What’s in a name? Get the details right
NOTE: this article has been updated as at November 2015
A local controversy prompts Jennifer Adams to warn all businesses of the need to check the names they plan to use. This article explains the legal and procedural requirements.
When dear old Woolies closed down a few years ago, the manager of my local branch in Dorchester decided to save her colleagues’ jobs and open a similar shop selling similar goods under the name Wellworths.
But the Channel Islands-based Barclay brothers who own the Woolworths name complained and forced the name to be changed to Wellchester. The solicitor’s fees, costs of changing the name and signage proved too much for the embryonic business and when the landlord increased the rent it closed after three years. A Poundland has taken its place.
- Check the Companies House GD01 guidance for sensitive names
- Check Companies House and/or Jordans webcheck for “same as” and similar names
- Check Intellectual Property Office register to find out if a name is registered as a UK trade mark.
- Check fasthost.co.uk for names registered as UK domain names to make sure there are no problems or companies with the same name - as reported by the BBC
- Search for identical or similar names on the web
- Make enquiries of suppliers and others of the intended sector.
- If in doubt contact Companies House
- If you don’t want to wait, but are unsure a company will pass the web checks, proceed until the final checks (enquiries etc) have been finalised and change the name to the one wanted.
- Check regularly to see if anyone is registering with a similar name to yours - some accountants and solicitors offer an annual subscription service which will automatically check and notify you accordingly.
This cautionary tale illustrates how tricky naming conflicts can be, so it made sense to investigate the legal background and to seek advice from the experts at Companies House on how best to avoid costly repetitions of the Wellworth’s experience.
We are used to thinking that the Companies Act 2006 refers only to companies, but s1192 Companies Act 2006 covers all types of business: sole traders, partnerships, LLPs, companies - you name it… In fact, the CA06 clauses apply to anyone trading under a name which is not their real name. Contravening these restrictions is a criminal offence, but I doubt whether any newly formed sole trader business would be aware of the rules. Directors should also be aware that if an offence is committed, each director is potentially liable.
The section is under a chapter headed ‘Restricted or prohibited names’ (Part 41 Chapter 1) and prohibits a business name being used that suggests any connection with the UK government or public authority, or which includes a prescribed “sensitive” word.
Check and check again
The current list of sensitive names is to be found under Chapter 7 of the Companies House Guidance GP1 ‘Incorporation and Names’. Names that do not appear to be very sensitive such as “Accredit” and “Standards” are listed.
Companies House has an online name checking facility that not only confirms name availability, but will also flag the name for potential rejection if on the "sensitive"list.
Sensitive names can be used, but only if approved by the Secretary of State and in some cases the views of other bodies may need to be sought; the list of approvers is shown in the GP1. For example you can use the word “Windsor” but only if the Cabinet Office agrees. Companies House will not rush to prosecute those who fall foul of the law, giving them every opportunity to seek approval or choose another name.
Following consulation legislation was enacted on 31 January 2015 (use this link) that reduced the number of sensitive words and fewer words are now disregarded for the purposes of deciding whether one name is the ‘same as’ another. The reasoning is to allow more choice and make name swaps within groups of companies easier.
Same names will be rejected automatically but it is possible to override the rejection if the existing company gives Companies House their consent and the proposed company is in the same group as the existing company. If there are companies with the same name, which are not in the same group, it will not be possible to register the name, even with the consent of those in the group.
If a company does get through the checks, another company (and only another company) could object under s67 CA 2006 on the grounds that the new name is too like an existing one. The Jordans website checker can help here as it lists those company names that their computer finds with similar names.
In an Any Answers post (dated September 2012 but still relevant in November 2015) Companies House refusing name swap a member commented that Companies House had rejected a company not under the same name rules (it was a group situation), but under the “too similar” rules. Companies House explained that there was an exception for companies within the same group, but added that permission must also be obtained from the rival companies with similar names and that they must be prepared to give up their names.
Tony Court advised that a name switch cannot be done directly, but can be achieved if statements were obtained from the former company directors confirming they had no objection to the "new" company's use of the name. The "old" company would have to change its name first, with the new company changing its name shortly after.
A company objects
Objection must be made within 12 months of incorporation.
The Companies Names Tribunal adjudicates at hearings where complaints are received. Objections are usually made by companies which have built a reputation and then find that a company has registered a name which is so similar it might be regarded as opportunistic thus breaching the goodwill of the existing company.
Jennifer Adams FCIS TEP ATT (Fellow) is Associate Editor of AccountingWEB. A professional business author specialising in corporate governance and taxation, she has written for many of the leading specialist providers of legal, tax and regulatory publications. Jennifer runs her own accounting and consultancy business with offices based in Surrey and Dorset.