Consumer Protection Act to outlaw ‘trading as’ names of companies

2009-07-28 00:00

THE practice whereby companies or close corporations trade under names other than their registered names will cease with the implementation of the Consumer Protection Act, 2008 (CPA).

Section 79 of the Act prohibits any person from carrying on business except under the person’s full name as recorded in an identity document or officially recognised or in the case of a juristic person (for example, a company), a business name registered with the Registrar of Companies.

This means that a trading name must be the registered name of the entity. Section 80 does, however, allow a person to register any number of business names that are used or will be used in carrying on business.

The effect of this is that, say, John Mkhize, or a firm of Mkhize and Smith, will not be allowed to do business as “Bright Products” unless it has been registered as a business name.

Likewise, XYZ Bank Limited will not be permitted to use, say, the name “XYZ Loans” for its domestic loans division without a separate registration of that name. Thus the present custom whereby a company or CC carries on business as “XYZ Bank, trading as XYZ Loans” will no longer be allowed once section 70 comes into force.

This will only be 18 months the state president approves the CPA.

It should also be noted that in terms of section 81 of the CPA, a business name may not be the same as, or confusingly similar to an entity already registered under the Companies Act, the Close Corporations Act or the Co-operatives Act.

The name may also not be the same as or similar to a registered trade mark belonging to another person

If an entity conducts business under a trading name that is not its registered name, the National Consumer Commission may require it to cease trading under that name.

The possible proliferation of new registered business names will require vigilance on the part of businesses and trade mark proprietors to protect their intellectual property rights in respect of their registered names.

 

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