Relaxing the regime on company names

Relaxing the regime on company names


Author: Sian Sadler

Have you ever chosen the perfect name for a company, only to be told you cannot have it?

Company names legislation is under review as part of the Red Tape Challenge - the Government's commitment to reduce unnecessary regulatory burden.

In its consultation document, the Government is seeking views on proposals to reduce restrictions on company names, which are widely seen as the cause of confusion and delay in the registration process.

What is under review?

The rationale for the current system of regulation is to protect members of the public from harm caused by names which mislead or confuse. Amongst the protection afforded by legislation is the system of "sensitive" words and the "same as" rules.

"Sensitive" words

Current legislation includes a list of "sensitive" words - such as "Association" and "Board" - which require prior approval by the Secretary of State. A company must meet certain conditions for their use.

One option set out in the consultation is to remove this rather long list altogether. Approval would no longer be required, provided the words used were not offensive, did not suggest a connection with government, and were not the same as a company name already in use.

Alternatively, the list might be reduced.

Nowadays, some words on the list might no longer be considered a risk as a result of evolving language use, and the consultation requests suggestions on which words should be removed. A shorter list would make it easier for companies to find an acceptable name.

"Same as" words

Currently, Companies House will not register a new name if it is the same as, or very similar to, one already in use.

There is a list of words that are to be disregarded when considering whether a proposed name is too similar to an existing name. The list is arguably too wide and causes difficulties to both start-up and established businesses looking to change names or swap names within a group.

An example is "Jumpers Limited", which is the same as "Jumpers UK Limited", because "UK" is disregarded.

One option put forward in the consultation is repeal of the entire list, permitting a company to register any name provided it was not identical to another on the register. This would mean greater reliance on registration numbers, something many European countries already do, but which the Government has been reluctant to impose due to the perceived importance in the UK of being able to identify one company from another by its name.

Therefore, reducing the list might receive a more favourable response, and the Government seeks views on which words should be removed.

What does this mean for you?

Choosing and registering a company's name may become simpler and faster.

Next steps

The Government welcomes opinions and comments from all affected. The consultation closes on 22 May 2013, and the Government intends to publish its response within three months of that date.