How Risky Is It To Change Your Businesses Name?

 

If you are thinking about changing the name of your company, you should be aware that there are many risks associated with it.

 

You must choose wisely when deciding whether to change the name of your business. 

 

Business name changes typically fall into one of two categories: the good and the bad, similar to other branding endeavors. Renaming your business may be exciting and lucrative if done correctly. In this article, we'll talk about the hazards associated with name changes and when someone might be forced to alter their company name.

 

How Risky Are Business Name Changes?

All of these examples demonstrate how dangerous it might be to change your company's name.

 

Reduced Brand Value

The risk of losing any brand equity the company's current name may have is the first one. Similarly to this, you give up any SEO benefits your current name may have given you as well as the brand recognition it may have.

 

Leads to Confusion

Other dangers include miscommunication among significant stakeholders (including customers, employees, and investors) and/or a widespread backlash from disgruntled members of these same groups. We become accustomed to the brand names in our lives, making change challenging.

 

Trademark Infringement 

The biggest risk is probably trademark infringement. Failure to thoroughly investigate potential trademark conflicts with your new company name is one of the most surefire ways to end up in court. This is why it is also crucial to apply for trademark registration online as soon as you come up with a brand name.

 

Many people believe this scenario to be the most horrifying. It's also true that, in addition to being a major headache, a lawsuit may result in your company going out of business if you're up against a much larger organisation.

 

People Won's be able to find you Anymore

There will undoubtedly be some consumers who are unaware of your name change, no matter how well you educate them.

 

How will the change affect the clients is a concern that many business owners share. They will be perplexed. 

 

What if they believe the business has been sold out? 

 

Because of this, switching businesses is a dangerous procedure. Only when essential should a name change be undertaken. These were the only dangers associated with altering a company's name.

 

When is it acceptable to request a name change?

There are some situations where a name change is suggested or even necessary. 

 

The following six situations indicate when a name change may be required:

 

Legal Difficulties

You can be compelled to come up with a new name if someone sends you a cease and desist letter for using a name that sounds similar to theirs for the same goods or services and their usage of the name comes before yours.

 

Offensiveness

These have been showing up a lot lately. 

 

It could be time to change your brand name if people find it offensive, even unintentionally, because it's racist, seen as cultural appropriation, or for any other reason.

 

Merger or Acquisition

When you team up with another company, you have to decide whether to keep the current name, combine the two, or come up with a new one.

 

Bullies

There are a few occasions where large, prosperous firms force smaller ones to alter their names, even though they don't operate in the same industry.

 

Growth

When new countries or categories are added, a name change can be required. For instance, if a brand expands outside of its country of origin, names that don't generate linguistic disasters may do so.

 

Documents Necessary to Change the Name of the Company 

First, Form MGT-14 must be filed to the RoC with the required documentation listed below:

 

• Notice of the EGM
• The authenticated version of the special resolution approved at the EGM
• An explanation for the EGM
• Adapted MoA and AoA copy with the new business name.

 

The INC-24 e-form and the accompanying documents must be submitted within 30 days of the MGT-14's approval:

 

• An authentic copy that has been certified of the EGM notice
• A copy of any approval orders you may have received from the IRDA, SEBI, RBI, etc., if relevant.
• Copies of the resolution agreements that shows who voted for and against the resolution and list their votes.
• Adapted MoA and AoA copy with the new company name
• Extra papers related to any desired additional information may be attached.

 

Procedure for Changing a Business Name 

The steps that must be taken to change a company's name are as follows:

 

 

Step 1 - Passing a Board Resolution

At a board meeting, a resolution to change the company's name must be passed. After the directors have given their approval for the new name, one of them or the company secretary (CS) should ask the MCA if the new name is available.

 

 

Step 2 - Checking the Name Availability

A form INC-1 must be submitted to the MCA by the authorised person to inquire about the availability of the sought name.

 

To ensure you have fallback options if any of your top selections are already taken or in use, it is advised that you create a shortlist of four to five business names before checking their availability.

 

Step 3 - Passing a Special Resolution

 

Once it is known that the new name is available, the company should hold an extraordinary general meeting (EGM). A special resolution will be passed to alter the name, and the AoA and the MoA will need to be updated appropriately.

 

Step 4 - Applying to Registrar

Within 30 days of the resolution's enactment, the RoC must receive both the special resolution and the form MGT-14, which contains details on the resolution.

 

Within 30 days of the MGT-14 filing, RoC must receive the form INC-24 and the necessary fee.

 

Step 5 - Issue a Certificate of Incorporation

When the RoC is pleased with the application and any supporting evidence, it will issue a new certificate of incorporation reflecting the name change.

 

It is a brief explanation of the complete process. to simplify the process for you.

 

With the knowledge we've provided thus far, we hope you can now decide whether changing your company name is risky or not. Also, applying for trademark registration online is the best choice to protect your brand name.