The Act introduces new restrictions on company names, including prohibiting a company from adopting a name that is intended to facilitate a criminal offence or that contains computer code.
The Act also gives the Registrar new powers to change the name of an existing company that has computer code in its name.
Restrictions on use of company names
The Companies Act 2006 (CA 2006) already includes some controls to prevent companies from using a name that is the same as or similar to an existing name, and certain terms are restricted. However, once a name meets these standards, the registrar has limited powers to prevent a name from being registered, or to remove it once it has been registered.
The Act imposes further restrictions in the CA 2006 on the use of certain company names with a view to improving the integrity of the register and increasing trust in the UK business environment.
Under the Act, a name may be prohibited (and, therefore, cannot be used to incorporate a company) for several reasons. These include if the company name:
- is intended to facilitate an offence of dishonesty or deception;
- suggests a connection with a foreign government or its off-shoots (e.g. NATO);
- consists of or includes computer code (the reason for this being that computer code embedded in an IT database can maliciously infect the systems of those who access or download the data to their own systems);
- is one that has been changed following a direction by the registrar and the company seeks to re-register using the same or a similar name;
- gives such a misleading indication of the company’s activities so as to pose a risk of harm to the public in the UK or elsewhere; or
- infringes any provision in Part 5 of the Companies Act 2006 (A company’s name) and has been wrongly registered.
Power to direct a change of company name
The Companies Act 2006 already gives the registrar the power to direct a company to change its name in specified circumstances, including where the name is the same or too similar to another already registered company name. The Act amends the CA 2006 to give the registrar additional powers to direct a company to change its name and to change the name itself where a company fails to comply with such a direction.
The Act gives the registrar new powers to require a company to change its name where:
- the name has been used to facilitate offences involving dishonesty or deception; or
- the name has been wrongly registered (in contravention of Part 5 CA 2006).
In these circumstances, the company will have 28 days from the date of the registrar’s notice to change its name. Alternatively, it can apply to set the notice aside. If a company fails to respond to a direction from the registrar to change its name, an offence will be committed by the company and all officers in default.
Where a company fails to change its name having already been directed to do so under any existing provisions of the CA 2006 or under the new provisions of the Act, the registrar will be able to remove the company’s name from the register and replace it with a new name.
The registrar will also be able to determine a new name for any entity whose name contains computer code and to remove any reference to the old name from the register.
The Act also introduces new offences and imposes further restrictions on the use of certain business names (where a business name is used for carrying on a business but is not the same as the company name).
In the same way as for a company name, the Act prohibits the carrying out of business using a name that:
- suggests a connection with a foreign government or its off-shoots (such as the United Nations or NATO);
- is so misleading as to be likely to cause harm to the public.
It is an offence to use a business name that contravenes either of these provisions. It will also be an offence for a company to carry on using a business name after it has been ordered to change that name by the registrar (or by a company names adjudicator).
Companies should take the opportunity to check all company names and business names to ensure that they do not fall foul of the new requirements.