It has been announced that in April 2011 a new national system for business name registrations will commence. Each State of Australia has agreed to refer their business name registration powers to the Federal Government so that a uniform system can be established. The new system will be administered by the Australian Securities and Investments Commission [ASIC] which also controls the registration of companies.
Lower registration fees
Those businesses that have registered business names across Australia will welcome the new simplified registration system that is being introduced, which will also significantly reduce registration costs to $30.00 for a one year registration and $70.00 for a three year registration. Costs have been reduced as all registrations will be conducted online.
The new national system will roll over all existing State and Territory business names into the national system. This will result in a large number of duplicated names. Within the computer system there will be a State or Territory designation to differentiate each business name together with, for all new business name registrations a requirement that the applicant must disclose an Australian Business Number [ABN]. Where identical names exist business name holders may need to decide whether to challenge other operators using an identical business name which could pass off as the local registered owner of the business name. Others may, if well funded, want to buy out similar names to consolidate a position in the market.
The new national system will retain the majority of the provisions of the State based Business Name Acts so that some names cannot be registered if they are offensive, misleading or under a restricted words regulation. An appeal process to challenge a decision of ASIC in allowing a competitor to register a business name or refusal of a business name will be established using the Administrative Appeals Tribunal [AAT]. It is proposed that, if an applicant for a business name is dissatisfied, on written request ASIC will complete a review of the decision within 28 days of the initial decision. No fee will apply for this review. If a person is dissatisfied with the outcome of a review, the cost for an appeal to the AAT is $682.00, refunded if successful.
The new system will not affect trade marks, domain names or company names. At present ASIC are developing software to create a search system to help users to identify names. Submissions for additional search criteria to be included in the software can be request over the next few months.
No franchisor consent to lodge a franchisee business name
It will be important for franchise systems to properly understand the new registration system as the registration of a franchisee's authorised franchise name including the franchisee's region or location will no longer require the franchisee to provide written permission from the franchisor. Franchisors and any other holder of a registered business name will now need to be diligent in checking ASIC records to establish that only authorised franchisees have franchise business names. ASIC have proposed that within the online system that there may be a registered interested party provision which will provide online information which franchisors and others may use to check that the integrity and security of important business names can be monitored. There are likely to be some procedural difficulties when the new national system is introduced in particular as the system relies exclusively on access via the World Wide Web. Some access facilities are likely to be established within ASIC offices and the offices of the Australian Taxation Office.
Businesses need to prepare for change
The new national business name registration system is a welcome improvement on the cumbersome and expensive State by State registration system. The introduction of an online format will significantly reduce the costs of registration which will now be less than for an individual State business name.
Businesses should carefully review their current business names and ensure that they are current and fully paid as there is significant advantage in having these names rolled over into the national system. If a business accidentally allows a State registered business name to lapse prior to the introduction of the national system, it may then, under the national system be impossible to re-register that business name due to conflicts with other State business names that have rolled over into the national system.
Equally, if a business has previously looked at the opportunity of having a national business name, but has rejected it as a consequence of conflict with interstate business names, prompt registration of a State business name in a State where there is no conflict will then allow a national registration of that same name in April 2011. At present the new legislation does not consider business name "squatting". When considering national business name registrations it is important to also co‑ordinate these activities with the use of trade marks and internet domain names which, combined with national business names, should significantly increase the value of goodwill of a business operating in Australia, and to monitor that no one registers a name that is already registered to you so you have time to challenge the registration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.