Section 11 of the Companies Act provides the criteria for registration of the names of companies by the CIPC (Companies and Intellectual Property Commission). Inter alia, it provides that the name of a private company must end with the words “Proprietary Limited” or the abbreviation “(Pty) Ltd”. In other words, the CIPC will not register a name in which anything appears after the prescribed suffix.
Many companies trade under names other than their registered names, for various reasons. Often, this is because they are licensed as a distributor, dealer or franchisee to sell particular products or services and may wish or be required to use the name of the product or service, or of the franchisor, in relation to their businesses. By definition, a “trading as” designation is not part of the name of the company but is a “business name”. The Consumer Protection Act (CPA) defines a “business name” as “a name under which a person carries on business other than the person’s full name”. If the licensor or franchisor allows or requires it, it is possible for a franchisee, which has its own distinct registered name, to use the licensor or franchisor’s name or trademark as its business name or part of its business name. For example, a company registered as “XYZ (Pty) Ltd” and carrying on business as a motor dealer, may use the name “Supreme Motors Pofadder” as its business name.
Business names are not registered in terms of the Companies Act. Section 80 of the CPA provides for separate registration of business names by the CIPC. The section contemplates that a company may use several business names (which shows further that the business name is a separate and distinct designation from the registered name). Section 81 of the CPA sets out the criteria with which business names must comply. They are very similar to the criteria for company names in terms of section 11 of the Companies Act, namely that the name must not be confusingly similar to the name of any registered company, or to a registered trademark, without the consent of the owner of the other name or mark. It must also not falsely imply a connection with any other person or organ of State.
Despite the rest of the sections of the CPA having been in effect for over 11 years, sections 80 and 81 have not yet been brought in to effect and the register of business names has not been created. Companies may therefore use business/”trading as” names without their being registered, provided that, in doing so, they do not infringe the trademark of any other person or attempt without authority to pass off their businesses as being connected with the business of any other person.
Regarding the use of the name on company letterheads and other documentation, section 32(4) of the Companies Act requires a company to have its full registered name and registration number on all official documents and correspondence issued by it. There is no requirement to reflect a business/”trading as” name on any documentation and this is left up to the company itself to decide. The franchisor or licensor may, and frequently does, by a term in the agreement, require the company to indicate its “trading as” name on any stationery. Referring to the example above, the company:
1. Must reflect the name “XYZ (Pty) Ltd” and its registration number on its letterhead and other stationery;
2. May choose to reflect its business name “Supreme Pofadder” on its letterhead and other stationery, but is not obliged to do so unless the franchise or license agreement requires it.
Ian Jacobsberg, Director
