Rectification of Name and Other Incidental Matters
Chapter Seventeen
Syllabus topic 1.2, label: "Rectification of name of company", and the balance of "matters incidental thereto"
Pages 95 to 100 of 830
In one line
If a company is registered with a name that clashes with an existing company or with somebody's trade mark, the Central Government can order it to change the name, and if it refuses, the Government simply gives it a new one.
In exam wording: section 16 empowers the Central Government, where a company has been registered by a name which is identical with or too nearly resembles the name of an existing company or a registered trade mark, to direct the company to change its name within three months by an ordinary resolution, and, on default, to allot a new name itself.
Why the law has this at all
Two different people are being protected and the section deals with them in its two clauses.
The first is the public, and the earlier company. Two companies with nearly the same name confuse customers, creditors and courts. Section 4(2)(a) tries to prevent it at the registration stage by forbidding a name identical with or too nearly resembling an existing one. But registrars are human and applicants are ingenious, so section 16(1)(a) provides the cure after the event.
The second is the owner of a trade mark. A trade mark proprietor has spent money building a name under the Trade Marks Act 1999. Somebody who cannot register that mark can still try to register a company with that name, and use the company's name as a badge of trade. Section 16(1)(b) closes that route.
Note how the section is built. It does not ask a court to injunct; it puts the remedy in the hands of the Central Government, and makes the last step self-executing. That is faster and cheaper than litigation, which is exactly what a name dispute needs.
Some words this chapter uses
Inadvertence means without intention, by oversight. A registered proprietor of a trade mark is the person in whose name a mark is registered under the Trade Marks Act 1999. To allot a name means to assign one. An ordinary resolution is passed by a simple majority. Authentication means signing so as to make a document official. Key managerial personnel is defined in section 2(51) and is taught in [Appointment of Key Managerial Personnel].
Rectification of name: section 16(1)
The section operates where, through inadvertence or otherwise, a company on its first registration or on its registration by a new name is registered by a name which falls in clause (a) or clause (b).
Clause (a): clash with an existing company
Where, in the opinion of the Central Government, the name is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, the Government may direct the company to change its name, and the company shall change it within three months from the issue of the direction, after adopting an ordinary resolution for the purpose.
Rectification of Name and Other Incidental Matters
Three things to fix. The test is the Central Government's opinion. The earlier company must have been previously registered, so priority in time decides. And the resolution required is an ordinary one, not a special one.
Clause (b): clash with a registered trade mark
Where, on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles a registered trade mark of his under the Trade Marks Act 1999, and in the opinion of the Central Government it is, the Government may direct a change, and the company shall change the name within three months of the direction, again after adopting an ordinary resolution.
The three year limitation is the detail that is examined. The proprietor's application must be made to the Central Government within three years of incorporation or registration or change of name of the company, whether under this Act or any previous company law. A proprietor who sleeps on his rights for four years cannot use section 16.
And note who must move. Under clause (a) the Government may act of its own motion. Under clause (b) it acts on an application by the proprietor.
Notice to the Registrar: section 16(2)
Where a company changes its name or obtains a new name under sub-section (1), it shall, within fifteen days from the date of the change, give notice of the change to the Registrar along with the order of the Central Government, and the Registrar shall carry out the necessary changes in the certificate of incorporation and the memorandum.
What happens if the company does nothing: section 16(3)
This is the sub-section with teeth.
If a company is in default in complying with any direction given under sub-section (1), the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter.
Read the verb: the Central Government shall allot. There is no discretion once the company defaults, and no further proceeding. The company loses the name whether it cooperates or not.
The proviso preserves choice for the future. Nothing in the sub-section prevents the company from subsequently changing its name in accordance with section 13. So a company saddled with a Government allotted name may pick a better one later, by the ordinary route: special resolution and Central Government approval under section 13(1) and (2), effective on the fresh certificate under section 13(3).
Rectification of Name and Other Incidental Matters
The other closing sections of Chapter II
MU names none of these, and they are taught because the Act contains them.
Section 17: copies of the memorandum and articles to members. On a member's request, and subject to payment of the prescribed fees, the company shall within seven days send him a copy of (a) the memorandum, (b) the articles, and (c) every agreement and every resolution referred to in section 117(1), so far as they are not embodied in the memorandum or articles. On default, the company and every officer in default are liable, for each default, to a penalty of one thousand rupees for each day the default continues or one lakh rupees, whichever is less.
That section is the practical partner of constructive notice: the documents the outsider is deemed to know are the documents a member can demand within a week.
Section 19: a subsidiary may not hold shares in its holding company. Set out in [Types of Companies by Control and Purpose]. In short: no company shall hold shares in its holding company, whether itself or through nominees, and no holding company shall allot or transfer shares to its subsidiary, and any such allotment or transfer is void. The three exceptions are legal representative of a deceased member, trustee, and a shareholder who held before becoming a subsidiary, and only the first two may vote.
Section 21: authentication of documents, proceedings and contracts. Save as otherwise provided in the Act, a document or proceeding requiring authentication by a company, or contracts made by or on behalf of a company, may be signed by any key managerial personnel or an officer or employee of the company duly authorised by the Board in this behalf.
Two points. It is not confined to directors: key managerial personnel under section 2(51), or any officer or employee the Board authorises, may sign. And the authorisation must be by the Board, so a self-appointed signatory is not covered.
Section 22: execution of bills of exchange and deeds. Set out in [The Characteristics of a Company]. In short: a bill of exchange, hundi or promissory note is deemed to be made on behalf of the company if made, accepted, drawn or endorsed in the name of, or on behalf of, or on account of the company by any person acting under its authority, express or implied; a company may authorise an attorney to execute deeds under its common seal, if any, and where there is no seal, by two directors or by a director and the Company Secretary.
Rectification of Name and Other Incidental Matters
A worked example
Sanjivani Pharma Limited is incorporated in Nagpur on 2 February 2026.
Case one, clause (a). A company called Sanjeevani Pharma Limited has existed in Chennai since 2011. In the Central Government's opinion the two names too nearly resemble each other, and the Chennai company was previously registered. The Government directs the Nagpur company to change its name. It must do so within three months of the direction, after passing an ordinary resolution, and must give notice with the order to the Registrar within fifteen days of the change, whereupon the Registrar amends the certificate of incorporation and the memorandum.
Case two, clause (b). Suppose instead that Sanjivani is a registered trade mark of a Hyderabad firm under the Trade Marks Act 1999. The proprietor applies to the Central Government. His application must be made within three years of the company's incorporation, so by 1 February 2029. If he applies in 2027 he is in time; if he applies in 2030 section 16 is closed to him and he must look to the Trade Marks Act instead.
Case three, default. The direction issues on 1 June 2027 and the company ignores it. Three months pass. Under section 16(3) the Central Government shall allot a new name, the Registrar enters it in place of the old, and a fresh certificate of incorporation issues with that name, which the company shall use thereafter. It has no say in the choice.
Afterwards. Two years later the company wants a name it actually likes. It may change it under section 13: special resolution, Central Government approval in writing, and effect only on the issue of a fresh certificate. The proviso to section 16(3) preserves exactly that.
And for two years after each change, wherever the company paints or prints its name under section 12(3)(a) and (c), the former name must appear alongside, by the first proviso to section 12(3).
Distinctions that carry marks
| Change under section 16 | Change under section 13 | |
|---|---|---|
| Who initiates | The Central Government, of its own motion or on a trade mark proprietor's application | The company |
| Resolution | Ordinary | Special |
| Approval | Not needed; the direction is the authority | Central Government approval in writing, section 13(2) |
| Time limit | Three months from the direction | None fixed |
| On default | The Government allots a new name, section 16(3) | Not applicable |
| Effective on | The Registrar's changes to the certificate and memorandum, section 16(2) | The fresh certificate, section 13(3) |
What this does NOT mean
It does not mean any similar name can be attacked at any time. Under clause (b) the trade mark proprietor has three years from incorporation, registration or change of name.
Rectification of Name and Other Incidental Matters
It does not mean a special resolution is needed. Both limbs of section 16(1) require only an ordinary resolution, because the change is being compelled rather than chosen.
It does not mean the company is stuck with the allotted name. The proviso to section 16(3) preserves a later change under section 13.
It does not mean only directors can sign for a company. Section 21 allows any key managerial personnel, or any officer or employee duly authorised by the Board.
Quick revision
- Section 16(1)(a): name identical with or too nearly resembling a previously registered company, in the Central Government's opinion. Direction to change within three months by ordinary resolution.
- Section 16(1)(b): on the application of a registered trade mark proprietor, made within three years of incorporation, registration or change of name. Same three months, same ordinary resolution.
- Section 16(2): notice to the Registrar with the order within fifteen days; Registrar amends the certificate and the memorandum.
- Section 16(3): on default the Central Government shall allot a new name; fresh certificate issues; the company shall use it. Proviso: a later change under section 13 remains open.
- Section 17: memorandum, articles and section 117(1) agreements and resolutions to a member within seven days; default costs one thousand rupees a day or one lakh rupees, whichever is less.
- Section 19: subsidiary may not hold shares in its holding company; such allotment or transfer is void; three exceptions; only two of them may vote.
- Section 21: authentication by any key managerial personnel or an officer or employee duly authorised by the Board.
- Section 22: negotiable instruments by a person acting under express or implied authority; deeds by an attorney under the seal if any, else by two directors or a director and the Company Secretary.
Test yourself
1. Who may direct a company to change its name under section 16, and on what grounds? The Central Government, where in its opinion the name is identical with or too nearly resembles the name of a previously registered company, or, on the application of a registered trade mark proprietor, a registered trade mark under the Trade Marks Act 1999.
2. What resolution and what time limit apply? An ordinary resolution, and the change must be made within three months from the issue of the direction: section 16(1).
3. Within what time must a trade mark proprietor apply? Within three years of the incorporation or registration or change of name of the company, whether under this Act or any previous company law: section 16(1)(b).
Rectification of Name and Other Incidental Matters
4. What happens if the company ignores the direction? The Central Government shall allot a new name, the Registrar enters it in the register in place of the old name and issues a fresh certificate of incorporation with the new name, which the company shall use thereafter: section 16(3). The company may later change it under section 13.
5. Within what time must a company supply a member with a copy of its articles? Within seven days of the request, subject to the prescribed fee: section 17(1). Default costs the company and every officer in default one thousand rupees for each day, or one lakh rupees, whichever is less.
6. Who may sign a contract on behalf of a company? Any key managerial personnel, or an officer or employee of the company duly authorised by the Board in that behalf: section 21.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.