New procedure to object to confusingly similar corporate names
19/05/2011

Until recently, name objections to company and close corporation names were governed by Section 45 of the Companies Act 61 of 1973 and Section 20 of the Close Corporations Act 69 of 1984 respectively. A name objection was lodged on the basis that the name was undesirable and/or calculated to cause damage to the objector, within one year of entity’s incorporation with the Registrar of Companies or Close Corporations, or within two years of the entity’s incorporation with the High Court.

As from 1 May 2011, all “name objections” are lodged with the Companies Tribunal in terms of Section 160 of the Companies Act 71 of 2008 (“the Act”). Section 160 provides for two instances in which an interested person may file an application to the Companies Tribunal in order to determine whether a name satisfies the requirements of the Act, namely:

1. on reservation of a name for a company, a defensive company name or during the registration of a company, the Commission may, by written notice, require an applicant to serve a copy of its application on any person who has an interest in the name. The interested person who receives this notice may, within three months after the date of the notice, file an application to the Companies Tribunal, objecting to the name. Due to this three month deadline, clients are encouraged to contact us without delay when they receive such notices, should they be interested in filing an application;

2. any interested person may apply to the Companies Tribunal, on good cause shown, at any time, for a determination whether a name satisfies the requirements of the Act. Although there is no deadline to file an application, an unreasonable delay would negatively affect the application.

The grounds to file an application to the Companies Tribunal are similar to the grounds on which name objections were based. The Act provides that a company name must:

a. not be the same as or confusingly similar to:

i. the name of another company, close corporation or co-operative unless that company forms part of a group of companies trading under similar names;

ii. a business name registered in terms of the Business Names Act;

iii. a registered trade mark belonging to a person other than the company, 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 194 of 1993;

iv. a mark, word or expression the use of which is restricted or protected in terms of the Merchandise Marks Act 17 of 1941, except to the extent permitted by or in terms of that Act.

b. not falsely imply or suggest, or be such as would reasonably mislead a person to believe incorrectly, that the company is part of, or associated with, any other person or entity.

The Act changes the name objection procedure and it is no longer possible for an attorney to simply address a letter to the Registrar, setting out the basis of the name objection on behalf of the client. The application to the Companies Tribunal is on a prescribed form and is supplemented by an affidavit which sets out the basis of the application. The application is filed at the Companies Tribunal and served on the respondent within 5 days. The respondent has 20 days to file an answer, failing which, the application can apply for default judgement. If an answer is filed, the applicant has 15 days thereafter to file a reply. The matter is then set down for hearing before the Companies Tribunal.

The procedure is now more similar to a High Court application procedure and the Act makes provision for the Companies Tribunal to grant an order as to costs.

The benefits of the new procedure include clarity on certain grounds which were not previously expressly stated to be acceptable, for example, reliance on a trade mark application, and the fact that one can object to a name at any time.

The Trade Mark Litigation department of Adams & Adams is poised to assist clients with applications in terms of the new Act.

Mandy Gordon
Partner
mandy@adamsadams.co.za

Nishan Singh
Senior Associate
nishan-s@adamsadams.co.za