Regulations for Reserving a Name or Changing the Name of an Entity
Article written by: Jaclyn Ross | Company Secretarial Assistant and Personal Assistant | MD Accountants & Auditors Inc.
There are four different options to register a name for an entity, these include:
1. Changing the name with the CIPC
2. Registering a Trademark
3. Reserving a Defensive Name
4. Trading-As Common Law Right
Changing the name with the CIPC
Changing the name of the entity with the Companies and Intellectual Property Commission (CIPC) would be the easiest and cheapest option. This would prevent someone else from registering the same name with the CIPC.
When reserving a name, the Consumer Protection Act states that a business name:
1. must not be the same as, or confusingly similar to—
- a name of a juristic person incorporated in terms of the Companies Act, the Close Corporations Act, or the Co-operatives Act
- a registered trade mark belonging to another person, or a mark in respect of which an application has been filed in the Republic for registration as a trade mark or a well-known trade mark as contemplated in section 35 of the Trade Marks Act, unless the applicant for registration of the mark as a business name either—
- is the registered owner or applicant for registration of the mark
- has been granted a licence to that mark
2. a mark, word or expression, the use of which is restricted or protected in terms of the Merchandise Marks Act, act to the extent permitted in terms of that Act.
In terms of the Companies Act, 2008, a company may be registered with or without a company name. When a company is registered without a reserved name, its registration number automatically becomes the company’s name. A name may be added at a later stage through a name amendment. A name amendment requires an approved name reservation and a special resolution to effect a change to the Memorandum of Incorporation (MOI).
If one would like to reserve a name, but not change the name of an entity, you would register a defensive name with the CIPC. This needs to be renewed every two years and one would have to prove to the satisfaction of the CIPC that one has a direct and material interest. A defensive name is only protected under Common Law.
If one would like to ensure the exclusive rights of the trading name, then it would be best to register a Trade Mark, but this can end up being very costly. A Trademark is protected under Trademark Law.
‘Trading As’ Names (Common Law Rights)
The Consumer Protection Act (CPA) states that someone may not trade under any name, unless that name is:
- The person’s full name as recorded in his or her identity document (if the trader is an individual);
- Registered by that person in terms of a public regulation (CIPC)
These requirements do not only apply to trading under a business name. They extend to carrying on business, advertising, promoting, an offer to supply or supplying any goods or services or entering into agreements under a business name.
However, the CPA does provide relief for businesses that have been in trade before the CPA’s business names provisions came into effect. The National Consumer Commission will not be entitled to enforce the business name requirements against a business that has been actively trading under a business name for at least one year before the relevant provisions come into force.
All material subject to our Legal Disclaimers.