Changes to the use of Business Names

With the rigid environment surrounding businesses in South Africa such as the registration of a separate VAT, UIF and PAYE number for each separate registered entity, owners would much rather opt to use one registered entity where under various businesses are conducted. Currently there is no legislation that prohibits the conducting of numerous businesses with different names under the flag of one registered entity.

Example 1

Section 32 of the Companies Act, No 71 of 2008 (‘the Act’) may complicate the status quo which determines that a company may not mistake its name or registration number in a way that is misleading or deceiving to the public . The company must use its name and registration number in all legible characters in, amongst others, all official publications and any person acting on behalf of the company may not by act or omission, misrepresent to any person the true legal status of the company.

Companies should be aware of these sections and implement measures to avoid misleading communications as it may be classified as an offence in terms of the Act which may lead to compliance notices and possible penalties.

Further to section 32 of the Act, sections 79 to 82 of the Consumer Protection Act, No. 68 of 2008 (‘the CPA’) introduced a significant change to the existing practice to have one registered entity with various trading names by making the registration of business names compulsory. The implementation date of these sections and the proposed changes are subject to an indefinite proclamation date.

Once implemented, these sections will have the necessary effect that a company will not be allowed to trade under a name different to its incorporated name unless such name has been separately registered at the Registrar of Companies under section 80 of the CPA or in terms of any other public regulation. This will require a registration of each separate trading name at the Registrar of Companies once the sections come into operation. A business will however not be required to register a trade name that has been in use for at least one year prior to the effective date of implementation of the sections.

How does this affect my business?

Although the Act does not require a company to refer to its registered name and registration number in all instances it would be sensible to include the following derivations in all official publications or communications to the public (i.e. letterheads, business cards, e-mail signatures, invoices and communications of the like):

Mr Fixit (Pty) Ltd (reg no.: 2013/007115/07) t/a

SPARES FOR AFRICA

AG TRUTER 20 August 2013

Barnard Incorporated is a firm of attorneys situated in Centurion, Pretoria.