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Company Name Change

If a company changes its name while a contract is still valid, the contract remains valid and enforceable. The change of name does not affect the company's rights or obligations. However, it is good practice for the parties to modify the contract terms to reflect the new name. An amendment makes changes to an existing contract, while a novation replaces the original contract with a new contract between different parties.

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48 views

Company Name Change

If a company changes its name while a contract is still valid, the contract remains valid and enforceable. The change of name does not affect the company's rights or obligations. However, it is good practice for the parties to modify the contract terms to reflect the new name. An amendment makes changes to an existing contract, while a novation replaces the original contract with a new contract between different parties.

Uploaded by

G P60 MOOTER 1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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If a company changes its name while a contract is still valid what happens to the

contract?
Procedure for Changing the Name of Limited Company in India
Step 1: Organise Board Meeting
A board resolution shall be passed for changing the name of the company and authorizing the
Director of the company or Company Secretary, to make an application to confirm the
availability of the name proposed. Resolution to hold EGM for change of the name in the
Articles of Association & Memorandum of Association can also be passed either in the same
Board meeting, conducted for a name change or new Board meeting convened after the
approval of a new name.
Step 2: Confirming the Availability of Proposed Name
The authorized person i.e. Director of the Company or Company Secretary Confirms the
availability of the proposed name by making an application to the MCA along with the copy
of Board resolution passed in the meeting.
Naming Guidelines under Companies Act 2013 govern this activity and at the same time, the
procedure of incorporation of a new company needs to be kept in mind.
The proposed name can be reserved through web service RUN- Reserve Unique Name
service available on the MCA portal.
Step 4: Convene an Extraordinary General Meeting
An Extraordinary General Meeting is convened after receiving approval of a new name from
MCA, to pass a special resolution for alterations in the company name, and its aftereffect to
the Memorandum of Association and Articles of Association. Section 13(1), Section 13(2),
Section 14 & Section 5(3) governs this step.
Step 5: Filing of Special Resolution and Application to the Registrar
In the next step, the following documents shall be filed with the Registrar of companies:
The special resolution passed by the company u/s 13 (1) in Form MGT-14. An application
made for the name change in Form No. INC-24 along with the fee for a change in the
company’s name.
Step 6: Obtaining a new Certificate of Incorporation
A new certificate of incorporation shall be issued to the company in Form No. INC-25 after
its name change. After- Duties which shall be performed post attainment of a new certificate
of incorporation and change in the Company’s name. As per Section 15(1), every change
made in the Company’s AoA & MoA shall be prescribed in every copy of articles and
memorandum, respectively.
Apply for the Company’s New PAN and TAN.
Get the name updated with basic utility services such as telephone and electricity service
providers.
Is the contract void or still valid?
Some contracts specifically state that the parties "now known as XYZ Corporation" or "by
any other name" or " by which the party may be titled." or something to that effect. Even if
the possibility of a name change isn't specifically mentioned in the contract language, the
business doesn't get out of contracts just by changing its name and legal type.
The change of name of a company does not affect any rights or obligations of the company or
invalidate any legal proceedings by or against it. Any legal proceedings may be commenced
or continued against the company in its new name.
Change of company name does not in any way affect the existence of the entity. Hence, all
assets, liabilities and obligations of the company or LLP would continue after
the name change.
When a company changes its name while the contract is in effect, the parties will want to
ensure that they modify the terms. Some contracts might already include terms in the
contract, which identify what happens if a company changes its name. For those contracts not
including such language, it is important for the parties to immediately modify the contract to
identify the change in name.
But, if the parties don’t immediately modify the contract, does that mean the contract will be
void and unenforceable? No.
An example of this might be if a homeowner contracts with an electrical company to do work
around the home. If the electrical company changes its name while the work is being done on
the home, this doesn’t mean that the change in name will void the contract. In fact, both
parties could simply agree to continue the contract as is, without modifying the name.

Difference between amendment and novation


A contract amendment is a change, correction, clarification, or deletion to an agreement you
have already signed.
An amendment leaves your original agreement substantially intact. However, you can use an
amendment to clarify details that were left out before, or to address a new need that became
apparent after the contract was originally entered into.
your situation might change or conditions might evolve to the point that modifications to the
original signed agreement are required. This can occur days or even months after the initial
contract was signed.
When this is the case, an amendment can then be introduced that modifies the original
agreement. All of the original parties to the contract must review, agree to, and sign the
amendment. Most of the essentials are similar in all three ways of discharge.
The main details which have to be entered into an amendment agreement are clauses in a
contract, details that have to be revised, the clause numbers that need to be revised, etc.
When you amend a contract, you change the original contract in some way. This can include
adding, deleting, or correcting portions of the contract. The contract amendment does not
replace the entire contract, but often substitutes a part of it.

A novation occurs when a party would like to transfer both the benefits and the burden within
a contract to another party. Similar to assignment, the benefits are transferred, but unlike
assignment, the burden is also transferred. When a novation is completed, the original
contract is deleted and replaced with a new one. In this new contract, a third party is now
responsible for the obligations and rights. Generally, novation does not cancel any past
obligations or rights under the initial contract, although it is possible to novate these as well.
The word ‘novation’ literally means to replace with a new contract and the same obligations
are performed by different parties. Under novation, the liabilities under the existing contract
are extinguished. The doctrine of novations is recognized under Section 62 of the Indian
Contract Act, of 1872. Every contract can be novated and novation can be effective only
when there is a new contract and not a new agreement.
Novation is a mechanism where one party transfers all its obligations and rights under a
contract to a third party, with the consent of the original counterparty.

If there is a change to the object clause of the MOA


Changes to the object clause of a private limited company can be effected easily with
minimal hassles.
Changing the objects of a company that has raised money from the public will require a
special resolution. Further, the special resolution must be published in newspapers both in
English and another in local language which is in circulation at place where the registered
office of the company is located. The details should also be displayed on the company’s web
site if any along with the justification for modification in objects of the company. A certified
copy of the order from the government would be filed by the company with the RoC along
with the printed copy of the altered MOA within the term period of three months from the
date of the order.
Finally, all dissenting shareholders should be given an opportunity to exit by the promoters
and shareholders possessing control of the company. This opportunity must be given in
accordance with the regulation specified by the Securities and Exchange Board of India
(SEBI).

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