New Delhi, Feb. 19: The government has decided to ban the use of the word “national” in all the names of private companies and limited liability partnerships floated in the future.
“It is being intimated that no company should be allowed to be registered with the word ‘national’ as part of its title unless it is a government company and the central/state government(s) has a stake in it,” the ministry of corporate affairs said.
All Registrars of Companies (RoCs) have been asked through a circular dated February 12, 2014 to follow the directive strictly while registering companies.
A circular has been issued to all stakeholders and regional directors, among others.
Entities wanting to have the word “bank” in their names must obtain a no-objection certificate from the RBI.
“By the same analogy, the word ‘stock exchange’ or ‘exchange’ should be allowed in the name of a company only where a no-objection certificate from Sebi is produced by the promoters,” the circular said.
The ministry of corporate affairs has long insisted that the use of words such as “banking”, “investment”, “insurance” and “trust” can be allowed only if they vindicate the use of such names.
Adding “stock exchange” and “exchange” is an obvious bid to plug loopholes in the law. However, these changes will be implemented with prospective effect.
These changes are being brought in the wake of the National Stock Exchange scandal.
NSEL was not an exchange approved by Sebi nor was it allowed to conduct forward trading.
The use of the word “national” and “exchange”, contend officials of the department of corporate affairs, seemed to suggest that it had some kind of government approval on its day-to-day affairs.
The government allows the use of the words corporation, international, global, continental, inter-continental, Asiatic, Asia, Bharat, Hindustan, India, Industries, Udyog, Enterprise only if they have a specified share-capital.