Companies & close corporation name objections

General

The Companies Act no. 61 of 1973 and the Close Corporation Act no. 69 of 1984 both contain provisions whereby the Registrar of Companies and Close Corporations may order a company or a close corporation to change its name on the ground that the name is:

1. undesirable; or
2. calculated to cause damage to the objector.

The Registrar has published a directive containing guidelines as to what names may be considered undesirable. The directive, however, is merely a guide for the public and, therefore, is not meant to be exhaustive. The directive includes references to names which are identical to names which are already registered or which so resemble such names as to mislead the public. It also provides that a trade mark may only be included in the name of a company or close corporation if the company or close corporation is the registered proprietor of such trade mark.

Any person may, within one year from the date of incorporation of a close corporation or a company, apply to the Registrar for an order that such close corporation or company change its name. Alternatively, such person may within two years from the date of incorporation of the entity approach the court for relief. The aforementioned time periods are not extendable.

Name objection procedure

The procedure for seeking an order from the Registrar for a close corporation or company to change its name is relatively informal. An objection is initiated by way of a letter to the Registrar setting out the reasons for the required change of name. The Registrar may call for such evidence on affidavit, or otherwise as he may require to enable him to decide the matter. It is enough for an objector to show that similarities between the names are such as to render it likely that the public might assume that the respondent is connected or associated with the applicant.

The Registrar then refers the objection to the respondent for reply and further correspondence may ensue. Thereafter, the Registrar gives his decision to the parties. He is obliged to furnish reasons for his decision on request.

There are provisions in the Close Corporations Act and the Companies Act which provide that if any person, close corporation or company is aggrieved by a decision of the Registrar such person or entity may, within one month after the date of such order, apply to the court for relief, and the court shall have the power to consider the merits of any such matter and make any order it deems fit.

Defensive company names

Although the Registrar's directive on company names provides that a trade mark will only be allowed in the name of a company if the company is the registered proprietor of such trade mark, the Companies Office does not actually conduct a search of the trade marks register when examining new company names. This is a serious omission.

It is therefore often advisable to register a trade mark as a defensive name under the Companies Act.

The principal effect of such registration is to block the companies and close corporations registers and to ensure that third parties are prevented from registering companies and close corporations under identical or confusingly similar names.

Accordingly, registration of a defensive company name goes a long way towards ensuring that a trade mark is not included in a new company name. Registration, however, provides no substantive rights on which reliance can be placed to restrain others from using an identical or confusingly similar business name or trading style.

In order to secure registration of a defensive name, it is necessary for an applicant to satisfy the Registrar of Companies that he or she has a direct and material interest in the name.

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Companies and Close Corporations: Companies Act no. 61 of 1973: Close Corporations Act no. 69 of 1984