Restricted Words List: Helps to choose a name for your Company

According to the new Companies Act, 2013 a guideline is set for incorporating a new name for the company under Rule 8 of Companies (incorporation) Rules, 2014. Restricted word list set out the list of names that cannot be used as the name of the company.

After incorporating a company in India, the next step is to register it legally. For registering a company, one needs to name the same. Hence there is a set of rules laid down by the Companies Act, restricting the use of certain words while choosing a company name.

What is a Restricted Word?

Once you incorporate a company in India, you need to propose a name for the same and get it approved by the Ministry of Corporate Affairs. The proposed name can be rejected if not followed under the guidelines of Company (Incorporation) Rules, 2014. There is a restriction of words that cannot be used while choosing the name of the company.

Restricted Words Rule in Company Names?

Rule no. 1

• The name of the company registered as a public limited company should end with the word “Limited”.
• The name of the company registered as a private limited company should end with the words “Private Limited.”

Rule no. 2

The name proposed should not be identical or similar to any other company’s name.

Rule no. 3

The name shall not be considered valid if:

• The name attracts provisions of section 3 of the Emblems and Names(prevention and improper use) Act, 1950
• The name includes a name of a registered trademark, or the trademark has been sent for registration.
• The words used are in any respect to be “Offensive” to the people.

In case of the name including the name of a registered trademark or the name of trademark been sent for registration can only be used after taking the consent from the owner of the existing trademark.

Rule no. 4

The following list provides with the words that are prohibited. These words cannot be used or clubbed in any other language or words having similar meanings

• Board
• Commission
• Authority
• Undertaking
• National
• Union
• Central
• Federal
• Republic
• President
• Rashtrapati
• Municipal
• Small Scale Industries
• Panchayat Minister
• National
• Forest Corporation
• Governor
• Statute or Statutory
• Court or Judiciary
• Bureau
• Development Scheme
• Khadi and Village Industries Corporation
• Financial or Corporation
• Prime Minister or Chief Minister
• Development Authority
• Word Scheme with the name of Government, State, India, Bharat or any government authority or scheme launched by the central, state or local government authorities.
• Name of any country, continent, state or city

Rule no. 5

A Company can use the name which is already in use in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity by the promoter.

In such cases, the applicant has to declare in affirmative or negative that whether they are using or have been using that name for the last five years. Along with providing the details and NOC from other partners for the use of such words for the naming their company.

Also, a declaration is filed, as to whether such other business shall be taken over by the proposed Company or not.

Rule no. 6

Certain words are only allowed to be used under certain conditions:

• Any foreign country name: The name of a foreign country is only allowed when the applicant provides any proof in regarding business relations with such country.

• Commodity exchange: Use of the word “Commodity Exchange” is allowed when the applicant submits a 'No Objection Certificate' from the forward Markets (FMC).

• Insurance, Bank, Stock Exchange, Venture Capital, Asset Management, Nidhi, Mutual Fund: these words can be used only after a declaration is submitted stating the requirements stated by IRDA, RBI, SEBI, MCA have been completed.

• Identical to any foreign company: the name of the company should not be similar or resemble any company registered outside India. This is only applicable to a subsidiary of a foreign company incorporated within India, can use the name of its holding company.

• Financing, leasing, chit-fund, investments, securities: if the company uses such name then the documents should be provided confirming the financial activities for the same.
• Change in the name of the company: if a company has changed its name, then the previous name remains recorded in the database and is not allowed to be used by any other company for a period of at least three years from the date of change of the name.

Mandatory words to be used

• For Section 8 Companies: The companies registered under Section 8 shall include the words Foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and more
• Nidhi Company: Every Company incorporated as a Nidhi shall have the last word ‘Nidhi Limited’ as part of its name

Rule no. 7

According to the new rules set up by the Ministry of Corporate Affairs

• The object or services of the company need not be mentioned in the name of the company
• If the company changes its business activity, then it’s not required to change the name of the company as per the activity of the business
• The name of promoters or their relatives can be used as the name of the company.