Company Name Approval Rejection | Common Reasons & Solutions

When you want to start a company, the very first step is to choose a name. The company name approval is important to have before you can start the process of incorporation and move on with the next steps.

It is essential for you to understand the requirements by MCA to apply for company name approval.

Why Is Company Name Approval Important?

The name of the company would be the identity of your business, which will be mentioned in the records, invoices, contracts, and other documents. The company name approval process allows you to make sure that the proposed name complies with the Companies Act, 2013 and other important Company incorporation regulations.

If you want to move on with your company registration process without much hassle, it is best to choose an appropriate name from the start.

The name should have these things:

• Be unique, different from every other existing company name
• Not include any prohibited or undesirable terms
• Not make people confused about any government relations without the approval needed
• Not violate any trademark
• Be attractive and representative of the idea of the business.

What Are the Common Reasons for Company Name Rejection?

There are numerous reasons for possible rejection of a company name when applying through the MCA portal. Knowing about these reasons at an earlier stage will allow one to prepare a proper application.

It's best to remember these things before you reserve company name:

• The name should not be an identical match to another active business enterprise.
• Even phonetic similarities can cause red flags
• If there are title conflicts with an existing or pending registered trademark then you application can get rejected.
• Your chosen name cannot have the implications that there is any government patronage or state sponsorship
• There are some restricted terms you cannot use like National, Federal, Central or Union.
• You cannot use broad terms like Manufacturing or enterprise without a multi-activity track record.

If the Proposed Name Is Too Similar to an Existing Name?

One of the most common reasons for rejection could be similarity with another company name already registered. Even in cases where the spelling of the name is different that name may be rejected owing to similarities in other aspects like pronunciation or meaning.

Thus, before you reserve business name, it is advisable to check thoroughly if that name has already been used.

Trademark Conflict Cause Rejection

It's best to remember that yes, a proposed company name can be rejected if it has an issue with the existing trademarks or trademark applications. Before you start applying for business name approval, it is important to conduct a trademark research, as well as to avoid names that lead to any possible litigation.

Generic or Descriptive Name Can Be Rejected

If the name is too generic and does not distinctively differentiate your business from others, it can be rejected. You should look for a name that helps form a good image of your business and offers solid distinction from other companies.

What Other Issues Can Affect MCA Name Approval?

The procedure of mca name approval takes into account if the name suggested by you makes use of any term that could be deemed as objectionable or gives any wrong impression about your venture.

For example, approval could be denied on the following grounds:

• The proposed name creates an impression of affiliation with the Central or State Government.
• The name comprises a word or word formulation which requires some approval from the regulating authority.
• The name gives a false impression of business activities.
• The words used are not suitable.
• The name does not comply with the prescribed naming guidelines.

Make sure to check the necessity of this qualification of your proposed company name before you apply for company name approval.

Ways to Improve Chances of Name Approval

With meticulous planning and research you can reduce the chances of rejection. First of all, start preparing in advance several viable names and scrupulously checking them, you can minimize the chances of rejection. The key to success in name approval is that it starts from research and not from submitting the first name you find attractive. If your business is a private limited company then ensure the proposed name should meet the applicable incorporation requirements as well.

Follow these steps:

• Examine the existing company names and LLP names.
• Check the trademark databases.
• Make sure your proposed name reflects the nature of business.
• Do not use any prohibited or misleading words.
• Prepare backup name options if the initial name is already taken.

What Fees Are Applicable for Company Name Approval?

The company name approval fees vary based on the process followed and the current rules of the MCA. Because the government fee may be changed through different amendments and notifications, it is suggested to check for the required amount before submitting the application.

In case an individual reserves his/her name through the MCA process, the government fee is to be paid while making the application. Additionally, the professional costs have to be paid separately if the professional assistance is used.

What Happens After Name Approval?

After you get your selected name approved, you need to carry out the entire process of incorporation in the period allowed. An approved name does not create a company. You still need to submit the necessary incorporation documents and complete other necessary formalities for incorporation.

If the name gets expired or you require a Name Change or the required process is not carried out in the stipulated period, another application will have to be filed.

Conclusion

Getting your company name approved helps make the process of incorporation easier. It is necessary to check what names are already in use, what trademarks are registered, whether certain expressions can be used, and whether all applicable MCA rules are followed before a name can be reserved. Careful approach guarantees business name approval and that the applicants will not face objections while getting the approval for a company name.

By knowing the reasons for possible refusals beforehand, it is possible to choose the name more wisely and complete the incorporation process successfully.