New national business names legislation replaces current state and territory system – How will it affect you?

From 28 May 2012, the regulation and administration of business names throughout Australia will shift from the current state and territory based system to a national system regulated by the Australian Securities and Investments Commission.

The new national scheme will introduce a number of efficiencies into the business name regime in Australia, including:

• one register and registration process — with registration of new business names taking effect Australia-wide; and
• easing the administrative burden of registering and maintaining many registrations for one name.

This article explores the effect of the new legislation on existing business names, how to register new business names and the rights and obligations of business name holders.

Jeff Holowaychuk

---

The new law

The new national business names registration system is set out in the Business Names Registration Act 2011. It is expected to start on 28 May 2012. The Australian Securities and Investments Commission (ASIC) has announced that each of the state and territory governments has passed the necessary legislation to enable the new system to begin.

Objectives of the new system

The objectives of the new national business name system are:

• to remove the inconvenience of having to register business names in more than one jurisdiction; and
• to address the confusion caused under the current system that allows identical, or nearly identical, names to be registered in various states and territories. The new system will prevent identical, or nearly identical, business names from being registered.

Australia-wide regulator and registration

The new legislation will create a single system for the registration and administration of business names in Australia. From when the system starts, anyone with a registered business name will deal only with the ASIC for the registration, administration and renewal of business names.

Under the new system, a business name registration will be valid for use anywhere in Australia.

What happens with current business name registrations?

One state or territory If you currently have a business name registered in a state or territory, then you will not be required to register it again with ASIC. Instead, ASIC will automatically transfer all current business names registered in any state or territory to the national register. The registration details from the previously registered business name, including the principal place of business and expiry date, will be transferred to the new register.

More than one state or territory If you have a business name registered in more than one state or territory, then each of those registrations will be transferred to the new register. You may then decide:

• to retain all the registrations, or:
• to keep one business name registration (for example, the one with the latest expiry date) and to cancel the others.

However, ASIC has said[1] that if it is able to reliably determine that the business names are identical and registered to the same holder then it may act on its own to combine multiple identical registrations.

Identical business names in different jurisdictions owned by different people When the business names are transferred to the new register, there may be two or more identical or nearly identical business names registered in different states or territories to different people. To reduce confusion, ASIC has said that it will provide additional information on the new register to assist people to differentiate between identical, or nearly identical, business names – for example:

• the state or territory in which the business name was registered; or
• the former state or territory business name registration number.

If these identifiers are not sufficient to reduce confusion, then ASIC may add a distinguishing word as an additional identifier – for example, the name of the relevant state or territory. Although this identifier will not form part of the business name, it will help people distinguish between identical registered business names. ASIC will notify the people who own the relevant business names before making any changes.

New registrations after the new national business name register starts

After 28 May 2012, if you apply to register a business name, then you must apply to ASIC through its online application form. Your application must include the following information:

• the ABN of the proposed business name holder (ASIC will not register a business name unless the holder has an ABN);
• the proposed business name;
• the preferred registration period (either 1 or 3 years);
• the name of the business name holder and their details; and
• the address for service of documents and the principal place of business (both of which must be in Australia).

Before you apply to register the name, you should check to see that the business name is available for registration. You can do this by conducting business name, trade mark and domain name searches to ensure that a name that is identical or nearly identical to your proposed business name is not already in use.

If ASIC rejects your application for a business name, then you will not be required to pay the registration fee.

Obligations of business name owners

The new business name legislation imposes the following obligations on businesses and business name holders:

• any person carrying on a business must register a business name — unless an exception applies (for example, if the business operates under the same name as the individual or company carrying on the business);
• the business must include its business name and ABN on all business documents — including invoices, receipts, orders, cheques and any document lodged with ASIC;
• the business name must be prominently displayed at every place the business operates that is open to the public; and
• an individual must not carry on a business under a business name if they are disqualified from doing so — for example, if the person is disqualified from managing a corporation under the Corporations Act 2001.

How can I transfer a business name to someone else?

If you wish to transfer your business name registration to another person, then you must follow the process, within certain time periods, that ASIC has set.

Process The process is as follows:

• First, the holder of the business name must apply, online at ASIC, to cancel their business name registration. In the cancellation process, the holder must select the 'cancel and transfer' option in order to transfer the registration to another person. ASIC will provide the holder with a 'consent-to-transfer reference number'. The holder must give that number to the transferee.
• Next, the transferee must apply to register the name using the consent-to-transfer reference number the holder gave them.
• Finally, if ASIC receives the transferee's application with the consent-to-transfer reference number, then the business name will be registered in the transferee's name.

Timing The transferee:

• has 3 months from the notice of cancellation in which to arrange the transfer. During that period, they may trade under the business name even if they are not yet the holder of that name; and
• has the right to register the business name until 4 months and 28 days after the date of cancellation. After that, any other person may apply to have the business name registered in their name (and there is nothing the transferee can do to prevent them from doing so).

Does owning a business name give the owner any intellectual property rights in the name?

Owning a business name registration under the Business Names Registration Act 2011 does not give the holder ownership or intellectual property rights in the name. In fact, the registration merely gives the owner:

• the authority — almost like a license from the government — to carry on their business under the registered name. That authority is subject to the rights of anyone else to use that name; and
• the narrow protection that no-one else will be able to register the name as a business name or company name while the business name is registered.

Even though the holder of a business name has that narrow protection, it does not enable them to sue anyone else for using the name.

How can a business name owner acquire the intellectual property rights in their business name?

If you wish to acquire a legally enforceable right to your business name, then you should consider applying to register the name as a trade mark with IP Australia, which is the government body that regulates intellectual property in Australia. You can also apply to register your business’s logo, product names etc. as a trade mark, see below.

Owning a registered trade mark gives the owner:

• an exclusive right to use the registered word, logo or other device in relation to one or more classes of goods or services;
• the right to licence other people to use the trade mark;
• the right to sell the trade mark; and
• the right to commence legal proceedings against a person who uses the trade mark without the owner’s consent.

Having a registered business name does not give the owner any of these rights (though they can sell the business name).

More information from Maddocks

For more information, contact Maddocks on (03) 9288 0555 and ask for a member of the Maddocks Commercial Team.

Registering a trade mark

If you would like to register a trade mark, you can prepare the application using Cleardocs' Trademark Application product.

You can find more information about the trade mark application process here.

---

[1] Regulatory Guide 235: Registering your business name, available here.