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Companies with names deceptively similar to that of a previously registered company will face strict action unless they change their name within three months.

The ministry of corporate affairs has issued two orders giving effect to a provision introduced in the Companies Act last year to address the problem of new businesses choosing names similar to existing ones.

As per this, the government will change the name of a company if it fails to do so on its own within three months of being asked. One of the notifications issued by the ministry sets 1 September as the date from which the new rule will become applicable.

Non-compliant companies will be issued a fresh incorporation certificate with the new name which will contain the letters ORDNC (order of regional director not complied). The company whose name has been changed this way has to print the letters ORDNC at all places such as seals, stationary, office premises etc, where its name is printed.

The norms will cover those entities that in the government’s view have names “identical" to or “too nearly resemble" the name “by which a company in existence had been previously registered."

India has over 1.3 million active companies and the numbers are growing by 10,000-16,000 every month. Similar names make regulation difficult in addition to causing confusion among consumers.

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