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The choice of a company name is a key feature in the formation and registration of a company and in theory any name should be capable of being registered.
Over the years a number of restrictions have developed. Companies House provides guidance on these restrictions that spans some 50 plus pages. Whilst the guidance is very useful there will be occasions where it is necessary to refer to the relevant section of the Companies Act 2006 (‘the Act') and the detailed regulations contained in various statutory instruments governing this area.
Company name rules
The rules are complex and apply equally to limited liability partnerships. They are found mainly in sections 53 to 85 (inclusive) of the Act and on business names in sections 1192-1207. There are seven statutory instruments (or regulations) to be considered. These also cover trading disclosures and opportunistic name registrations. There is not sufficient space to cover these or the business names rules but it is important to be aware of the rules in these areas.
When choosing a company name, the Act lays down certain provisions and there are three key statutory instruments. These are:
Names must end in either ‘limited' or ‘ltd' for private companies, ‘public limited company' or ‘plc.' for public companies, ‘LLP' or ‘limited liability partnership' for LLPs and the Welsh equivalents where relevant. A proposed name must not be the same as that of another entity already registered (the ‘same as' rules). There are also controls on:
Some names that include words that would constitute an offence eg incitements to violence are not allowed.
‘Same as' rules
The Act brought changes too. Prior to 1 October 2009 the ‘same as' rules were narrowly defined. Now they are very broad. In this it could be argued that the Act has failed in its stated aim of simplification.
This can only be assessed by working through the rules. Names that seem, look and even sound quite different are treated for registration purposes as the same, eg Hands Limited is the same as H & S Limited.
Companies House now exclude certain words and phrases from proposed company names and compare them to existing registered companies. So for example it would only be possible to incorporate a company called ‘Acme Building Services Limited' with the express permission of the existing company ‘Acme Building Co Limited' together with a letter confirming the two companies are connected. Simple? Well not quite, because if you choose to insert brackets ie Acme Building (Services) Limited or move the word ‘services' away from the word ‘limited' eg ‘Acme Building Services Kent Limited' the name becomes perfectly acceptable!
To their credit Companies House has gone to great lengths to assist users. It has (as has Jordans) an online name availability checker. By their nature these checkers cannot guarantee that the name will be available when you apply for registration (someone else may have acquired the name in the meantime). Note also that Companies House lookup will not warn you about ‘sensitive' elements in the name.
A warning to group companies
Group companies wishing to swap names between subsidiaries must bear in mind that once one company has divested itself of a name the registration of another company with that name will be subject to the new rules. The name availability checkers should still be used. Due to the change in the rules it may be that there is in existence a company with a name the same as the proposed ‘new' name. If that company is within your group then this can be easily resolved via a letter of non-objection to the application. The problem arises where a third party incorporated prior to 1 October 2009 has what is under the rules a name the same as your proposed name under the new broader rules. This will prevent the application for the ‘new' name even though previously within the group for a number of years.
Incorporation with a name is not a guarantee. A company could be required to change its name after incorporation, eg if it is ‘too like' an existing name, the company's activities listed on incorporation were misleading or its name is considered too similar to a name in which someone else has goodwill.
It is therefore advisable to check business directories, trademark registries as well as the Companies House register when choosing a name to reduce the risks attached.
There is a limit of 160 characters on a company name and believe it or not there are four companies that have used up all their allotted characters (including the imaginatively named ‘ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ
ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ Limited'). At the other end of the scale the shortest limited company name is ‘Y Ltd'!
In its online red tape challenge, The Department for Business, Innovation and Skills (BIS) recently invited comments and suggestions on the area of company names generally. It may come as no surprise that it was highlighted by many respondents as ripe for change and improvement.
Kathleen O'Reilly, Head of Internal Legal Services at Jordans Limited. Is a solicitor and member of the Law Society's Company Law Committee. She can be contacted via firstname.lastname@example.org.
With additional content provided by Dave Percival, Jordans e-business Development Manager.
Previously published in Chartered Secretary Magazine.
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