Companies Incorporation Amendment Rules 2016

In order to make 'Business doing' an easy and widely loved practice in India, the Government of India has been sincerely working towards the Startup India Action Plan. Taking another step towards the goal, on 22nd January of this year, the Companies Incorporation Amendment Rules 2016 was released. It came into effect from 26th of January, 2016. This amendment to the Companies Rule aims at making it easier to start a company in India. The key points of the Amendment Rules are featured in this article.

It is no more mandatory for the Company to have a name in line with the objects of the company. Before the amendment, it was mandatory for the companies to have names in harmony with the objects of the company. However, the new rules have relieved the companies from this compulsion.

Companies may choose a vague or abbreviated name. Prior to the passing of Amendment Rules 2016, names like "A2Z Limited" or "SKB Limited" or any other kind of vague, abbreviated names were not approved. Now, in the new rules this clause has been omitted, leaving the companies free to to choose vague or abbreviated names.

Ban on misleading names lifted. The names not in line with the companies actives, i.e. those misleading regarding the scope or scale of the activities of the company were not allowed earlier. With the coming of the new rule, the Sub-clause (xvii) of clause (b) has been removed. Thus, companies are now free to keep names that may mislead in some way.

Change of activities without change of name approved. Before the new rules were brought in, any company willing to change activities, was required to change its name to a name harmonising with the new activity. This had to be done within six months from the change of activities. Now the changing of activities can be done under the roof of same name. In other words, the company can continue to use the same name even if it is not in line with the new activities of the company.

Using names no more requires a NOC. As per the old rule, if the company name contains name of someone who is not one of the promoters of the company, a NOC must be attached. The new rule brought in that a NOC is not required in such cases from now on.

The steering now in hands of Central Registration Centre for Name. Previously, the name approval process was the responsibility of Registrar of Companies of respective states. The new Rules have handed this responsibility to the central registration centre. It is a centralised system which is concerned with name approval applications filed from across India.

Resubmissions increased from two to three. The number of resubmissions allowed for incorporation of company under the INC-29 method have been increased by one. However it has to be noted that the total period for re-submission should not exceed thirty days.

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