Business Services Alert: National Business Names Registration starts today - 28 May 2012

A new national regime for the regulation of business names comes into effect today, 28 May 2012. Intended to simplify registrations and reduce costs to businesses, the National Business Names Register allows businesses to register names and manage those registrations online.

Here, partner Luke Mountford and associate Tim Scanlan outline what holders of existing business names and those wishing to apply for new business names must do.

What holders of existing business names must do now

Because the National Business Names Register is intended to be an online register, holders of existing business names should register with the new ASIC Connect Service on ASIC's website to update and manage their registrations.

ASIC has migrated approximately 1.6 million business names and 80 million records from the previous eight state and territory registers. Business name holders should search the ASIC register to ensure that their business name details have been correctly migrated.

Where there are multiple identical business names registered to the same holder, the holder can choose to keep one registration (eg the one with the latest registration expiry date) and cancel the other registrations. Having one registration will reduce the cost of renewals necessary to maintain the name.

If identical business names are registered by different holders in different states, a location identifier will be placed on those names. Business name holders should review the register to ensure that the identifier is appropriate.

What those wishing to register new business names must do now

Those carrying on a business in Australia must register a business name unless one of the exemptions apply, such as where a person conducts the business under their own name.

Applications for a business name will now be made online from the applicant's ASIC Connect Service account. The online form requires the applicant to provide certain details, including an ABN, meaning that the applicant will not be able to register a name without an ABN. If the applicant has applied for an ABN but is still waiting to receive it, they may apply for the business name using the ABN application reference number, but will not be issued the business name until ASIC receives the ABN.

ASIC says that a proposed business name will be subject to 14 automated tests to determine whether it is available to register. The application will receive one of four colour-coded results:

  1. Green: the name is available.
  2. Amber: the name will need to be reviewed by an ASIC staff member. ASIC says that it will endeavour to review and respond to the application within two business days.
  3. Red: the name is not available.
  4. Amber (transfer): the name can only be registered if the applicant provides the unique 'consent to transfer number' provided by the holder of the name, who must have notified ASIC (through the ASIC Connect Service) that it intends to cancel its registration and transfer it to the applicant.

The new regime promises more scrutiny as to names that are 'nearly identical'. The Business Name Registrations (Availability of Names) Determination 2012 provides further guidance on where a name will be considered 'nearly identical', including a list of words which are taken to be the same for the purposes of determining whether a business name is nearly identical. For example, the words 'clinic' and 'medical centre' will be taken to be the same, meaning that the name 'ABC Clinic' would not be able to be registered if the name 'ABC Medical Centre' already exists.

The Determination also provides that a business name is nearly identical to another name if, despite the characters used in the name, it may be pronounced the same as the other name. The example provided in the Determination is that 'Dollar Shop' is the same as '$ Shop'.

It will be interesting to see how accurate the automated tests are in determining when a name sounds the same as another. If an applicant is not satisfied with the decision made, it can ask ASIC to review its decision within 28 days and, ultimately, the decision can be taken to the Administrative Appeals Tribunal.

ASIC has also indicated that the cost of registering a business name will be $30 for one year, or $70 for three years. This is significantly lower than the registration fees under the previous state and territory regimes.

For more information about the impact of the new regime on Australian businesses, please read our earlier alert or contact HopgoodGanim's Business Services and Structuring team.