On 31 January 2015, the rules governing permissible company names are due to change in some important ways.
The most significant change in our view relates to the circumstances in which two very similar names may be allowed onto the Register of Companies.
There are also alterations to the list of ‘sensitive words and expressions’ which require permission from a relevant authority before they are (a) registered as part of a company name or (b) used as part of a company or trading name. Generally the authority in question will only grant permission where criteria are met.
Names considered ‘the same as’ each other
In most circumstances, the Registrar of Companies will not allow a company name to be registered which is ‘the same as’ one which already exists. In making the assessment as to whether two names are the same, certain words are discounted from the comparison. For example, an application to register a company with the name ‘Charitable Aid UK Limited’ will be rejected if a company called ‘Charitable Aid Limited’ already exists.
The changes that are about to take place will remove a number of important expressions from the list of words to be ignored. These are:
- Services (and Welsh and Gaelic equivalents)
The effect is that, where previously a company called (e.g.) ‘Disaster Relief Limited’ could rest assured that the Registrar would block any application to register ‘Disaster Relief International Limited’ or ‘Disaster Relief Services Limited’, this is no longer the case.
This raises the spectre of opportunists seeking to register company names that are very similar to those of other organisations, possibly with a view to using them to create confusion or to disrupt the established organisation’s activities.
For most organisations, this should not lead to a major problem. It would in most instances be overkill to set up shell companies covering the numerous variant names that others may seek to acquire, unless you have a substantive interest in using those variants in the future yourself.
However we do recommend recognising this risk as part of your broader brand and name protection strategy. In particular, it is important to register key names and brands as trade marks. This will enable you to take more effective action where a third party uses, or threatens to use, a conflicting company or trading name. It may also help with a complaint to the Company Names Tribunal in the event of an egregious company name registration by a third party which is obviously calculated to cause you difficulty.
Sensitive words and expressions
Another change is that, from 31 January 2015, restrictions on the following ‘Sensitive words and expressions’ will be lifted:
- Data protection
- Human Rights
- Pregnancy termination
- Rule Committee
- United Kingdom
In our view, some of these changes are sensible – for example they abolish the bureaucratic requirement to provide the names of two countries in which a company traded before it could use the word ‘International’ in its name. However in our view it is surprising that any organisation will be now able to hold itself out as a ‘registry’ or ‘authority’, as this could prove misleading.
Charities should bear in mind that the absence of a term from the ‘Sensitive words and expressions’ list, such that Company law no longer has an objection, does not automatically mean that the name is compliant with Charity law. Of the above-listed expressions, ‘Authority’, ‘European’, ‘International’, ‘National’, ‘Registered’ and ‘United Kingdom’ remain on a list of terms whose use may allow the Charity Commission to insist on a change of name if ‘inclusion … of that word or expression is in the opinion of the Commission likely to mislead the public in any respect as to the status of the charity’. It is unusual for this provision to be invoked, but we anticipate it is still a real possibility where use of a particular term is genuinely misleading.
Posted on 04/02/2015 in Legal UpdatesBack to Knowledge