Sole proprietorship as an entity is beneficial from a tax and compliance perspective, but how well it can protect your brand is the real question. Name registration with the ROC and trademark registration are two separate governmental procedures that often run in parallel, sometimes creating significant confusion.
After eight years of operating as a sole proprietorship, one of my clients decided to transition to a private limited company. Three years ago, they had registered their logo and name under trademark laws. However, when they applied for name registration under ROC formalities, the request was rejected under Rule 8(2)(b)(xi) of the Company Incorporation Rules, 2014 because the name was similar to company struck off by ROC. According to this rule, a proposed name is considered undesirable if the proposed name is identical to the name of a company dissolved as a result of liquidation proceeding and a period of two years have not elapsed from the date of such dissolution. provided that if the proposed name is identical with name of a company which is struck off in pursuance of action under section 248 of the Act (or under section 560 of the companies act , 1956) , then the same shall not be allowed before the expiry of twenty years from the publication in the official gazette being so struck off. Rule 8 of the Incorporation Rules, 2014, lays down various grounds for rejecting a proposed company name.
For the client, this was a crucial realization: trademark registration alone is not sufficient to ensure the safe use of a brand name in the future. Name registration under ROC and trademark registration are two different governmental procedures that often conflict, especially in cases of trademark infringement disputes. The end result for my client was the need to choose a new name, making all prior expenditures on brand establishment futile.
This experience reminds us that if the goal is to build a strong brand, it is best to complete both name registration and trademark registration during the initial stages of the business. Each type of entity formation has its own advantages and disadvantages. However, a private limited company is a better alternative if one is planning to establish a strong, legally protected brand.
The key takeaway from these experiences is that branding and brand management are serious matters that require careful planning and execution. While you may believe that the name you have chosen is unique, the reality often becomes clear only after a thorough brand investigation. It is always advisable to consult a brand expert who can guide you through the process smoothly if you are serious about branding.