INCORPORATION OF LIMITED LIABILITY PARTNERSHIP- PART-V - (Change of Name)

[Dr. Sanjiv Agarwal]

Section 17 of LLP Act deals with change of name of limited liability partnership This section seeks to empower the Central Government to give direction to the LLP to rectify its name if the name registered is undesirable or so nearly resembles the name of any other LLP or body corporate or other name as to be likely to be mistaken for it. It seeks to provide that in case the LLP fails to comply with such direction it shall be liable for imposition of a fine of not less than ten thousand rupees which may extend to five lakh rupees and the designated partner of such LLP shall be liable to pay fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

Change of Name

Section 17 deals with a situation where the Government allots an undesirable name in terms of the provisions of Section 15 of the Act and later observes or get to know that the name was not desirable. 

Government Directive

According to Section 17(1), the Government may direct an LLP to change its name if it finds that the LLP is registered with an undesirable name as per provision of Section 15. The Government may make such direction on application by an entity under Section 18 challenging that the name of the LLP is similar or bears too much resemblance with that of the entity's name. It is unlikely that the Government would take action on its own.

The LLP is bound to follow the directions of the Government and change its name accordingly within the period of three months of the date of direction. The Government may extend this period of three months for an LLP to change its name.

Penalty for non-compliance

Section 17(2) defines penalty for non-compliance of the Government's directions for change of name as per Section 17(1) of the Act. The penalty has been prescribed both for LLP as well as for designated partners. The minimum amount of penalty both for LLP and designated partners is Rs. 10000/- which is extendable to Rs. 5 lac in case of LLP and Rs. 1 lac in case of a designated partner.

Application for direction to change name in certain circumstances

Section 18 of  LLP Act seeks to provide for an application to be made by an LLP to the Registrar in case another LLP has been incorporated with the same name subsequently, for giving a direction to the LLP (subsequently registered) to change its name. A period of twenty-four months has been provided within which the former LLP will have to make an application to the Registrar.

As per Section 18 read with Rule 19 of the LLP Rules a limited liability partnership or a body corporate or any other entity which already has a name which is similar to or which too nearly resembles the name of a limited liability partnership incorporated subsequently, may apply to the Registrar for change of name of such LLP.

What is an entity.

 As per Section 2(1)(k) of the Act, for the purposes of this Section, "entity" means any body corporate and includes a firm set-up under the Indian Partnership Act, 1932. Further, the expression body corporate as defined under Section 2(1)(d) of the Act includes an LLP and a company whether incorporated in India or outside India but does not include a corporation sole and a co-operative society (also a society registered under the Society Registration Act, 1860 may not be included in the definition of body corporate as per the discussion made in chapter 1 under the commentary of section 2(1)(d)).

Thus, a partnership firm set-up under the Indian Partnership Act, 1932, an LLP or a company form of organization have been granted power to challenge an LLP for having a similar/resembling name to that of such entity if the said entity was already existing at the time of incorporation of LLP.

Application is to be made to the Registrar in Form 23 to give a direction to that limited liability partnership incorporated subsequently to change its name.

The application is to be verified by the person making it. Also, the person making the application shall attach the following documents there with:

(a) the authority under which he is making such an application;

(b) a copy of the incorporation certificate of the limited liability partnership or the company or the registration certificate of the entity as the case may be

The application shall be accompanied by a prescribed fee of Rs. 10,000

The application can be made within twenty-four months from the date of registration of the limited liability partnership under that name which is being challenged by the entity under the above provisions.