There are several risks involved in changing the name of your business, so if you're considering doing so, here's everything you need to know. Read on to know!
When considering whether to change your company name, you must make the best decision possible. As with other branding initiatives, business name changes usually fall into one of two categories: the good and the bad.When done properly, renaming your company can be a fun and rewarding endeavour. In this blog, we will discuss the risks that are involved in the name changing process and also when one can be forced to change its business name.
How Risky Are Business Name Changes
These all points shows, how risky is it to change your businesses name,such as
Losing Brand Value
Firstly, you face the risk of losing any brand equity that the company’s current name may have. In a similar manner, you sacrifice any SEO advantages that the present name may have gained you as well as the brand recognition that surrounds it.
It Can Create Confusion
Other risks include confusion among key stakeholders (such as clients, staff, and investors) and/or a broad backlash from unhappy members of these same groups. Change can be difficult because we get used to the brand names in our lives.
Trademark Infringement
Infringing on trademarks poses perhaps the biggest risk. One of the most certain ways to end up in court is to not thoroughly check your new company name for any trademark disputes.
This is the scenario that many people find the most terrifying. It’s also true that, if you’re fighting a much larger organisation, a lawsuit might cause your business to go bankrupt in addition to being a huge hassle.
People Can’t Find You Anymore
Regardless of how thoroughly you communicate with them, there will definitely be some customers who are uninformed of your name change.
How will clients react to this change? is a common worry among business owners. They’ll be confused. What if they assume that the company is sold out? That’s why changing business is a risky process. A name change should only be made when it is absolutely necessary.These were all the risks that one faces when changing a business name.
When Can One Be Forced to Change the Name?
There are circumstances in which a name change is advised or even required. Here are six scenarios where a name change may be necessary:
Legal challenges
If someone issues you a cease and desist letter for using a similar name for the same products or services and their use of the name precedes yours, you can be required to come up with a new name.
Offensiveness
These have appeared frequently recently. If people find your brand name offensive—even unintentionally—because it’s racist, considered cultural appropriation, or any other reason—it might be time to switch it up.
Merger or acquisition
You must choose whether to preserve one company name, combine the two, or come up with a new name when you join forces with another business.
Bullies
Even if they don’t work in the same sector, there are a few instances where big, successful corporations force smaller ones to change their names.
Growth
A name change might be necessary when adding new nations or categories. For instance, names that don’t cause linguistic disasters (see above) in a brand’s home country may become a problem if the business extends beyond borders.
Documents Required to Change the Company Name
First, Form MGT-14 must be submitted to the RoC with the necessary following documents:
- Notice of the EGM
- Certified copy of the special resolution passed in EGM
- An explanatory statement to EGM
- Copy of altered MoA & AoA with the new company name.
After MGT-14 is approved, the INC-24 e-form should be filed within 30 days along with following documents:
- A certified true copy of the EGM
- Notice of the EGM
- If applicable, a copy of any permission orders obtained from other authorities, such as IRDA, SEBI, RBI, etc.
- Copies of the resolution agreements that list the members who voted in favour of and against the resolution.
- Copy of altered MoA & AoA with the new company name
- Further documents relating to any additional information requested as optional attachments.
Process for Changing a Business Name
The following procedures must be followed in order to change a company’s name:
Passing a Board Resolution
A resolution to alter the company’s name must be approved at a board meeting. The new name should be approved by the directors, who should then designate one of them or the company secretary (CS) to contact the MCA to see if the new name is available.
Checking the Name Availability
To check the availability of the requested name, the authorised person should submit a form INC-1 to the MCA.
Before examining their availability, it is advisable that you make a shortlist of four to five business names to ensure that you have backup options in case any of your top choices are already taken or in use.
Passing Special Resolution
The business should call an extraordinary general meeting once the new name’s availability is confirmed (EGM). The AoA and the MoA will need to be amended accordingly, and a special resolution will be passed to change the name.
Applying to the Registrar
The special resolution and the form MGT-14, which contains information about the special resolution, must be presented to the RoC within 30 days following the resolution’s passage.
The form INC-24 and the required fee must be submitted to RoC within 30 days of the MGT-14 filing.
Certificate of Incorporation issuance
The RoC will issue a new certificate of incorporation reflecting the name change once it is totally satisfied with the application and any supporting documentation.
This is a short summary of the entire procedure. To make the procedure simple for you.
Conclusion
We hope the information we’ve given you so far has helped you find an answer to the question “Is it Risky to Change Your Business Name?” For more clarification, get in touch with our legal experts at Vakilsearch. They have a group of qualified professionals that can help you with the complete name change procedure, including updating the main items.
They will cater to all of your needs and will clear up any confusion you have. It is always better to have the name change of your company handled by a professional because changing a company’s name is a legal process under the 2013 Companies Act.
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