Choosing the right name for your business
Provided by Business Partners Ltd, South Africa's leading investor in SMEs
It's amazing how few entrepreneurs put thought and research into naming their business. There are certain guidelines to follow to ensure you not only choose a good name, but that there won’t be negative consequences for your choice.
No matter what type of venture you're setting up, the key is to opt for a name that distinguishes you from other businesses. It's a lot harder to use the name that describes your products or services, as it may be very common and stops other traders from using the same or a similar name.
Finding the right one
There are various limitations to what is allowed when it comes to naming your business. Here is a basic guide of what you need to know.
- Companies must have a name and be allocated a registration number by the Registrar of Companies
- This name and its registration number must be displayed clearly in easily legible characters outside the registered office and every place in which the business is conducted
- The registration number and the name must be used in official publications, letters, invoices, receipts, delivery notes, and 'all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods'
- If the name of the company is not used correctly on 'all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods', the person who signs the document commits an offence and will be fined
- The person can held liable for the stated amount unless it is paid by the company. This means that the signatory would have to pay out of his pocket should the company fail to pay for any reason
- It is possible for a company or a CC to register a literal translation of its name into another official language and then use the name as well
A sole proprietor, partnership and business trust is only required to state its 'name, title or description' on all trade catalogues and circulars, business letters, orders for goods and statements of account.
Words you can't use
There are a number of statutes that prohibit the use of certain words in business names. For example:
- You may not use a name implying that you are an attorney, notary or conveyancer unless you are one
- A business name may not include the words 'government', 'state' or 'United Nations'
- The use of the word 'bank' is prohibited unless the person using either or both of those terms is registered as a deposit-taking institution or unless the business is incorporated under the Banks Act or some other law relating to a particular type of company
- The word 'Limited' (Ltd) or 'Incorporated' (Inc) may not be used as the last word of its name
Words that must appear in names
Certain words must appear in, or at the end of, the names of companies and CC.
- The name of a public company must end with 'Limited' or 'Beperk'
- The name of a private company must conclude with '(Proprietary) Limited' or '(Eiendoms) Beperk'
- The name of a company or CC being wound up must have the words 'In Liquidation', 'In Likwidasie', 'In Voluntary Liquidation' or 'In Vrywillige Likwidasie' appended to it
- The words 'Under Judicial Management' or 'Onder Geregtelike Bestuur' must appear immediately after the name of a company under judicial management
- The name of a close corporation must end with the abbreviation 'cc' or 'bk' (the abbreviation for 'beslote korporasie')
Apart from what we've already mentioned, the name used by a sole proprietorship, partnership or business trust must not imply that the business enjoys government patronage.
It may not be one prohibited by the Registrar of Companies on the basis that it can deceive or mislead the public, that it causes annoyance or offence to any person or class of persons, or that it is suggestive of blasphemy or indecency.
In the case of companies and CCs, a name must not, in the opinion of the relevant registrar, be 'undesirable'. Some examples of what is considered undesirable are:
- Names identical to, or nearly resembling names already registered
- Names containing descriptive words conveying an impression of a company's business that differs materially from the company's main business
- A name consisting of fewer than three letters of the alphabet
To make sure your company's name doesn't already exist or break any rules, you can go to Companies and Intellectual Property Commision (CIPC) to conduct searches on the Trade Marks Register, Companies and Close Corporations Registers and .CO.ZA Domain Name Register.
Once you have the go-ahead to use the name, you can instruct the CIPC to register your business name, domain names, slogans, logos and product names as trade marks to obtain proper protection. The cost of registering your trade mark is much lower than having to go to court to prove that you used or thought of the name first.
Now who thought naming their business was as easy putting the words together and start painting the shop signs?
Source: The CIPC
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