Sections 78 to 81 of the CPA introduce changes to the way business names can be used, and although, apart from sections 79(3)(c) and (4), these provisions are not yet in force (as the Minister of Trade and Industry ("the Minister") has not yet announced the date of commencement) it is necessary to take note of the changes they will bring and the effect these changes will have on South African businesses.

Although at present, a business is allowed to trade under a trading name which is different to the actual registered name without having to register such trading name (example "Wholesale Traders (Pty) Ltd t/a Auto Electric"), sections 78 to 81 introduce new requirements relating to the use and registration of such trading names.

In terms of section 79(1):

"a 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) The person’s full name as-
i. Recorded in an identity document or any other recognised identification document, in the case of an individual; or
ii. Registered in terms of a public regulation, in the case of juristic person; or
b) A business name registered to, and for the use of, that person in terms of section 80, or any other public regulation."

The registration of a business name will therefore only be mandatory where a trading name is different to the name of the person carrying on any business or activity contemplated in section 79, whether such person is a natural or juristic person.  Therefore, a company wanting to trade under a different name to the company's actual registered name will have to register such name in terms of the CPA.

In essence, it would appear that these provisions aim to ensure that a consumer is always aware of the identity of suppliers he is dealing with as section 79(2) goes on to provide:

"A person doing anything contemplated in subsection (1) must include the following particulars on any trade catalogue, trade circular, business letter, order for goods, sales record or statement of account that the person issues:
(a) The name, title or description under which the business is carried on;

(b) a statement of the primary place at which, or from which, the business is carried on; and

(c) if the activity is carried on under a business name, the name of the person to whom that business name is registered."

The CPA does however provide certain relief from the requirement to register business names.  In particular, the National Consumer Commission ("the Commission") will not be entitled to enforce the provisions of section 79(1) against a person who has been actively conducting business under a business name for a period of at least one year before the date on which these specific provisions take effect.  The same relief is also granted to persons who have already registered their business name in terms of any other public regulation (which has not been repealed), prior to the general effective date of the CPA, being 31 March 2011 (such as registration of a name as a trade mark in terms of the Trade Marks Act, 194 of 1993).  

Although one cannot be certain at this stage when these provisions will come into effect, the CPA provides that the Minister must publish a notice at least six months prior to the effective date of the business name provisions.

Sections 79(3)(c) and (4), which are the only provisions relating to business names currently in force, provide recourse for persons who have already registered business names against persons wishing to trade under the same name, and further set out the powers which are granted to the Court to force suppliers to adhere to these provisions.  Section 80 of the CPA requires a person registering a business name to file a notice with the Registrar of Companies in the prescribed manner and form, and with payment of the prescribed fee. 

Section 81 of the CPA sets out the criteria for business names.  In terms of section 81, business names must not be misleading and must not be confusingly similar to, or the same as the name of a juristic person already registered under the Companies Act, Close Corporations Act, or Co-Operatives Act.  Furthermore, business names must not be the same as, or similar to a registered trade mark, well-known trade mark, or a mark in respect of which an application has already been filed.

Despite these provisions not having come into force yet, it would be advisable for any business to consider the registration of a business name either in terms of the CPA, alternatively as a defensive name in terms of the Companies Act.  In this way, the business owner will be afforded the necessary protection.

Casey Austin, Candidate Attorney

Contact: 031 575 7329 or caustin@wylie.co.za