India: Rules Amended For Companies To Avoid "Similar" And "Undesirable" Names At Incorporation

Before applying for a company name in India, a stakeholder is required to ensure that the proposed name does not contain any word as prohibited under the Companies Act, 2013 (in Section 4(2) & (3)) read with the Companies (Incorporation) Rules, 2014 (Rule 8). This Rule 8 has been recently amended by the Ministry of Corporate Affairs (MCA), Government of India, by its notification of 10th May 2019, to clarify issues relating to undesirable and similar names of the companies.

A company applying for incorporation is also required to ensure that no identical trademark and/or domain name is already registered in the same name. While conducting availability searches for trademarks, many proposed marks get rejected because of similar existing company names. Equally, getting a company name registered during incorporation is not easy as the parameters relating to the acceptable names have not been clear thus far. However, this amendment has not only clarified the pre-registration requirements for companies seeking incorporation but will also be useful for the applicants engaged in trademark disputes which are pending due to similar company names.

Indeed, the selection of a unique name is a common issue that stakeholders face during the process of incorporation of a new company. The changes brought about the amended rule may be more easily understood by way of the following illustrations:

Rule 8: Names which resemble too nearly with the name of an existing company. The following matters shall be disregarded while comparing the names:

1. the words like Private, Pvt, Pvt., (P), OPC Pvt. Ltd., IFSC Limited, IFSC Pvt. Limited, Producer Limited, Limited, Unlimited, Ltd, Ltd., LLP, Limited Liability Partnership, company, and company, & co, & co., co., co, corporation, corp, corpn, corp or group;
2. the plural or singular form of words in one or both names;

1. type and case of letters, spacing between letters, punctuation marks and special characters used in one or both names;

1. use of different tenses in one or both names;

1. use of different phonetic spellings including use of misspelled words of an expression;

1. use of host name such as 'www' or a domain extension such as 'net', 'org', 'dot' or 'com' in one or both names;

1. the order of words in the names;

1. use of the definite or indefinite article in one or both names;

1. a slight variation in the spelling of the two names including a grammatical variation thereof;

1. complete translation or transliteration, and not part thereof, of an existing name, in Hindi or in English;

1. addition of the name of a place to an existing name, if the existing name does not contain the name of any place;

1. addition, deletion, or modification of numerals or expressions denoting numerals in an existing name, unless the numeral represents any brand;

Both the previous and the amended Rule 8A make it clear that a proposed company name will be considered undesirable if it includes a registered trade mark being used or proposed to be carried out for the same class of goods or services, unless consent from the trademark owner has been obtained. We continue to encounter many cases in the courts where proprietors of registered trademarks sue companies for using similar names. In December 2018, the online travel aggregator "MakeMyTrip" sued five travel and tourism websites (MakeMyYatra, MakeMyJourney, Make My Happy Journey, Pick My Trip and Superb My Trip) for allegedly using similar sounding names. This amended Rule will not only discourage companies from adopting similar names, but may also reduce trademark infringement disputes that arise due such issues.

These amendments serve as a check list of sorts for companies while considering what to name themselves. Equally, trademark applicants can also benefit from these rules. Indeed, as a precautionary step, trademark applicants are always advised to check the records of the MCA while conducting availability searches for trademarks.

In the larger context of legal developments, these amendments are a step forward towards improving the ease of doing business in India.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.