Reuse of Company Names
We are following on from our last blog on the prohibition of reusing company names after the company has gone into liquidation, under Sections 216 and 217 of the Insolvency Act 1986, where we mentioned that there are exceptions to the law on the reuse of a Company’s name.
So, for example, if the company in liquidation was called Joe Bloggs Limited trading as Mr Bloggs then a prohibited name (unless an exception applies or the court has given permission) would be:
- a company having the registered name Joe Bloggs Limited or Mr Bloggs Limited
- a company having any other name if it trades, or partially trades, using the name Joe Bloggs or Mr Bloggs
- a company with a name so similar as to suggest an association with Joe Bloggs Limited or Mr Bloggs
The same rules apply if you are concerned in carrying on an unincorporated business (for example as a sole trader) called Joe Bloggs or Mr Bloggs or if you named the company using your personal name and then decided to trade using your own name.
It is possible to reuse what is otherwise a prohibited name if your successor company’s name falls within one of the three exceptions to Sections 216 and 217 of The Insolvency Act 1986 which are set out at Rules 22.1 to 22.7 of The Insolvency Rules 1986.
You buy the business assets from the Liquidator
If you purchase the whole or substantially whole business from the liquidator, you may be able to reuse the company’s name. An important part of this process, however, is to inform creditors of your liquidated company that you’ll be reusing the company name, and also place an advert to the same effect in the Gazette before using the prohibited name.
You may also use the name if the whole, or substantially the whole, of the business of the company is sold, or otherwise acquired from an administrator, administrative receiver or supervisor of a CVA before the insolvent liquidation, and before using the name you give the required legal notice.
You obtain permission from the Court
You can apply to court seeking permission to use the same or a similar name to the name of your liquidated company, but you must do within 7 days (this is a strict time limit) of the date of liquidation. If you have applied to court for permission you may use the prohibited name for:
- up to 6 weeks from the date of the liquidation, or
- up to the point where the court decides whether to give you permission if this is less than 6 weeks
If the court hasn’t made its decision within 6 weeks, the ban will again apply to you.
The name is already an existing name
If the successor company has used the prohibited name continuously for at least 12 months before the liquidation took place and it traded throughout this period, you do not need permission of the court; it cannot have been a dormant company during this time.
Reusing a company name outside of these three scenarios could have serious ramifications for you and other directors. The penalty for contravention of Section 216 can be 6 months to 2 years imprisonment or a fine or both; the statutory maximum fine is currently £5,000. You may also be disqualified as a director. A person can also be made personally liable for all the relevant debts under Section 217 of the Insolvency Act for the successor company if Section 216 is contravened.
If you are in any doubt about whether a name may be so similar as to suggest an association then you should seek professional advice.
If you require any assistance please do not hesitate to call us on 0800 118 2948
You don’t know what we can do until you ask.
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