.

The Company Incorporation Amendment Rules 2016 is one such initiative which will make it easier to start a company in India.

Here is a brief on the various major features of Companies Incorporation Amendment Rules 2016.

Company’s name do not necessarily be in consonance with the objects

Previous Rules:

As per the Companies Incorporation Rules, 2014 a company was supposed to be in consonance (on the same line) as per the principal objects of the concerned company.

New Rules:

The Company’s name necessarily do not need to be in consonance with the main object of the company.

Company’s name can be an abbreviation or vague

Old Rules:

The company name which are abbreviated or vague were not allowed. For example, names like “XYZ Limited” or “RSIO Limited” were not allowed.

New Rules:

Sub-clause (X) of clause (b) has been removed. Now, the company names can be abbreviated or vague.

Company had the liberty of misleading its activities

Old Rules:

Company did not possess the power to select its name which could intend or produce a misleading impression in regards to the scope or scale of its activities.

New Rules:

Sub-clause (xvii) of the Clause (b) has been removed. So, now onwards the company names may not be in line with the scale or scope of the activities of the company.

Company has the liberty of changing the activities without any change of name

Old Rules:

If a particular company changed its overall activities that reflected in its names, then it was necessary to change its name in line with the change in activities within a period of six months from the change of activities.

New Rules:

Any company, if it changes its line of activities, can continue to operate with its old name even if the activities of the company are not in line with the new product or service of a company.

There is no more requirement of NOC for usage of names of persons

Old Rules:

If a keyword in the name of the company’s name contains a name of a person of a name of one of the promoters, or close blood relatives, then NOC was supposed to be attached.

New Rules:

As per the new rule, there is no NOC required for using the name of a person in a company’s name even if the name is of a promoter or any of the close blood relatives of the promoter.

Centre for Central Registration for the approval of the name

As for the old Companies Incorporation Rules, 2014, the approval for the name of the company was usually handled by the Registrar of the Companies operating in that particular state. Now, the name approval would be handled by the centralized centre for the processing of the name approval application made from all across India.

Three Resubmissions Allowed

As per the Companies Incorporation Rules 2014, there were up to two resubmissions authorized for the correction of any mistakes in the incorporation application. However, as per the new Companies Incorporation Rules 2016, there are up to three re-submissions of the documents allowed.

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