Can a Business Be Called a Company After Incorporation?

In the world of business, choosing the right name and legal structure is crucial. Many entrepreneurs wonder: can a business be called a company after incorporation? This question touches on fundamental aspects of corporate law, particularly under Indian statutes like the Companies Act. While incorporation typically transforms a business into a distinct legal entity, the use of terms like company comes with specific statutory definitions, historical nuances, and regulatory restrictions.

This article explores the legal framework, drawing from key statutes, court decisions, and practical requirements. Note: This is general information and not specific legal advice. Consult a qualified lawyer for your situation.

Historical and Conceptual Foundations of Incorporation

Incorporation has evolved significantly. In the early 19th century, statutes allowed partial corporate privileges without full incorporation. For instance, the Crown could grant limited liability or perpetual succession via letters patent, creating hybrids between unincorporated entities (like clubs or societies) and full corporations. 1977 0 Supreme(AP) 245

Early 19th-century statutes allowed the Crown, via letters patent, to grant advantages of incorporation—such as limited liability or perpetual succession—without conferring full corporate personality. 1977 0 Supreme(AP) 245

Partnerships exemplify this hybrid model today, where partners can sue or be sued in the firm's name. This shows that terms like company or firm may imply partial corporate traits without full legal personality. However, true incorporation under modern laws confers complete corporate status, allowing the entity to be designated as a company.

Statutory Definitions Under the Companies Act

In India, the Companies Act provides clear definitions. Under the Companies Act, 1956 (preceding the 2013 Act), Section 2(10) defined company as: (10) company means a company as defined in section 3. Section 3 covered entities formed by shares or guarantee, registered under the Act. 2020 0 Supreme(All) 677 2020 0 Supreme(All) 59

Under the Companies Act, 1956... company was defined in Section 2(10) as: ‘(10) company means a company as defined in section 3’. 2020 0 Supreme(All) 677

Registration under these provisions grants corporate personality, enabling the business to legally use company in its name. Post-incorporation, entities receive an incorporation certificate, distinguishing them from partnerships or individuals. For example, in tender qualifications:

In the case of Company, incorporation certificate of the company/certificate of commencement of business of the company are required. 2022 0 Supreme(AP) 102 2022 0 Supreme(AP) 114

This certificate is mandatory for companies, unlike partnership registration under the Indian Partnership Act or individual sales tax certificates. Thus, after incorporation, referring to the business as a company aligns with statutory recognition.

Company Designation in Legal Proceedings

Courts reinforce this. In consumer disputes, complaints naming officials with the company's designation (e.g., insurance company) are maintainable against the company itself, not individuals personally.

ABHIJIT NANDY VS NEW INDIA ASSURANCE CO. LTD. - Consumer (1996)

In consumer disputes, complaints naming officials in designation with incorporation of the name of the company... are maintainable against the company itself.

ABHIJIT NANDY VS NEW INDIA ASSURANCE CO. LTD. - Consumer (1996)

This binds the corporate entity, highlighting how incorporation enables company terminology for liability and standing.

Restrictions on Specialized Terminology

While general incorporation allows company, specialized terms are restricted. The University Grants Commission (UGC) Act, 1956, defines a university under Section 2(f) as one established by a specific Central, Provincial, or State Act—not general Companies Act incorporation. Section 23 prohibits unauthorized use of University.

In Prem Chand Jain & Anr. Vs. R.K. Chhabra (AIR 1984 SC 981), the Supreme Court ruled that a Commercial University Limited (Companies Act-incorporated) does not qualify as a university.

J.K. Soni vs State Govt. of NCT of Delhi - Delhi (2012)

Established or incorporated refers to special statutes... not general incorporation laws.

J.K. Soni vs State Govt. of NCT of Delhi - Delhi (2012)

Failure to rename post-incorporation invites penalties, showing that while company is standard, conflating it with regulated terms like university is impermissible.

Practical Post-Incorporation Requirements

After incorporation, companies face ongoing obligations that affirm their status:

• Dormant Status: If a company isn't operating for two years, the Registrar may remove its name unless a dormant application under Section 455 is filed. 2018 0 Supreme(Mad) 4222

• Company is not carrying on any business or operation for a period of two immediately preceding financial years... he shall send a notice to the Company... 2018 0 Supreme(Mad) 4222

• Tender and Contract Compliance: Companies must submit incorporation certificates, unlike firms or individuals. Violations of tender conditions based on such distinctions can lead to contract awards being set aside. 2022 0 Supreme(AP) 102 2022 0 Supreme(AP) 114

• Business Commencement: Shortly after incorporation, companies commence business, as noted in cases involving share capital reduction or restructuring. 2005 0 Supreme(Guj) 128

These underscore that incorporated businesses are distinctly companies, with unique documentation and compliance.

Corporate Personality and Lifting the Veil

Upon formation, a company's right under Article 19(1)(c) of the Constitution is exercised, creating a separate juristic entity. However, the corporate veil may be lifted in certain cases. 2016 5 Supreme 612

As soon as citizens formed a company, the right guaranteed to them by Article 19(1)(c) stood exercised. 2016 5 Supreme 612

This separation allows the entity to operate and be called a company independently.

Key Takeaways and Considerations

• Yes, generally: A business incorporated under the Companies Act can be called a company, backed by statutory definitions and certificates. 2020 0 Supreme(All) 677 2022 0 Supreme(AP) 102
• Partial privileges historically: Early laws created hybrids, but modern incorporation is fuller. 1977 0 Supreme(AP) 245
• Procedural validity: Courts uphold company designations in proceedings.

  ABHIJIT NANDY VS NEW INDIA ASSURANCE CO. LTD. - Consumer (1996)

• Terminology limits: Avoid restricted terms without special statutes.

  J.K. Soni vs State Govt. of NCT of Delhi - Delhi (2012)

• Compliance essentials: Maintain incorporation docs for tenders, operations, and avoidance of strikes-off. 2018 0 Supreme(Mad) 4222

In summary, incorporation statutes confer the right to use company, subject to contextual rules preventing misuse. Legislative intent prioritizes clarity and prevents misleading practices. For tailored guidance, especially on naming or compliance, seek professional legal counsel.

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