New Rules for Company Names

On 4^th March 2024 a number of important changes were introduced by Companies House, including new rules for company names. These form part of a package of measures from the new Economic Crime and Corporate Transparency Act 2022, which gained Royal Assent on 26^th October 2023. 

In this article we will explain everything that you need to know about the new rules for company names in the UK. In particular, we will look at the reasons for the changes and the implications for company owners.

Why has Companies House changed the rules for UK company names?

Companies House will be conducting more robust checks to refuse and remove company names which may give a false or misleading impression to the public. The new rules for company names in the UK are also about improving the quality of data held on registers held by Companies House. As Companies House explains:

“One of the key aims of the Economic Crime and Corporate Transparency Act is to improve the accuracy and quality of the data on our registers, to help tackle economic crime and drive confidence in the UK economy”. 

Companies House hopes that the changes will ultimately reduce the soaring levels of economic crime in the UK and provide greater transparency across the UK business environment. 

Other measures introduced under the new law include:

• A statement of lawful purpose
• Changes to the rules for registered company addresses and 
• The requirement to provide a registered email address from 4^th March 2024.

Do Companies House not already have control over company names?

Yes, but the new changes add to the existing powers of Companies House to prevent the misuse of company names. Before the introduction of the changes on 4^th March 2024 Companies House already had limited powers to prevent the misuse of company names. These included measures to prevent the use of names that are the same as, or too similar to, an existing name. 

Companies House take the view that their existing powers did not go far enough once a name passed thresholds set by these controls. They also had only limited powers to stop companies from being placed on the register or to take action once they were on the register. 

The new act will now allow the registrar to reject or remove a company name where they believe the company may be used to facilitate certain crimes. 

New ‘‘querying powers’’

Companies House now has new ‘‘querying powers’’ that allow them to question information and ask for supporting evidence to:

• Ensure that anyone who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied-with);
• Ensure that the information contained in the register is accurate and that the register contains everything that it ought to contain;
• Ensure that records that are kept by the registrar do not create a false or misleading impression to members of the public and:
• Prevent companies and others from carrying out unlawful activities and/or from facilitating the carrying out of unlawful activities by others.

The new powers will provide the tools needed to improve the accuracy and integrity of the information on the register and safeguard against activity that is misleading and/or unlawful.

What are the company name rules for 2024?

Under the new act, Companies House now have new powers to reject certain company names. These new rules will work in tandem with the already existing company name controls, as set out below:

Existing company name rules

New company name rules

Company names must not: Be the ‘‘same as’’ or ‘‘too much like’’ the name of a company already on the register.  Contain a sensitive word or expression that requires prior approval. Contain a word or expression which may be covered by other legislation. Imply a connection with the following: UK government. A public authority. A devolved government or administration. The Royal family. Another official body or organisation. Suggest business pre-eminence, a particular status or a specific function, for example names that include ‘‘British’’, ‘‘Institute’’ or ‘‘Tribunal’’. Include a word that represents a regulated activity. Include a word which may constitute an offence.

Company names must not: Be intended to facilitate fraud. Be comprised of or contain a computer code. Give any false impression that the company is connected with a foreign government or an international organisation whose members include two or more countries or territories (or their governments).

Avoiding company name words and expressions that may be rejected

When deciding on your company name it is important to check the following lists on the Companies House website to avoid the possibility of rejection or removal:

• Sensitive words and expressions that require approval before they are used in a company or business name.
• Words and expressions which could imply a connection with a government department, a devolved administration or a local or specified public authority.
• Words and expressions protected under other legislation.

There are different rules for sole traders and business partnerships.

Can Companies House compel an existing company to change its name?

The new law will apply not only to new applications to incorporate a company but also to existing companies. There are currently around 4 million company names on the public register. Any company may also be asked to change their name if it has been used, or is intended to be used, by the company to facilitate fraudulent activity. 

When might a company be required to change their registered name?

A company may be required to change their registered name if it:

• Is similar to an existing name on the register.
• Is offensive or suggests criminal activity.
• Was registered using misleading information to support the use of a sensitive word or expression.
• Gives a misleading indication of the company’s activities and is likely to pose a risk of harm to the public in the UK or elsewhere.
• Is used for criminal purposes.
• Has been wrongly registered.
• No longer justifies omitting ‘‘Limited’’ from the end of its name
• Is an ‘‘opportunistic registration’’. 
• It includes a geographical location such as the UK or – within it – England, which would imply a connection with an official body or administrative authority. This kind of company name may require prior approval from the Secretary of State for Companies House.
• Infringes upon an existing trademark.
• Refers to a specific profession without permission from a relevant professional body.

What happens if a company ignores a direction to change its name?

If Companies House direct that a company name be changed then this must be carried out within 28 days. If this is not done within that time then they can now specify a new name for the company. For example, Companies House may change the company name to its registered company number. 

Companies House now have also the legal power to suppress a name from the register while a company responds to a formal request to change its name.

Financial penalties for non-compliance

If a company does not comply with a name change direction within 28 days then financial penalties may apply. The new rules allow Companies House to levy a fine of £1,000 per breach.

Will the Company Names Tribunal still have a role?

Yes, the Company Names Tribunal (CNT) will continue to be responsible for handling complaints where a company name is:

• The same as an existing name in which another person has goodwill.
• Sufficiently similar to that name that it is likely to mislead.

There are some changes, however. The new Economic Crime and Corporate Transparency Act 2022 amends the Companies Act 2006, which set out how the CNT will operate going forward, as follows:

1. Consideration of similarity between the applicant’s name (in which he has goodwill) and the registered company name is extended to use outside the UK, where such use would likely mislead members of the public outside the UK.
2. Persons who were members or directors of the registered company when the name was registered may be joined as respondents.
3. A defendant can no longer defend a challenge against its registered company name on the basis that:
   1. It is operating under the name;
   2. It is proposing to do so and has incurred substantial start-up costs in preparation for this, or:
   3. It was formerly operating under the name but is now dormant.

Will the Company Names Adjudicator still have a role?

Yes, Company Names Adjudicator (CNA) will continue to deal with disputes relating to opportunistic name registrations, but Companies House may handle some cases under their new ‘querying powers’. 

As Companies House explain: “Some of the cases that the CNA currently handles will be picked up by the Registrar using her querying power. However, there is still a clear role for the CNA to continue to deal with cases which require an adjudication to be made between two parties following an objection to a registered company name”. 

Conclusion

The new rules make it even more important to carry out proper due diligence when deciding on and registering your company name. This is essential to avoid Companies House rejecting your application or else fining you for not complying with a direction to change your company’s name. Before you register a company we recommend that you use an online tool that will check whether your proposed company name is available and that it does not contain sensitive words or expressions which may lead to rejection.