One less hurdle for start-up businesses
Following public consultation, the government has recently introduced measures to reduce ‘red tape’ surrounding the regulation of company and business names. The changes introduced will have a substantial impact on the registration process for start-up businesses and current businesses considering a change of name. Two new regulations came into force on 31 January 2015, introducing a number of changes to the previous regulations. The following information highlights two of the more significant changes:-
The ‘same as’ restriction
A company may not be incorporated if its name is the ‘same as’ another name appearing on the registrar’s index of company names. The definition of ‘same as’ has a wider scope than simply catching two identical names. Firstly, certain characters and expressions are treated the same, such as ‘two’ and ‘2’ and ‘at’ and ‘@’; therefore ‘Name Two Ltd’ is considered the ‘same as’ ‘Name 2 Ltd’. Secondly, certain words and expressions at the end of a company name are disregarded, such as ‘CO’ and ‘UK’; thus ‘Name UK Ltd’ is considered the ‘same as’ ‘Name Ltd’. These provisions are intended to prevent two company names co-existing that are so similar, they are likely to confuse the public as to which company is which. However the downside of this is restricted freedom to choose a company name and more barriers for start-up businesses.
The new 2015 regulations have attempted to mitigate the restrictive criteria under the previous regulations by reducing the list of words to be disregarded when comparing two company names. The following words have been deleted and can now be used at the end of a company name without fear of it being rejected under the ‘same as’ restriction:-
– exports
– group
– holdings
– imports
– international
– services
So, for example, ‘Name International Ltd’ and ‘Name Group Ltd’ will no longer be rejected on the basis that they are the ‘same as’ ‘Name Ltd’. This should therefore allow more choice when choosing a company name and should make name swaps within groups easier to achieve.
Restriction on ‘sensitive’ words
There are certain names which, though not prohibited, still require the approval of the Secretary of State or other relevant body prior to registration. This includes using words and expressions which are considered ‘sensitive’ and could mislead or harm the public.
The 2014 regulations have deleted a total of 26 words from the previous regulations, some of which include:-
– board
– European
– group
– holding
– international
– national
– registry
– United Kingdom
Reducing the list of sensitive words removes an additional hurdle for prospective businesses and should allow a greater proportion of new companies to incorporate quickly without delays to the process.
If you are unsure about how these new regulations will affect your prospective or current business, or you wish to seek further information on the content of this article, please get in touch with our Corporate Team on 01603 610911 or email [email protected].
Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any specific circumstance.