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RESERVATION OF COMPANY NAMES

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Article by listed AttorneyNanika Prinsloo

The Companies Act, Act 71 of 2008, determines specific methods of registration of Company names, as well as the use thereof.  

The name of a Company must be registered with CIPC (the Corporate and Intellectual Property Commission) in Pretoria.  The Memorandum of Incorporation must first be signed and then this, with other documents are sent to CIPC for registration.  To choose a name, one can reserve a name before registration. This article deals with the reservation of Companies’ names before registration. See also: Criteria governing Company Names
 

RESERVATION PROCESS

A person may reserve one or more names to be used at a later time, either for a newly incorporated Company, or as an amendment to the name of an existing Company, by filing an application together with the prescribed fee with CIPC.

Upon receipt of the documents, CIPC must reserve each name as applied for in the name of the person who so applies. If the name is already used for any of the undermentioned, then of course the name cannot be reserved by CIPC:

(a)          if the proposed name is the registered name of another Company, Close Corporation  or Co-operative that is already registered;

(b)          if it is the same name of a registered external Company; or

(c)          if the name is already reserved by somebody else.

One reserves the name by completing certain forms that is sent to CIPC.
 

IF THE RESERVED NAME DOES NOT COMPLY WITH THE COMPANIES ACT

If there are reasonable grounds to believe that the proposed reserved name may be inconsistent with the requirements of the Companies Act (the correct abbreviations etc), then CIPC may ask the person who makes the application to serve a copy of the application and name reservation on any particular person, or class of persons, named in the notice, on the grounds that the person or persons may have an interest in the use of the name that has been reserved for the person that applies. 

Also notice can be given to the Companies Tribunal for determination regarding the name (read further on in this article what happens if there is a dispute about a reserved name).  CIPC may also refer the application and name reservation to the South African Human Rights Commission (“SAHRC”); and the SAHRC may apply to the Companies Tribunal for a determination.
 

TIME PERIODS FOR THE RESERVATION OF A COMPANY NAME

A name reservation continues for a period of six months from the date of the application, and may be extended by CIPC for good cause shown, on application by the person for whom the name is reserved together with the prescribed fee, for a period of 60 business days at a time.  Normally one does the reservation and if the name is available, one immediately registers the Company, so it is not, in our experience, often that a name is reserved for so long.  Most people want to register the Company in any case as fast as possible, but it is good to know that the name can be reserved for 6 months if one needs it to be reserved while you get your affairs in order.
 

TRANSFER OF A RESERVED NAME

A person for whom a name has been reserved may transfer that reservation to another person by filing a signed notice of the transfer together with the prescribed fee.  If CIPC reasonably believes that a person to whom a reserved name is to be transferred, or a person for whom a name is reserved, may be attempting to abuse the name reservation system for the purpose of selling access to names, or trading in or marketing names, CIPC may issue a notice to that person which would state the following:

(a)  requiring the person to show cause why that name should be reserved or continue to be reserved, or why the reservation should be transferred;

(b)  refusing to extend a name reservation upon its expiry;

(c)  refusing to transfer a reserved name; or

(d)  cancelling a name reservation.

 

ABUSE OF THE NAME RESERVATION SYSTEM

If, as a result of a pattern of conduct by a person, or two or more persons who are related or inter-related, CIPC has reasonable grounds to believe that the person or persons have abused the name reservation system by selling access to names, or trading in or marketing reserved names; or repeatedly attempting to reserve names for the purpose of selling access to names, or trading in or marketing reserved names, then CIPC may apply to a court for an order prohibiting the person or persons from applying to reserve any names for a period that the court considers just and reasonable in the circumstances.

In considering whether a person has abused, or may be attempting to abuse, the name reservation system, CIPC may consider any relevant conduct by that person or any related or inter-related person, and also the following:

(a)   the reservation of more than one name in a single application or a series of applications;

(b)  a pattern of repetitious applications to reserve a particular name or a number of substantially similar names, or to extend the reservation of a particular name;

(c)  a failure to show good cause for a reservation period to be extended; or

(d)  a pattern of unusually frequent transfers of reserved names without apparent legitimate cause having regard to the nature of the person’s profession or business.
 

DEFENSIVE NAMES

Any person may on application on the prescribed form and on payment of the prescribed fee apply to CIPC register any name as a defensive name for a period of two years; or renew, for a period of two years, the registration of a name as a defensive name, in respect of which he or she has furnished proof, to the satisfaction of CIPC, that he or she has a direct and material interest.

 

DISPUTES CONCERNING RESERVATION AND REGISTRATION OF COMPANY NAMES

Application to Companies Tribunal

 A person to whom a notice is delivered as discussed in this article under the heading “If the name does not comply with the Companies Act” , then any other person with an interest in the name of a Company may apply to the Companies Tribunal whether the name satisfies the requirements of the Companies Act.  Read our article as mentioned in the beginning of this article regarding the criteria for Company names.

An application to the Companies Tribunal may be made within three months after the date of a notice that was given by CIPC to the person who so applied for the reservation of the name, or on good cause shown at any time after the date of the reservation or registration of the name that is the subject of the application, in any other case.

What can the Companies Tribunal find

After considering an application, and any submissions by the applicant and any other person with an interest in the name or proposed name that is the subject of the application, the Companies Tribunal must make a determination whether that name satisfies the requirements of the Companies Act.

The Tribunal can also make an administrative order directing CIPC to do the following or one of the following:

(a)  reserve a contested name for the applicant;  or

(b)  register the contested name, or amended name as the name of a Company; or

(c)   cancel a reservation, if the reserved name has not been used by the person entitled to it; or

(d)  a Company must choose a new name, and to file a notice of an amendment to its Memorandum of Incorporation, within a period and on any conditions that the Tribunal considers just, equitable and expedient in the circumstances, including a condition exempting the Company from the requirement to pay the prescribed fee for filing the notice of amendment.

 

Within 20 business days after receiving a notice or a decision issued by the Companies Tribunal of this nature, an incorporator of a Company, a Company, or a person who received a notice as discussed above in this article, or an applicant or/and any other person with an interest in the name or proposed name that is the subject of the application, as the case may be, may apply to a court to review the notice or decision.

This article written by Nanika Prinsloo of Prinsloo and Associates.

www.empowerlaw.co.za