Although existing business names will be carried over to the new system, the new system will affect existing business names and the future registration of business names.
Business names will be subject to a new national registration regime from 28 May 2012. Now is the time to consider the effects of the new system on existing business names, and the ability to register, transfer and renew business names under the regime.
The current system and its rationale
The rationale behind the requirement to register a business name is to enable consumers to identify the legal entity that is trading under that name.
A person is required to register a business name if it is carrying on a business under a name which is neither its personal name nor the name of a company. For example, if ABC Pty Ltd traded under the name "XYZ Foods", it would be required to register "XYZ Foods" as a business name.
The registration of business names is currently regulated by State and Territory legislation and, accordingly, registrations are effected at a State and Territory level. This means that a person is required to register a business name in every State and Territory in which it carries on business under that business name.
From 28 May 2012, the relevant State and Territory legislation will cease to have effect and the registration of business names in Australia will be governed by Commonwealth legislation.
Under the new regime, all new business names will be registered at the national level and all existing business names which have been registered under the old regime at a State or Territory level will be migrated to the new national business name register.
Under the new regime, a business name may now be registered to non-legal persons. This means that partnerships, joint ventures and superannuation funds may now be eligible to register business names.
The national register will be maintained and operated by ASIC. The register will be accessible via ASIC's new online service portal, ASIC Connect.
Where the same business name is registered in different States or Territories to different entities, ASIC will likely allocate that business name a qualifier (eg. the relevant State or Territory acronym or identifying number) to enable people to distinguish between identical business names. Any such qualifier will not form a part of the business name.
A person with a business name currently registered on a State or Territory register will be mailed an invitation via post to sign up to ASIC Connect after 28 May 2012. All businesses should ensure their contact details on the relevant State and Territory registers are up to date for this purpose.
ASIC Connect offers a person the option to search, register, view the status of, transfer, cancel and renew a business name.
As persons are now required to hold an Australian Business Number (ABN) under the new regime, ASIC Connect will also link to the ABN application website. A person who is not eligible for an ABN will not be able to register or renew a business name under the new regime.
Important notices relating to business names will be sent electronically once a person signs up to ASIC Connect including renewal notices. An agent may also register on ASIC Connect on behalf of a business name holder with the consent of the person carrying on the business.
Transfer of business names under the new regime
Where a person agrees to transfer a registered business name, that person may do so through ASIC Connect. ASIC Connect will issue the transferor a "consent to transfer number" for the transferor to provide to the transferee. The transferee may then register the business name by applying for the business name using ASIC Connect and entering the "consent to transfer number" when prompted.
Effect of registration
It is important to remember that the registration of a business name does not create a proprietary interest in the name. The only advantage of registering a business name under the new regime, other than to comply with legislation, is to prevent another person from registering an identical business name.
In order to secure exclusive proprietary rights in respect of a name (whether that name is used as a business name or as the name of a product or a service), traders should ensure that the name is registered as a trade mark in respect of the goods and services for which it is used (or is intended to be used).
While there are common law causes of action which a trader can fall back on if the use of their business name (or a similar name) is being inappropriately used by another person and no trade mark has been registered, it is far easier to rely upon the statutory causes of action contained in the Trade Marks Act which become available upon registration of a trade mark.
Important messages to all business owners
People that are presently carrying on a business should ensure that all of their business names are registered for two reasons:
- to comply with the law; and
- to prevent another person from registering an identical name on the national register, as this may preclude someone who wishes to use an identical name from registering that name at a later date, even if their usage of the name pre-dated the use by the other person.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.