Companies Ordinance, 2016: SECP introduces changes to prohibit certain company names

The Securities and Exchange Commission of Pakistan (SECP) has introduced many changes under the new Companies Ordinance 2016 to prohibit certain names to be used by new companies intended to be registered with the SECP. Sources told Business Recorder here on Tuesday that for the first time the right of appeal has been provided against the refusal of name by the commission.
The new enabling provision has been added to the Companies Ordinance 2016 empowering the Commission to restrict the use of any word or expression in the name of a company as may be notified. In this regard, the confusion has been removed in the new law. The powers have been given to the registrar being relevant authority. Under new section 10 (Prohibition of certain names) of the Companies Ordinance 2016, no company shall be registered by a name which contains such word or expression, as may be notified by the Commission or in the opinion of the registrar is identical with or resembles too nearly to the name of a company; inappropriate; undesirable; deceptive; designed to exploit or offend the religious susceptibilities of the people or any other ground as may be specified.
Sources said that the word "Modaraba" is being misused by some of the companies. It is intended that the company with the word "Modaraba" in its name shall only be registered with the clearance of the Commission. The enabling provision for the reservation of a name has been added in the Companies Ordinance 2016. The provision for cancellation of name, if obtained on the basis of misstatement or concealment of fact, has been added. In this regard, the detailed procedure shall be provided in the regulations of the SECP.
Sources said that the right of appeal has been provided against the refusal of name under Companies Ordinance 2016. "If the name applied is refused by the registrar, the aggrieved person may, within thirty days of the order of refusal, prefer an appeal to the Commission," relevant provision of the new law said.
They said that the second provision in the relevant law containing restriction on the power of registrar not to issue directions for a change of name after a period of three years has been removed. The registrar has been empowered to change the name suo motu in case of non-compliance of direction by the company within the period specified in the direction.
Sources said that the situation of the conversion of private company into single member company (SMC) and vice versa has been added in the new law. Under new section 12 (change of name by a company), a company may, by special resolution and with the approval of the registrar signified in writing, change its name: Provided that no approval under this section shall be required where the only change in the name of a company is the addition thereto or the deletion therefrom, of the parenthesis and words "(Private)" or "(SMC-Private)" or "(Guarantee) Limited" or "Limited" or "Unlimited", as the case may be, consequent upon the conversion of the status of a company in accordance with the provisions of sections 46 to 49 of this Act, it added.