National system for business name registrations to commence next year, report Donaldson Walsh Lawyers

Donaldson Walsh Lawyers are experienced business advisors, providing advice on a range of issues, and with a new national system for business name registrations to commence in 2011, have outlined the potential consequences for business owners.

As of April next year, the business advisors report that each state of Australia has agreed to refer their business name registration powers to the Federal Government so that a uniform system can be established.

The system will be administered by the Australian Securities and Investments Commission (ASIC), who will also control the registration of company names.

An immediate benefit of this new system for businesses across Australia, the business advisors suggest, will be a simplified online registration system that will also significantly reduce registration costs.

Rolling all existing state and territory business names into the national register will inevitably result in a large number of duplicated names. To differentiate these businesses, the electronic register system will attach a state or territory designation to each.

In addition, all new business name registrations will require that applicants disclose an Australian Business Number (ABN).

Many business name holders will need to decide whether to challenge other operators using an identical business name which passes off as the local registered owner. Business advisors suggest that others may, if well funded, want to buy out similar names to consolidate a position in the market.

The new national system will retain most of the provisions of the state based Business Name Acts, limiting the registration of names if they are deemed offensive, misleading or are under a restricted words regulation.

An appeal process will be established to challenge decisions made by ASIC in allowing a competitor to register a business name or the refusal of a business name.

Business advisors at Donaldson Walsh note it has been proposed that if an applicant for a business name is dissatisfied, on written request ASIC will complete a review of the decision within 28 days.

No fee will apply for this review, though if an individual is dissatisfied with the outcome of a review, there will be costs involved in lodging an appeal. These costs will be refunded if the appeal is successful.

ASIC is currently developing software to create a search system that will allow users to identify registered names. Submissions for additional search criteria to be included in the software can be requested over the next few months.

The new business name registration system will not affect trade marks, domain names or company names.

Franchise systems will need to properly understand the new registration system before it is instituted. An important implication is that the registration of a franchisee’s authorised franchise name, including their region or location, will no longer require the franchisee to provide written permission from the franchisor.

Business advisors state that franchisors and any other holders of a registered business name will now need to be diligent in checking ASIC records to ensure that only authorised franchisees have franchise business names.

ASIC have proposed that within the online system there may be scope for a registered interested party provision which will provide information for franchisors and others to use to check that the integrity and security of important business names is maintained.

The new national business name registration system is still in development, and being an online system some problems should be anticipated when it is instituted. Franchising lawyers at Donaldson Walsh are available to provide legal and business advice on the changes where required.