Navigating Company Name Changes: Considerations and Implications
Changing a company’s name can be expensive, time-consuming and potentially risky. However, sometimes it can be necessary to build a successful brand. When a company's existing name no longer resonates with a target audience or fails to convey the right information, a rename can be a way to get your business back on track.
Lately, we have seen a lot of companies updating their names as part of an overall strategy for brand modernisation.
An example of this is ‘Dunkin’ Donuts’ - in 2018 the brand officially changed its name after more than 60 years with the same moniker, to highlight to the public their product diversification beyond just doughnuts.
Another recent example involved Facebook changing its company name to Meta in October 2021 to reflect its growing ambitions beyond social media and its shifting focus on the Metaverse.
Additional reasons for changing a company’s name include expansion or evolution as a result of a merger or acquisition, or if the original name doesn’t fit the direction or focus of the new company. An example of this is when Kat Von D changed the name of her makeup brand from “Kat Von D” to “KVD” in order to maintain brand equity while distancing the organisation from the founder.
Companies may also change their name if they feel their company image needs an update. For example, Citigroup’s decision to change its name to Citi aided in presenting to the public that a more forward-thinking direction had been adopted by the Company.
A short and simpler name can also be particularly important in today’s digital world, where misspelling a company name could result in traffic being redirected to the company’s competitors. An example of a company shortening its name to make it less complex is the American Online Company evolving to “AOL” or the National Australian Bank becoming "NAB."
What are the effects of changing a company name?
A company can change its name by passing a special resolution in a general meeting (Section 77(1) Company Act 2006) or by other means that are provided for by the company’s articles (i.e. a resolution of the directors).
A copy of the resolution must be posted to Companies House with a completed version of either
Along with the form, a cheque for the registration fee must be provided. The fee to register via post is £10 (£50 for same-day service). It is also possible to register a change of name electronically at Companies House via the Companies House online service, however, this is to file changes of name by special resolution only. A registration fee via the online portal is also required; £8 to file or £30 for same-day service.
The choice of the name is subject to the same restrictions as when a new company is registered. Under the Companies Act and the Company, Limited Liability Partnership, and Business (Names and Trading Disclosures) Regulations 2015, a new company must:
End in ‘Limited’ or PLC (etc.);
Must not be the same as one already registered;
Must not contain certain sensitive words without permission;
Suggest connection with the government; and
Must not be offensive.
For more info on the choice of name click here.
The change of name takes effect on the date Companies House registers the change. Changing a company’s name does not affect the company number; this stays the same. No rights or liabilities of the company are affected by the change (Section 81 Company Act 2006).
It will also be necessary to change the details on the company's notepaper, websites, email address, etc. to reflect the new name, and it must be remembered that the company's correct name must be displayed at the registered office, outside every place of business, and on the company's seal (if it uses one).
IP considerations when choosing a new name
There are some IP considerations in choosing a new name. The main restriction on using a name (for any business whether sole trader, partnership, or company) is that the name used for the business, or a very similar name, may already be used by an existing business.
The other business may be able to sue for the tort of passing off, where they claim that one party uses another party’s image for their own benefit. If the original company is successful, it can obtain an injunction to stop the new company from using its name and damages may be available. Therefore, there is a risk of legal cost if there is potential IP infringement. So, companies should be very cautious in terms of what they wish to change their name to.
Author: Eesha Singh -
Author: Eesha Singh -
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DISCLAIMER
This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.
Sources
Steve Harvey: “Why do companies rename? The reasons for naming a business” Last Accessed: 5th February 2023. URL: https://fabrikbrands.com/why-do-companies-rename-reasons-for-renaming-a-business/
Salvador Rodriguez: “Facebook changes company name to Meta” Published Thu, Oct 28 2021, Last Accessed: 5th February 2023 URL: https://www.cnbc.com/2021/10/28/facebook-changes-company-name-to-meta.html
Company Law Solutions Ltd: “Changing a company's name” Last Accessed 5th February 2023, URL: https://www.companylawclub.co.uk/changing-a-company-name
UK Government:“Set up as a sole trader” Last Accessed 5th February 2023 https://www.gov.uk/set-up-sole-trader
UK Government: “Choose a company name” Last Accessed: 5th February 2023 https://www.gov.uk/choose-company-name
“How to change a partnership name with HMRC” Last Accessed 6th February 2023 How to Change a Partnership Name with Hmrc | Mesomedic ®
