Changing the Name of the Company - Essay Example

Introduction The of any company, under Companies Act, must be registered with the relevant ities and there are certain rules which companies have to follow at the time of incorporating their name at the time of their inception. Mostly importantly the name suggested by the firm must not be in violation of the different conditions set out in the Companies Act. On the other hand, the change in the name of the firm requires other set of rules that need to be met before a company can actually change its name. Under the UK’s Companies Law, firms can change its name by passing a special resolution and subsequently file on the same on appropriate format to the Companies House for alteration of the records. However, there are certain rules and regulations which need to be fulfilled before the name can formally be changed. One of the important requirements is the passing of a special resolution to change the name of the firm. A resolution is considered as an special resolution when 75% or more members vote in favor of any proposed change in the name of the company. There are also other important requirements that need to be changed in accordance with Companies Act 2006. This report will provide a comprehensive analysis of the situation given in the case study wherein there arises a conflict of interest between the directors regarding the change in the name of the company and what procedures may be adapted for the change besides discussing as to what obstacles may be encountered by two Directors while attempting to change the name of the firm. Changing the name of the company A firm can change its name by following certain important steps requires under the Companies Act. Most importantly, following steps need to be undertaken: Special Resolution In order to change the name of the company, it is required that a special resolution must be passed by the members1. As such there requires 75% of the majority voting rights in order to bring change in the name of the firm. In this case, two directors are agreeing upon to change the name of the firm however, third director is not ready. As such the first step that needs to be taken is to arrange a meeting of the Directors/Members of the firms and special resolution shall be passed. Special Resolution therefore shall clearly outline the change of the name and the Company Secretary than must submit a copy of the special resolution to the Companies House accompanied by the required fee. (Verlag Goyang Media Ltd,2008) On passing of the special resolution and same is received by the Companies House, it will be registered provided it does not violate the specific conditions outlined in the Companies Act. Some of the important conditions that need to be followed include the name suggesting any connection with the Her Majesty’s Government or any of the Agency or government directly controlled by the State. Further, the new name shall also need not to be sensitive in nature and must not include a sensitive word. Thus as for as the change of name is concerned, it is not necessary that all the Directors must agree to this and if two out of three Directors are ready they can pass the Special Resolution in written and provide a notice of the same to the Companies House.(Sheikh,2008). It is also critical to note that there is even no need to arrange a meeting for Special Resolution if the same is in written form and is signed by 75% of the Directors or Members of the firm. As such even if Edwardo refuse to change the name, the same can be changed if two of the Directors agree to change the name. What is however, critical to note that in order to effectively make a permanent change into the name of the firm certain other important procedural requirements need to be met. These requirement and possible legal obstacles will be discussed in following sections. Nature of the Sensitive Words Once decided that the name has to be changed and a special resolution has already been passed with 75% majority (which in this case is achieved because 2 out of 3 Directors are willing to change the name). Companies House will than check and scrutinize as to whether the name suggest any indication to the sensitive words which can actually invoke strong public sentiments. Thus the proposed name shall also not indicate any type of relationship with the government and its agencies. What is significant about the change of name is the fact that the new proposed name shall not be deceptive in nature and shall not mislead the public. What is also critical to note that the new name must therefore correspond with the conditions outlined in the Chapter 2& 10 of the Companies Act 2010. Further there is also a list published in the Appendix A of the Companies Act 2006 which specifically outlines the names which need the written approval before that name can actually be incorporated. Since the propose name of the company does not violate any of the specific requirements that need explicit approval, it will therefore shall be a matter of concern for the Directors. Changing the Memorandum and Articles of Association A company is legally binding to amend its Memorandum and Articles of Association once its new name is approved by the Companies House. As such all the documents including Memorandum and Article of Association must reflect the new name of the company along with mentioning the old name of the firm too. Changing the names of the firm will also require that the firm must inform Internal Revenue Services of its new name and must also obtain its new employer identification number in order to avoid future complications for tax purposes.(Keenan & Riches, 2005). Conclusion The Companies Act 2006 allows any company to change its name subject to passing of a Special Resolution passed by 75% of the majority. As such Edwardo’s disagreement will not matter most as for as the change of name is concerned. However, there are certain other requirements that need to be fulfilled before the name can effectively be changed. References 1. Verlag Goyang Media Ltd (ed). (2008). Companies Act 2006. London: BoD. 2. Sheikh, S (2008). A Guide to the Companies ACT. Illustrated. ed. London: Taylor . 3. Keenan, D, Riches, S (2005). Business law. 7th. ed. London: Longman. 4. Read More