On 1 March 2012, the Australian Securities and Investments Commission (ASIC) released Regulatory Guide 235 – Registering your business name (RG 235). RG 235 explains when you must register a business name, how to register a business name and how to maintain a business name.
Subject to the passage of legislation through state parliaments, on 28 May 2012 (Commencement Date), ASIC will maintain a new business names register (Register) which will enable businesses to register their business name on a single national database. Currently, business names are required to be registered in each state and territory that a business trades in unless an exception applies.
Existing business names
If you have an existing business name that was registered in a state or territory before the Commencement Date, ASIC will automatically transfer the business name to the Register on the Commencement Date. If you wish to continue carrying on business under your existing business name following the Commencement Date, you will need to ensure that you renew your business name prior to its expiration date.
Registering a business name after the Commencement Date
To register a business name after the Commencement Date, you will need to:
- create an 'ASIC Connect' account with ASIC (this is currently not available); and
- complete an online application.
When completing the online application form you may choose to register the business name for a period of 1 to 3 years. A discounted annual business name fee applies if you choose to register for 3 years. You will also be able to nominate an email address as your address for service where ASIC will send all notices and other correspondence.
What information will be shown on the Register?
If a business name application is successful, certain information regarding your business name will be available to the public by conducting a free online search of the Register and by obtaining a paid business name extract. Some of the information that will be available on the Register includes:
- the business name;
- the ABN of the business;
- period of registration; and
- other details regarding the business name holder such as address for service and principal place of business (only available on paid extract).
If you need to update any of the information that is held by ASIC, in most cases, you will be able to amend such details by logging into ASIC Connect and making the relevant changes. However, it will not be possible to change all details through ASIC Connect (for example, date of birth of the business name holder). In such circumstances, you will need to request a correction through ASIC Connect.
Multiple business names
If your business name is currently registered in more than one state or territory, all of your business names will transfer to the Register on the Commencement Date. This will inevitably result in business name holders having multiple identical business names. In this event, business name holders may elect to keep one business name and cancel the others at no fee. In addition, ASIC has the power to cancel identical business names if it is able to reliably determine that the same business name holder owns multiple identical business names.
Identical business names with different business name holders
When the Register goes "live", it is likely that there are going to be business names transferred from states and territories that are identical (or nearly identical) which belong to different business name holders. In this event, ASIC will provide additional information on the Register to "assist the public in differentiating between identical business names". If ASIC determines that it is necessary to add a further distinction between two or more identical business names, it may add a distinguishing word as another identifier to the business name. If ASIC determines that it is necessary to add an identifier, it will notify the proprietor of the business name and will put forward a proposed identifier (for example, the suburb or city that business is registered in). Business name holders may choose an alternative identifier (subject to certain conditions) if they are not happy with the one proposed by ASIC. The identifier will not form part of the business name but will be displayed on the Register to allow the public to differentiate between identical business names.
Following the Commencement Date, it will be interesting to see whether it will be more difficult for new business owners to register their desired business names given that were will be one national Register containing a much larger pool of existing business names. As is the case under the current state and territory regimes, following the Commencement Date, ASIC will generally not accept an application for a business name if it is identical (or nearly identical) to an existing business name.
Implications for franchisors
When granting franchises to franchisees, some franchisors require their franchisees to provide them with an executed, but not dated, cancellation of business name form (as the business name under the which the relevant franchisee will conduct the business is held by the franchisee not the franchisor) which the franchisor may lodge at a later date in the event that the franchise agreement is terminated. Following the Commencement Date, except in limited circumstances, only the business name holder (in this example, the franchisee) will be able to request for the cancellation of a business name. Accordingly, franchisors will need to amend their processes regarding business names.
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.