Selecting an appropriate company name is a vital step in establishing your business. In the UK, company names are regulated by legal requirements. Your company name serves as an introduction to your brand’s identity and values. Uniwide Formations offers insights into what you should consider before deciding on a company name. In this article we delve into the legal regulations and provide tips for crafting the perfect name for your business.
Understanding the Use of “Limited” or “Ltd.”
When forming a company in the UK you must indicate its legal form in its name. For example, private companies limited by shares must include the word “Limited” or its abbreviation “Ltd.” at the end of their names.
- This helps clarify the company’s structure.
- It is essential for transparency and legal identification.
- This requirement is mandated by the Companies Act 2006.
Moreover, your company must prominently display its full name at its operating address and on all business stationery, websites and e-mails. The exception to this rule is if you operate from home but have a registered address for your company elsewhere – in which case you should instead display that address, stating that it is your company’s registered address.
Company Name versus Business Name: What is the Difference?
It is vital to differentiate between a registered company name and a business or trading name.
- Company Name: This is the legal name under which your company is registered at Companies House. It must comply with various legal requirements.
- Business Name: Often known as a trading name, this is the name under which your business operates. It can be different from the registered company name.
If you are using a business name, it should be clear. For example, if “ABC Limited” trades as “XYZ”, the company’s signage and paperwork should display: “ABC Limited, trading as XYZ” or else “XYZ is a trading name of ABC Limited”.
Key Restrictions on Company Names in the UK
When choosing a company name several legal restrictions must be considered:
- The name must be unique and not too similar to the name of any company that already exists.
- It cannot be offensive or imply illegal activities.
- It must not exceed 180 characters.
- It cannot contain certain characters, signs or symbols.
- It must not mislead with regard to the nature of its business activities.
- It must not infringe upon an existing trademark.
Companies House ensures that businesses comply with these legal guidelines.
Identifying Names that are Considered the Same
A company name is considered the same as an existing one if the only differences are in punctuation, characters or words that are similar in appearance or meaning. For example, “Hands-On Builders Ltd” would be considered the same as “Hands On Builders Limited”.
To register a company with a similar name:
- Either the new company must become part of the same group as the existing one or:
- The existing company must provide a “letter of non-objection” confirming their consent.
Avoiding Names that are Too Alike
It is crucial to avoid a name that resembles too closely that of an existing company. For example, “Quick Car Repairs Ltd” may be considered too similar to “Quick Car Repair Limited”.
If Companies House deems the names too alike then they may require a change of name. Equally, however, if you believe a that the name of another, more recently formed company matches too closely that of your own company then you can submit an objection to this within 12 months of that other company being registered.
Certain words and phrases in a company’s name in the UK require permission for their use, especially if they imply an association with government or public authorities. For example, words such as “King”, “Queen”, “Royal”, “Her Majesty’s”, “HM”, “Police” and “Law Commission” are sensitive. To use them without approval may lead to legal consequences.
To use “Royal” in your company’s name you must seek permission from the Cabinet Office Constitutional Policy Team if you are registering in England or Northern Ireland. In Scotland, approach the Scottish Government Protocol and Honours Team. In Wales, contact the Branding Manager of the Communications Division of the Welsh Government. If “Tribunal” is desired, consult the Ministry of Justice.
Moreover, words that imply a connection with a government department or public authority require a “letter of non-objection”. For example, if you wish to use “CIW” then you must seek approval from the Care Inspectorate of Wales. It is advisable to avoid using words like “Agency”, “Authority” or “Assembly” that imply governmental connections. Note that there is no standard procedure, so carrying out research and seeking permission is essential.
Furthermore, some words and phrases are protected by specific legislation, such as “Bachelor of Medicine”. Under the Medical Act 1983 only individuals who are registered with the General Medical Council can use this term. Similarly, the word “charity” requires approval from the Charity Commission. It is crucial to conduct thorough checks to ensure that your proposed company name complies with the relevant laws, since there is no exhaustive list of such terms.
Exemption from Using the Word “Limited” or “Ltd.” in a Company Name
Under section 60 of the Companies Act 2006 a private company limited by guarantee, rather than by shares, may opt not to include “Limited” or “Ltd” (or their Welsh equivalents “Cyfyngedig” or “Cyf”) at the end of its name. To qualify for this exemption the company’s Articles of Association must adhere to the following specific conditions:
- Promotion of Certain Objectives: They must declare that the company’s objectives include the promotion or regulation of commerce, art, science, education, religion, charity, or any profession. It could also be any cause or activity incidental or conducive to any of those objectives.
- Utilisation of Income: They must mandate that the company’s income is used exclusively for promoting its objectives.
- Prohibition on Dividends to Members: They must prohibit the distribution of dividends or any return on capital to members.
- Distribution of Assets Upon Dissolution: They must stipulate that, if the company is dissolved, then any assets that would otherwise be distributed to its members (if the company were limited by shares) should, instead, be transferred to another organisation with similar or charitable objectives.
If a company that is limited by guarantee wishes to claim this exemption after it has already been registered/incorporated then it must complete Form NE01 from Companies House.
This exemption allows companies, especially those which are not-for-profit, to present a name that reflects their charitable or community-focused nature without the standard corporate designation. It is essential, however, to adhere strictly to the criteria set out in the Articles of Association.
The Importance of Unique Company Names
Having a unique company name is not just a legal requirement in the UK: It is a strategic move that can contribute to the success of your business. Here are a few reasons why a unique name is important:
- Brand Identity: A unique name helps in creating a distinct brand identity. It differentiates your business from competitors and makes it easily recognisable to your target audience.
- Credibility and Trust: A well-thought-out and unique name adds credibility to your business. Customers are more likely to trust and engage with a business that stands out.
- Online Presence: In the digital age, having a unique name can greatly benefit your online presence. It makes it easier for customers to find you on search engines and social media platforms.
- Avoid Confusion: A unique name prevents confusion with other businesses, which is essential to avoid miscommunication or mistaken identity.
- Trademark Protection: Having a unique company name makes it easier to secure trademark protection, which is crucial for safeguarding your brand against infringement.
Legal Consequences of Breaking Company Name Rules
Failing to comply with the legal regulations surrounding company names in the UK can have various consequences:
- Mandatory Name Change: Companies House may force you to change your company’s name if it is too similar to that of an existing company, if it is misleading or it does not comply with legal regulations.
- Legal Disputes: If your company name infringes upon a trademark or is too similar to that of another business then you may face legal action from the aggrieved party.
- Financial Penalties: There may be financial penalties involved for non-compliance with naming regulations, including the costs associated with rebranding.
- Damage to Reputation: The reputation of your business may suffer if you are forced to change your company name after infringement or non-compliance, because this can erode trust among your customers and stakeholders.
Tips for Choosing the Perfect Company Name
Selecting a company name requires thoughtful consideration. Here are some tips to help you choose the perfect name for your business:
- Reflect Your Business: Choose a name that reflects the nature and values of your business. It should give an idea of what your business is about.
- Easy to Remember and Pronounce: A name which is easy to remember and pronounce will stay in people’s minds, which is beneficial for word-of-mouth marketing.
- Check for Trademarks: Before settling on a name, check to ensure that it is not already trademarked. You can use the Intellectual Property Office’s online trademark search tool.
- Consider Online Availability: Check domain name availability for your desired company name. Having a matching domain name can strengthen your online presence.
- Be Future-Proof: Choose a name that will still be relevant as your business grows and, potentially, diversifies.
- Seek Feedback: Get feedback from friends, family and potential customers to gauge how your chosen name is perceived.
- Compliance with Regulations: Ensure that your chosen name complies with the legal requirements set out by Companies House.
Remember that your company name is an essential part of your brand identity. Take your time to ensure that it not only complies with legal requirements but also serves as a strong foundation for your business’s brand and values.
Check Company Name Available
Choosing the right company name is a fundamental yet intricate step for any UK business. It is essential to ensure that the name is unique, complies with legal requirements and reflects your brand’s identity. For a seamless experience in checking and registering your company name, consider utilising the services of Uniwide Formations. We offer a handy tool to Check Company Name Availability, ensuring that your chosen name is compliant and ready for registration. By selecting a strong and meaningful company name you pave the way for a successful business journey. Happy naming!