Consumer Protection Act & Business names
Sections 79 to 82 of the Consumer Protection Act (“the CPA”), which deals with business
names, proposes a significant change to existing practice by making the registration of
business names compulsory. Therefore, the practice whereby individuals, companies or
close corporations trade under names other than their registered names will no longer be
allowed.
Date of compliance delayed
Note that the aforesaid sections will only become effective on a date that is still to be
determined by the Minister, which must be at least 18 months from the general effective
date of the CPA (being 31 March 2011). Therefore, these may come into force any date
after 30 September 2012, as proclaimed. Despite this, and as with so many other sections
of this Act, it is prudent to get one’s house in order before the sections become operative
in order to avoid any difficulties down the line.
What does the Act require?
Section 79(1) of the CPA provides for the proper identification of suppliers and states that
any person must not carry on business, advertise, promote, offer to supply or supply any
goods or services, or enter into a transaction or agreement with a consumer under any
name, except:
a) under the person's full name as recorded in any identity document or any other
recognised identification document, in the case of an individual; or
b) registered in terms of a public regulation, in the case of a juristic person (for
example, a company or close corporation); or
c) a business name registered to, and for the use of, that person in terms of Section
80, or any other public regulation.
Simply put, the effect of the above is that Joe Blogs, or a firm of Blogs and Blogs, will notbe permitted to do
business as “Blogs Catering” unless it has been duly registered as a business name.
Similarly, ABC Events (Proprietary) Limited will not be allowed to use, for example, the
name “ABC Conferencing” for its conferencing division without a separate registration of
that particular name. Consequently the present practice whereby a Company or a Close
Corporation carries on business as “ABC Events (Proprietary) Limited, trading as ABC
Conferencing” will no longer be permitted once Section 79 of the CPA becomes effective.
For the sake of clarity, the registration of a name will only be mandatory where a trading
name is different to the name of the business owner. Therefore, one shall still be able to
trade under one’s own name (in terms of one’s identity document) without registering
same. Likewise, one’s Company or Close Corporation may trade under its own registered
name. Only where the trading name differs from the individual or the owner’s name,
registration will be obligatory and therefore it will be unlawful to do business in any way
under a non-registered name. However, Section 80 of the CPA does allow a person to
register any number of business names that are used or will be used in carrying on
business.
Moreover, it is important to note that, in terms of Section 81 of the CPA, a business name
must not be misleading in any way and may not be the same as, or confusingly similar to
an entity already registered under the Companies Act, the Close Corporations Act or the
Co-operatives Act. In addition to this, the name may also not be the same as or similar to
a registered trade mark belonging to another person.
Penalties
Should an individual or an entity conduct business under a trading name that has not
been duly registered, the National Consumer Commission (“the Commission”) may issue
a compliance notice, with the effect that business must be discontinued under that name.
However, they may not take any action to enforce the provisions of Section 79(1) at any
time against a person for the use of a business name, if that person:
a) had registered that business name before 31 March 2011 in terms of any public
regulation other than a repealed law; or
b) was actively conducting business under that business name for a period of at
least one year before the date on which Section 79 takes effect.
Despite the above, it is strongly advised that attention should be given to the aforesaid
and that any business name must be registered either as:-
i. a business name with the Commission; or
ii. a defensive name, which must be renewed every two years to guarantee due
protection and the future use of such name.
In conclusion, such name registration will provide crucial protection to its proprietors, and
despite the fact that the above provisions are not yet effective, businesses need to take
heed thereof and prepare accordingly.
*INFORMATION RECEIVED FROM STBB PROPERTY LAW UPDATE NEWSLETTER |
