Company Law Reform Bill [HL] (25-31)

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL] (25-31)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 5 — A company’s name
Chapter 2 — Indications of company type or legal form
25

62
Continuation of existing exemption: companies limited by shares
(1)
This section applies to a private company limited by shares—
(a)
that on 25th February 1982—
(i)
was registered in Great Britain, and
(ii)
had a name that, by virtue of a licence under section 19 of the
5
Companies Act 1948 (c. 38) (or corresponding earlier
legislation), did not include the word “limited” or any of the
permitted alternatives, or
(b)
that on 30th June 1983—
(i)
was registered in Northern Ireland, and
10
(ii)
had a name that, by virtue of a licence under section 19 of the
Companies Act (Northern Ireland) 1960 (c. 22 (N.I.)) (or
corresponding earlier legislation), did not include the word
“limited” or any of the permitted alternatives.
(2)
A company to which this section applies is exempt from section 60
15
(requirement to have name ending with “limited” or permitted alternative) so
long as—
(a)
it continues to meet the following two conditions, and
(b)
it does not change its name.
(3)
The first condition is that the objects of the company are the promotion of
20
commerce, art, science, education, religion, charity or any profession, and
anything incidental or conducive to any of those objects.
(4)
The second condition is that the company’s articles—
(a)
require its income to be applied in promoting its objects,
(b)
prohibit the payment of dividends, or any return of capital, to its
25
members, and
(c)
require all the assets that would otherwise be available to its members
generally to be transferred on its winding up either—
(i)
to another body with objects similar to its own, or
(ii)
to another body the objects of which are the promotion of
30
charity and anything incidental or conducive thereto,

(whether or not the body is a member of the company).
63
Continuation of existing exemption: companies limited by guarantee
(1)
A private company limited by guarantee that immediately before the
commencement of this Part—
35
(a)
was exempt by virtue of section 30 of the Companies Act 1985 (c. 6) or
Article 40 of the Companies (Northern Ireland) Order 1986 (S.I. 1986/
1032 (N.I. 6)) from the requirement to have a name including the word
“limited” or a permitted alternative, and
(b)
had a name that did not include the word “limited” or any of the
40
permitted alternatives,

is exempt from section 60 (requirement to have name ending with “limited” or
permitted alternative) so long as it continues to meet the following two
conditions and does not change its name.
(2)
The first condition is that the objects of the company are the promotion of
45
commerce, art, science, education, religion, charity or any profession, and
anything incidental or conducive to any of those objects.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 5 — A company’s name
Chapter 2 — Indications of company type or legal form
26

(3)
The second condition is that the company’s articles—
(a)
require its income to be applied in promoting its objects,
(b)
prohibit the payment of dividends to its members, and
(c)
require all the assets that would otherwise be available to its members
generally to be transferred on its winding up either—
5
(i)
to another body with objects similar to its own, or
(ii)
to another body the objects of which are the promotion of
charity and anything incidental or conducive thereto,

(whether or not the body is a member of the company).
64
Exempt company: restriction on amendment of articles
10
(1)
A private company—
(a)
that is exempt under section 62 or 63 from the requirement to use
“limited” (or a permitted alternative) as part of its name, and
(b)
whose name does not include “limited” or any of the permitted
alternatives,
15

must not amend its articles so that it ceases to comply with the conditions for
exemption under that section.
(2)
If subsection (1) above is contravened an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
20

For this purpose a shadow director is treated as an officer of the company.
(3)
A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 5 on the standard scale and, for
continued contravention, to a daily default fine not exceeding one-tenth of
level 5 on the standard scale.
25
(4)
Where immediately before the commencement of this section—
(a)
a company was exempt by virtue of section 30 of the Companies Act
1985 (c. 6) or Article 40 of the Companies (Northern Ireland) Order 1986
(S.I. 1986/1032 (N.I. 6)) from the requirement to have a name including
the word “limited” (or a permitted alternative), and
30
(b)
the company’s memorandum or articles contained provision
preventing an alteration of them without the approval of—
(i)
the Board of Trade or a Northern Ireland department (or any
other department or Minister), or
(ii)
the Charity Commission,
35

that provision, and any condition of any such licence as is mentioned in section
62(1)(a)(ii) or (b)(ii) requiring such provision, shall cease to have effect.

This does not apply if, or to the extent that, the provision is required by or
under any other enactment.
(5)
It is hereby declared that any such provision as is mentioned in subsection
40
(4)(b) formerly contained in a company’s memorandum was at all material
times capable, with the appropriate approval, of being altered or removed
under section 17 of the Companies Act 1985 or Article 28 of the Companies
(Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) (or corresponding
earlier enactments).
45

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 5 — A company’s name
Chapter 2 — Indications of company type or legal form
27

65
Power to direct change of name in case of company ceasing to be entitled to
exemption
(1)
If it appears to the Secretary of State that a company whose name does not
include “limited” or any of the permitted alternatives—
(a)
has ceased to be entitled to exemption under section 61(1)(a) or (b), or
5
(b)
in the case of a company within section 62 or 63 (which impose
conditions as to the objects and articles of the company)—
(i)
has carried on any business other than the promotion of any of
the objects mentioned in subsection (3) of section 62 or, as the
case may be, subsection (2) of section 63, or
10
(ii)
has acted inconsistently with the provision required by
subsection (4)(a) or (b) of section 62 or, as the case may be,
subsection (3)(a) or (b) of section 63,

the Secretary of State may direct the company to change its name so that it ends
with “limited” or one of the permitted alternatives.
15
(2)
The direction must be in writing and must specify the period within which the
company is to change its name.
(3)
A change of name in order to comply with a direction under this section may
be made by resolution of the directors.

This is without prejudice to any other method of changing the company’s
20
name.
(4)
Where a resolution of the directors is passed in accordance with subsection (3),
the company must give notice to the registrar of the change.

Sections 80 and 81 apply as regards the registration and effect of the change.
(5)
If the company fails to comply with a direction under this section an offence is
25
committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
(6)
A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 5 on the standard scale and, for
30
continued contravention, to a daily default fine not exceeding one-tenth of
level 5 on the standard scale.
(7)
A company that has been directed to change its name under this section may
not, without the approval of the Secretary of State, subsequently change its
name so that it does not include “limited” or one of the permitted alternatives.
35

This does not apply to a change of name on re-registration or on conversion to
a community interest company.
Inappropriate use of indications of company type or legal form
66
Inappropriate use of indications of company type or legal form
(1)
The Secretary of State may make provision by regulations prohibiting the use
40
in a company name of specified words, expressions or other indications —
(a)
that are associated with a particular type of company or form of
organisation, or
(b)
that are similar to words, expressions or other indications associated
with a particular type of company or form of organisation.
45

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 5 — A company’s name
Chapter 3 — Similarity to other names
28

(2)
The regulations may prohibit the use of words, expressions or other
indications—
(a)
in a specified part, or otherwise than in a specified part, of a company’s
name;
(b)
in conjunction with, or otherwise than in conjunction with, such other
5
words, expressions or indications as may be specified.
(3)
A company must not be registered under the Companies Acts by a name that
consists of or includes anything prohibited by regulations under this section.
(4)
In this section “specified” means specified in the regulations.
(5)
Regulations under this section are subject to negative resolution procedure.
10
Chapter 3
Similarity to other names
Similarity to other name on registrar’s index
67
Name not to be the same as another in the index
(1)
A company must not be registered under this Act by a name that is the same as
15
another name appearing in the registrar’s index of company names.
(2)
The Secretary of State may make provision by regulations supplementing this
section.
(3)
The regulations may make provision—
(a)
as to matters that are to be disregarded, and
20
(b)
as to words, expressions, signs or symbols that are, or are not, to be
regarded as the same,

for the purposes of this section.
(4)
The regulations may provide—
(a)
that registration by a name that would otherwise be prohibited under
25
this section is permitted—
(i)
in specified circumstances, or
(ii)
with specified consent, and
(b)
that if those circumstances obtain or that consent is given at the time a
company is registered by a name, a subsequent change of
30
circumstances or withdrawal of consent does not affect the registration.
(5)
Regulations under this section are subject to negative resolution procedure.
68
Power to direct change of name in case of similarity to existing name
(1)
The Secretary of State may direct a company to change its name if it has been
registered in a name that is the same as or, in the opinion of the Secretary of
35
State, too like—
(a)
a name appearing at the time of the registration in the registrar’s index
of company names, or
(b)
a name that should have appeared in that index at that time.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 5 — A company’s name
Chapter 3 — Similarity to other names
29

(2)
The Secretary of State may make provision by regulations supplementing this
section.
(3)
The regulations may make provision—
(a)
as to matters that are to be disregarded, and
(b)
as to words, expressions, signs or symbols that are, or are not, to be
5
regarded as the same,

for the purposes of this section.
(4)
The regulations may provide—
(a)
that no direction is to be given under this section in respect of a name—
(i)
in specified circumstances, or
10
(ii)
if specified consent is given, and
(b)
that a subsequent change of circumstances or withdrawal of consent
does not give rise to grounds for a direction under this section.
(5)
Regulations under this section are subject to negative resolution procedure.
69
Direction to change name: supplementary provisions
15
(1)
The following provisions have effect in relation to a direction under section 68
(power to direct change of name in case of similarity to existing name).
(2)
Any such direction—
(a)
must be given within twelve months of the company’s registration by
the name in question, and
20
(b)
must specify the period within which the company is to change its
name.
(3)
The Secretary of State may by a further direction extend that period.

Any such direction must be given before the end of the period for the time
being specified.
25
(4)
If a company fails to comply with the direction, an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the company.
(5)
A person guilty of an offence under this section is liable on summary
30
conviction to a fine not exceeding level 3 on the standard scale and, for
continued contravention, a daily default fine not exceeding one-tenth of level
3 on the standard scale.
Similarity to other name in which person has goodwill
70
Objection to company’s registered name
35
(1)
A person (“the applicant”) may object to a company’s registered name on the
ground—
(a)
that it is the same as a name associated with the applicant in which he
has goodwill, or
(b)
that it is sufficiently similar to such a name that its use in the United
40
Kingdom would be likely to mislead by suggesting a connection
between the company and the applicant.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 5 — A company’s name
Chapter 3 — Similarity to other names
30

(2)
The objection must be made by application to a company names adjudicator
(see section 71).
(3)
The company concerned shall be the primary respondent to the application.

Any of its members or directors may be joined as respondents.
(4)
If the ground specified in subsection (1)(a) or (b) is established, it is for the
5
respondents to show—
(a)
that the name was registered before the commencement of the activities
on which the applicant relies to show goodwill; or
(b)
that the company—
(i)
is operating under the name, or
10
(ii)
is proposing to do so and has incurred substantial start-up costs
in preparation, or
(iii)
was formerly operating under the name and is now dormant;

or
(c)
that the name was registered in the ordinary course of a company
15
formation business and the company is available for sale to the
applicant on the standard terms of that business; or
(d)
that the name was adopted in good faith; or
(e)
that the interests of the applicant are not adversely affected to any
significant extent.
20

If none of those is shown, the objection shall be upheld.
(5)
If the facts mentioned in subsection (4)(a), (b) or (c) are established, the
objection shall nevertheless be upheld if the applicant shows that the main
purpose of the respondents (or any of them) in registering the name was to
obtain money (or other consideration) from the applicant or prevent him from
25
registering the name.
(6)
If the objection is not upheld under subsection (4) or (5), it shall be dismissed.
(7)
In this section “goodwill” includes reputation of any description.
71
Company names adjudicators
(1)
The Secretary of State shall appoint persons to be company names
30
adjudicators.
(2)
The persons appointed must have such legal or other experience as, in the
Secretary of State’s opinion, makes them suitable for appointment.
(3)
An adjudicator—
(a)
holds office in accordance with the terms of his appointment,
35
(b)
is eligible for re-appointment when his term of office ends,
(c)
may resign at any time by notice in writing given to the Secretary of
State, and
(d)
may be dismissed by the Secretary of State on the ground of incapacity
or misconduct.
40
(4)
One of the adjudicators shall be appointed Chief Adjudicator.

He shall perform such functions as the Secretary of State may assign to him.
(5)
The other adjudicators shall undertake such duties as the Chief Adjudicator
may determine.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 5 — A company’s name
Chapter 3 — Similarity to other names
31

(6)
The Secretary of State may—
(a)
appoint staff for the adjudicators;
(b)
pay remuneration and expenses to the adjudicators and their staff;
(c)
defray other costs arising in relation to the performance by the
adjudicators of their functions;
5
(d)
compensate persons for ceasing to be adjudicators.
72
Procedural rules
(1)
The Secretary of State may make rules about proceedings before a company
names adjudicator.
(2)
The rules may, in particular, make provision—
10
(a)
as to how an application is to be made and the form and content of an
application or other documents;
(b)
for fees to be charged;
(c)
about the service of documents and the consequences of failure to serve
them;
15
(d)
as to the form and manner in which evidence is to be given;
(e)
for circumstances in which hearings are required and those in which
they are not;
(f)
for cases to be heard by more than one adjudicator;
(g)
setting time limits for anything required to be done in connection with
20
the proceedings (and allowing for such limits to be extended, even if
they have expired);
(h)
enabling the adjudicator to strike out an application, or any defence, in
whole or in part—
(i)
on the ground that it is vexatious, has no reasonable prospect of
25
success or is otherwise misconceived, or
(ii)
for failure to comply with the requirements of the rules;
(i)
conferring power to order security for costs (in Scotland, caution for
expenses);
(j)
as to how far proceedings are to be held in public;
30
(k)
requiring one party to bear the costs (in Scotland, expenses) of another
and as to the taxing (or settling) the amount of such costs (or expenses).
(3)
The rules may confer on the Chief Adjudicator power to determine any matter
that could be the subject of provision in the rules.
(4)
Rules under this section shall be made by statutory instrument which shall be
35
subject to annulment in pursuance of a resolution of either House of
Parliament.
73
Order requiring name to be changed
(1)
If an application under section 70 is upheld, the adjudicator shall make an
order—
40
(a)
requiring the respondent company to change its name to one that is not
an offending name, and
(b)
requiring all the respondents—
(i)
to take all such steps as are within their power to make, or
facilitate the making, of that change, and
45