One of the most valuable assets of your business is the name of your company, Ltd. company, or other business entity. The implications of its effects is tightly woven in every fabric of your company including the business’s sales, reputation, and even the potential for your business to succeed (or not). This is why choosing an appropriate name for your business – as a business owner – is a very crucial step before moving forward with your company formation plans.

However, picking a name for your company is not as easy as picking apples. Oh no, there is a whole gamut of laws, restrictions, technicalities, uniqueness, etc. that can prevent you from licensing the business entity name you want for yours. What you must do is to do your due diligence in determining whether your favorite company name will survive all this scrutiny.

Continue reading this article to find out more on what the steps are in licensing a business name successfully, as well as how to protect your legal business name including the acquisition, maintaining, and enforcing your rights as a business entity.

Table of Contents

  • Business Entity Laws and Legal Name Selection
  • What is a Legal Name?
  • Statutory Restrictions on Legal Name Selection
  • Required Words
  • Prohibited Words
  • Name Availability
  • Companies House Rules for Determining Legal Name Availability
  • Foreign Business Entities
  • Trademark Laws and Legal Name Selection
  • What is a Trademark?
  • How Do Trademark Laws Affect Name Selection?
  • Avoiding Infringement
  • Domain Names and Social Media Names
  • What to Do When Your Business Name is Rejected
  • The Company Names Tribunal
  • Conclusion

Company Formation: Business Entity Laws and Legal Name Selection

 

What is a Legal Name?
When incorporating a company in the United Kingdom, you are required to have a “legal name” for your company, which will appear on the formation document of a corporation, Ltd., LLP, LP or other statutory business entity. The company name that appears at the time the company formation was done is its original legal name. Any business structure or entity has the right to change its legal name as much as it needs to (depending on the circumstances) for as long as it exists.

However, UK laws does not allow it to have more than one name at a given time.

Statutory Restrictions on Legal Name Selection
The business owner(s) of a company, Ltd. LLP, LP or other entity cannot just choose any name they deem is worthy of their company. There are restrictions imposed by the statute that governs the entire process of company formation. It usually revolves around three key issues, which are:

  1. Required words
  2. Prohibited words
  3. Name availability

 

Required Words
UK laws regarding business entities requires companies, when applying for company formation, are required to have their business name contain a specific word, phrase, or abbreviation indicating the type of entity it will be. For instance, your company name may show on the formation document as [chose name] [corporation/incorporated] or [corp./inc.].

Prohibited Words
According to UK laws, only appropriate names shall be allowed as the designated “legal name” of the business entity. There are certain words and phrases that the UK government have prohibited and for a good reason. One of the most prominent reasons is to prevent misleading the public about the nature and work that the company is doing. To give you an example, if you apply for company formation under UK laws and you registered your business as an LLP (limited liability partnership) or LP (limited partnership), then you’re not allowed to include the word “company” in the business name.

Another example is when a business attempts to use the word “bank” along its name when it is not in the banking industry, then the UK government will not allow that as well. Obviously the company does not do any banking or financing work and thus will mislead the public if it retains such a name.

Name Availability
Before your business name is approved by the UK Company Formation & Registrations, you must first ensure that it is available. In some cases, the name you’ve thought up for your company may have already been thought up, is currently in used and protected by law, which would make it invalid. You can go to the Companies House to search for duplicate names and if your search returned zero results, then that means your company name is available!

Companies House Rules for Determining Legal Name Availability
You can go to the Companies House physical office and file for company formation or incorporate your business by yourself, or you can also do electronic software incorporation, where third party businesses will give you a streamlined assistance in exchange for a fee (this cost more than if you do it yourself, but the tradeoff is that it rarely causes any legal troubles for you in the long run).

The UK’s Companies House explicitly states that a company name has to be unique and distinguishable from another company name. However, there are exceptions like,

  • The applicant company’s name is singular while the other already registered company name is plural.
  • A difference in a lowercase and/or uppercase letter in their respective names despite having similarities.
  • The names have different entity indicators or domain name extensions.
  • The names differ in punctuation, geographical terms, or symbols.

Foreign Business Entities
The only time a foreign business entity is required to register its business name is if it has some degree of physical presence in the UK, such as a place of business or branch, where it carries on business. The foreign company must register its name in the UK’s Companies House as the same name it had legally acquired in the country of its origin, unless it is a subsidiary company when filing for company formation. Commercial enterprises that cannot register in the UK as an overseas company are as follows:

  • Partnerships
  • Limited partnerships
  • Unincorporated bodies
  • Government agencies

 

Trademark Laws and Legal Name Selection

 

What is a Trademark?
Any word, symbol, phrase, or design that is utilized to identify a certain manufacturer’s or seller’s products and to distinguish them from the products of other organizations can be trademarked at the UK Intellectual Property Office. Any individual or company may also register their unique service as “service mark.” Under normal circumstances, the legal name of a company cannot be its trademark or service mark, as a legal name identifies the business entity itself, whereas a mark (a general term to indicate either the product or service of the company) identifies the business entity’s goods or services. However, there are cases where a legal name can also be used as the trademark or mark of the company in commercial transactions in order to identify its products or services.

How Do Trademark Laws Affect Name Selection?
Trademarks are governed and protected by UK laws and common law. You have to understand that when it comes to company formation the laws are enacted to protect your business trademark rights. Therefore, your trademark or service mark must not infringe upon someone else’s trademark rights and the other thing to know about trademark laws, is that not all marks may qualify for protection under UK trademark laws. Now the most logical thing for you to do is to hire a graphics artist to help you create a unique mark (brand, seal, logo or name/business legal name) that will qualify for trademark law protection.

Avoiding Infringement
The penalties for trademark infringement are severe. Therefore, it is your duty as the company founder or owner to do due diligence and conduct a trademark search. While this step can be demanding, it will keep you safe from committing trademark infringement and cause quite the problem in your attempts to incorporate your business or do company formation. You may want to come up with at least 5 unique names and/or mark, seal, or logo to register as your trademark. This will save you time as you’ll instantly have options for selecting a different name, mark, seal, or logo to register.

Domain Names and Social Media Names
No matter what type of business setup you want for your business (i.e. the old fashioned brick and mortar, the hybrid online and physical model, or the pure digitized business model), having a strong online presence is now a requirement for all business, without which a business is guaranteed to fail. Another thing that you need to do before registering your business name in the UK’s Companies House for company formation is to do a domain name and social media handle search. If you find that the business name you want to register is available on both fronts, then you may proceed to the Companies House and have it registered.

One the UK Government has approved your business name, go immediately to a hosting company and purchase the domain name for your website. Hire a professional web developer and have your website made, then create a social media business page on the top 5 – 10 social media platforms in order to establish an online presence as soon as possible. The idea is to secure a space in search engines and social media sites to avoid other people from using your business name or trademark logo.

Once you’ve done all the necessary stuff in establishing your business online, then hire a digital marketing expert to market your business on the web and get leads, who could potentially become your customers. Everything you do from here will result in your ROI (return on investment) and sales profits. Good luck!

What to Do When Your Business Name is Rejected
Set your expectations to median levels when attempting to register your business name during company formation, because there’s a good chance that it might get rejected by the Companies House. UK legislation states that the Registrar of Companies may reject application of a business name under these conditions:

  • The UK Secretary of State may deem its use would constitute a criminal offence
  • The UK Secretary of State may also deem it offensive
  • If it is the same as the registered name of another company in the registrar’s index of company names (unless the new company applying for a legal name belongs to the same company that’s already registered)

There are some instances where the UK Secretary of State needs to grant permission on companies applying for a legal name (and other relevant authorities if applicable). Instances where these conditions apply include:

  • The business name you’re applying for implies a connection between their company and the UK government, a person in authority in their local area, or any other public authority in the UK.
  • The business name you’re applying for during company formation contains sensitive words or expressions that are prohibited under the Sensitive Words and Expressions Regulations 2014

The Companies House may require you to change your business name if another business entity has filed a complaint that your business name:

  • Looks very similar or identical to their company name already existing in the index
  • You justified the use of a sensitive word or expression in your business name through false or misleading information
  • Your company name suggests and/or misleads the public about your company’s dealings, which may harm the public in the process
  • You deliberately omit the word “Limited” from the end of your business name without justification
  • Your business name is similar or is associated with a current complaint filed in Companies House. It is known as “opportunistic registration” because the applicant wants to take the opportunity to register his business name, while another business name, which is similar to his company name, is under contention.

The Companies Act of 1996 stipulates that the term “public limited company or (PLC)” must appear at the end of the company name (or its Welsh equivalent) for all public limited companies when applying for company formation. On the other hand, the term “private limited company or (LTD)” must also appear at the end of the business names of all private limited companies (or its Welsh equivalent) unless they are deemed “exempted” otherwise.

Companies that are exempted from this law include:

  • Non-profit organizations and charitable companies
  • Companies limited by guarantee whose objects are the promotion or regulation of commerce, art, science, education, religion, charity or any profession and anything incidental or conducive to those objects, provided

Features of this type of exempt companies:

  • Any profit the company makes is used for promoting its objects
  • Company members (board of directors) are not paid any capital or dividends
  • If the company ceases to exists, all of its assets should be handed over to another company which has similar objects, or promotes charitable activities and/or similar goals

Should your application for a legal business name is rejected; you can go to an experienced Company Law Solicitor for legal advice. The next step would be to go to the Company Names Tribunal to seek an appeal for your company formation aspirations.

The Company Names Tribunal
The Company Names Tribunal is similar to The Court of Appeals and its main function is to settle any and all disputes concerning companies applying for legal business names. You may go to this government institution if you wish to make a complaint against someone else’s business name, or defend your business name should it come under scrutiny. Be aware that you will need legal assistance once things go down this path, so you may want to find the best UK corporate law firms to assist you.

Conclusion
Choosing a legal business name can be a daunting task that may involve a great deal of time, money, and effort. Business entities who are in the process of doing company formation would consider deeply in name selection for their business, and no matter what kind of business structure you aim to establish whether it is a sole trader, partnership, limited liability partnership or limited company, your business name must always reflect your business activities and values.