Australia's new national business name register: what you need to know
By Brett Lewis and Alexa Kostenko | Friday, February 24, 2012
A new national business name registration system was approved by the Council of Australia Governments (COAG) on 3 July 2008. This new registration system will replace the current scheme under which an entity trading under a name other than its entity name (e.g. individual, partnership or company name) must register a business name separately in every state or territory in which it trades. The new system will allow entities trading under names other than their own to register their business name once on a national register, regardless of where they trade in Australia.
In a major step toward enacting the new registration system, the Federal Parliament passed the Business Names Registration Act 2011 (the Act) on 13 October 2011. Provided that the related state and territory legislation is passed, the new system is expected to commence in mid-2012. ASIC will publish media releases and other communications to ensure that the commencement date is publicised.
The new system is expected to make business name registration cheaper and more efficient. The national registration system should benefit businesses by allowing them to make a single application when registering a business name (even when the business intends to operate in multiple states/territories). Under the new system, businesses will also pay lower registration and renewal fees.
The existing Business Name Registration System
Entities carrying on business under a name other than their own must currently register the business name in each state and territory of interest. Each state and territory currently administers its own business name registration system. This means that businesses trading nationally need to register their business names in eight jurisdictions through eight separate registration regimes, each with its own requirements and fees: a cumbersome and expensive process.
Fees and Renewals
Under the current system, each state and territory has its own fees structure and options for renewal so businesses needing to register in multiple jurisdictions need to pay fees in each of the jurisdictions concerned.
The new National Business Name Registration System
Under the new system, people and companies proposing to carry on business in Australia under a name other than their own will need to register their business name once on the national register and pay a single fee. Businesses operating in multiple states or territories will no longer need to register in each jurisdiction separately. This will streamline administrative procedures and reduce costs to businesses.
The new national register is administered by the Australian Securities and Investments Commission (ASIC) and will be publicly assessable at www.asic.gov.au without charge. For each business name, the public will be able to view the name of the entity holding the business name, its principal place of business and its address for service. Further information will also be available upon payment of a fee. The purpose of the business name registration regime is to protect consumers by enabling them to identify and contact the person(s) or company responsible for a business. The new national online register will further this purpose by making information about business more easily accessible to consumers. However, for privacy reasons, home-based business will only have their suburb and state or territory displayed publicly and businesses can request ASIC not to publicly display sensitive information.
Registration of limited partnerships and limited associations as well as licensing and professional registration will continue to be administered primarily by the states and territories.
Existing business names
Business names registered under the old system do not need to be re-registered. All existing business names will be automatically transferred to the new national system upon its commencement. Existing business name holders will be able to review and check the details that will be displayed on the public register at www.search.asic.gov.au.
Where the same business name is registered in more than one jurisdiction by different entities, ASIC may add a geographic identifier or other distinguishing mark or expression to each duplicate business name. While the geographic identifier or other mark will appear on the register, the business name will not change and the holder will not need to change the name in use. A new business name cannot be registered if it is identical or nearly identical to the registered business name alone or the name with the distinguishing mark added. For example, 'Jane Doe Pharmacy' might be currently registered in both Melbourne and Sydney. Under the new system, ASIC may add the identifying marks '(Melbourne)' and '(Sydney)' to the respective business names on the register. However, both businesses will be able to continue trading as 'Jane Doe Pharmacy'. In such a case, new applicants would not be able to register 'Jane Doe Pharmacy', 'Jane Doe Pharmacy Melbourne' or 'Jane Doe Pharmacy Sydney' or any business names nearly identical to those names.
Where a business has the same business name registered in two states, but registered on different dates, ASIC will advise the business that the business names will be merged into one entry on the national register. The renewal date will be the latest renewal date of all the identical business names. Where the same entity holds different business names in different states under the current system, all of the business names will be transferred to the new national system. However, an entity can elect to cancel any names that it no longer intends to trade under.
While applicants under the new system are required to have or be in the process of applying for an Australian Business Number (ABN), holders of business names registered under the old system will still be able to renew their registration without an ABN.
How to apply
Businesses will be able apply online to register their business name at any time. For applicants who do not have access to the internet, the online national business names service will be available through government service centres across Australia, including the offices of ASIC, the Australian Tax Office (ATO), designated state or territory agency offices, business enterprise centres and small business centres. Alternatively, a paper-based application form can be completed and mailed to the Register at ASIC's headquarters. For alternative methods of registration, applicants will be able to call ASIC on 1300 300 630.
Who can apply?
A person who is legally responsible for the business or the business' nominated qualified business advisor (e.g. an accountant or solicitor) can complete the application form. Partnerships and unincorporated associations can nominate a principal contact to act on their behalf in dealings with ASIC. Applicants can alternatively nominate an ASIC Registered Agent to lodge an application on their behalf.
What information do applicants need to provide?
An entity applying to register a business name will have to disclose to ASIC:
- details sufficient to identify the business entity;
- the entity's ABN, or a statement to the effect that an application for an ABN is pending and the reference number for the ABN application;
- the address of the entity's principle place of business in Australia;
- an address for service in Australia;
- the business name the entity seeks to register; and
- the applicant's place and date of birth where applicable.
If the application is accepted, the entity will have an ongoing obligation to notify ASIC of changes to the above information within 28 days after becoming aware of them.
Unlike the situation under the current system, applicants under the new system will be required to have an ABN or be in the process of applying for an ABN and must not have been refused an ABN. The new business name register will be combined with the current ABN register administered by ASIC. When the system commences, applicants will be able to register for an ABN and a business name in a single integrated online registration process through www.abr.gov.au. Registration of an ABN will remain free. While the ABN application is being processed (which may take up to 28 days), the status of the business name application will remain 'pending'. During this time, no one else will be able to register the same business name. Once the ABN is allocated, the business name will be registered. However, if the ABN has not been allocated with 28 days, the business name application will be cancelled. Applicants who already have an ABN will be able to seek registration of a business name at www.asic.gov.au.
Applicants will also only be required to nominate one principal place of business in Australia. This is an improvement on the current situation under which an applicant has to nominate a principal place of business in each state and territory in which the name is used. Many businesses do not have offices in all the jurisdictions of interest in which case a third party such as a law firm with an address in the appropriate state or territory has to be engaged to provide a local address and this incurs additional cost.
Choosing a business name
A business name cannot be registered if:
- it is identical, or nearly identical to, an already registered company or business name;
- it contains restricted words or expressions (e.g. Anzac);
- it has been determined by the Minister to be an undesirable name;
- it is likely to be offensive; or
- it is likely to mislead or deceive.
The online system will provide information on and links to the Australian trade mark database (ATMOSS) and domain name databases. In particular, it will highlight the fact that registration does not give proprietary rights to a business name. Many individuals and companies believe that registration of a business name provides proprietary or exclusive rights to use of the name. However, registering a business name does not confer rights to prevent other traders from carrying on business under the same name, registering the name as a trade mark, or using the name as part of a domain name. Furthermore, registration of a business name does not provide a defence to any legal claims. Just like the present situation, under the new national registration system, applicants will need to be careful not to use a business name in a way which infringes a registered trade mark or is otherwise misleading or deceptive. Determining whether use of a business name may constitute trade mark infringement, passing off or misleading and deceptive conduct can involve complex legal issues with important ramifications. The new system does not simplify these issues but at least flags them for consideration.
The online application system will also warn applicants seeking to register a name incorporating a reference to a protected title (e.g. doctor or solicitor) that use of such titles must comply with state or territory laws. While registration of a franchise name will not require the applicant to provide ASIC with the written permission of the franchisor, the online system will warn applicants for registration of franchise names that they need to have been authorised to trade under the name by the franchisor.
When an applicant submits an application online, an automated program will be used to determine whether the name can be registered. The purpose of this method is to expedite the business name registration process. However, as discussed below, there are significant practical implications which arise from the automated process.
After submitting an application online, applicants will either receive instantaneous confirmation of the registration (including a payment advice and a Business Name Extract) or a message stating that the name cannot be registered. If the business name cannot be registered, the online system will provide a reason and permit the applicant to choose another business name.
Business names will be available on a first come, first serve basis. Where two or more applications are lodged with ASIC for registration of identical or nearly identical names, the application lodged first will take priority.
The fees for business name registration under the new system will be less than the fees charged by the states and territories (except the Northern Territory). This is possible because the system is more efficient and less administratively burdensome than the current system. Further, businesses will only need to pay one fee upon registration, instead of paying a fee in each state and territory of interest.
Applicants will be able to choose between registering for a one-year period (for a fee of $30) or for a three-year period (for a fee of $70). The appropriate fee will be payable by BPay, Australia Post BillPay, Visa, or Mastercard. The business name will not be registered until the fee is received. If the fee is not received by ASIC within 10 business days, the application will be cancelled. If an application is rejected and the fee has already been paid, ASIC will refund the fee.
For business names registered under the current system, the renewal period will not change. Renewals will continue to be issued by the States and Territories up until the commencement of the new system. Holders of business names registered under the new system will be able to choose to renew their business name for one year (for a fee of $30) or three years (for a fee of $70). These renewal fees are lower that the current fees in all states and territories except the Northern Territory. ASIC will issue renewal reminders to holders of registered business name prior to the expiration date.
If an application to register a business name is rejected, the applicant will have 28 days to request review of the decision by ASIC. There is no fee for a review. ASIC will review whether the application satisfied the requirements set out above.
If not satisfied by the review, applicants will be able to appeal ASIC's decision to the Administrative Appeal Tribunal (AAT). The cost of appeal is $777, but the majority of that fee may be refunded if the applicant is successful.
A third-party can seek review of ASIC's decision to register a business name if:
- the third-party is an entity facing a real risk of substantial detriment due to registration of the business name;
- the business name was not carried over to the national register from one of the old state or territory registers; and
- the application for review is received by ASIC within 15 months of the date the business name was registered, or a longer period allowed by ASIC.
Offences and Penalties
It is an offence under the Act for an entity to carry on a business under a name which is not the entity's name or its registered business name. The penalty for breach is $3,300.
An entity carrying on a business under a business name will be required to include its business name and ABN (if any) in written communications with other entities, if the communication is connected with carrying on the business. The entity will also have to display the business name prominently at every place where it carries on business in public. The penalty for breach of either requirement is $550.
ASIC will have the power to cancel a business name, providing it gives 28 days' notice to the holder, if:
- the holder fails to pay the renewal fee when due;
- the holder does not trade under the business name for three months;
- the business name is used in infringement of a registered trade mark;
- the holder fails to satisfy a condition of registration;
- the holder fails to provide ASIC with information it is obligated to provide;
- the holder becomes disqualified from running the business; or
- ASIC becomes aware of a matter which would have led ASIC not to register the business name at the date of registration.
The states and territories will finalise any applications, renewals, reviews and appeals that commenced before the new national system becomes operational. Once the national register commences, all new transactions will be handled by ASIC.
Availability of Business Names
Critics of the new system have observed that fewer business names will be available than under the current system, because business names which are identical or nearly identical to an already registered company or business name cannot be registered. However, this is unlikely to have much practical significance for businesses. Some businesses may just need to be more creative with their choice of business names. For example, in spite of the restrictions and challenges which might be encountered under the Trade Mark Act 1995 (Cth) trade mark applicants still have a high success rate.
Trade mark infringement and passing-off
Since business name registrants will in many cases be notified that the name has been registered with a geographical identifier, the new system may highlight the potential for disputes in some instances.
Before businesses invest time and money into developing and registering a business name, advice as to whether use of the business name may constitute trade mark infringement, passing-off or misleading and deceptive conduct should be sought.
IP Australia provides general information on trade marks and a free, public trade mark database (ATMOSS) through its website at www.ipaustralia.gov.au. However, given the complexity of trade mark law, businesses should seek professional advice from a registered trade mark attorney or intellectual property solicitor. Business name owners should seek registration of their names as trade marks where appropriate and should monitor for conflicting trade mark registration applications. After a trade mark application is advertised as accepted, any person who considers that the trade mark should not be registered can oppose its registration within the following three months. Businesses should consider seeking registration under the Trade Marks Act 1995 (Cth) before the new system commences.
Cancellation for non-use of business name
As discussed above, ASIC will have the power to cancel a business name and remove it from the register if the holder does not trade under the business name for three months. This power is designed to stop businesses from registering business names for defensive or strategic purposes for the purpose of impeding registration by third parties and to free up unused names for adoption by others. However, the application process does not require businesses to show use at the time of application or renewal. Subject to renewal, many unused business names effectively remain registered indefinitely.
Identical and nearly identical business names
Whether a business name application is rejected because it is identical or "nearly identical" to a prior registered business name will be determined electronically at first instance. In theory, while this may create an objective and consistent process, it is also likely to lack flexibility and the criteria for determining "nearly identical" remain to be seen at this stage. It will clearly be important for the review process to be readily accessible, transparent and efficient.