It is quite common for businesses to register their company name with the Companies and Intellectual Property Commission (“CIPC”), and then to carry on business under a completely different name known as their “trading as” name – this was especially prevalent when it was still practice to purchase shelve companies or where a company wants to trade under one of its brands.
We are aware that there is some confusion amongst not only everyday businesspeople, but also legal practitioners surrounding the status and legality of these “trading as” names in South Africa.
The confusion stems from sections 79 to 81 of the Consumer Protection Act, 68 of 2008 (“the CPA”) which, on the face of it, require “trading as” names to be registered to be valid – however, this is untrue (for now at least).
Section 79 of the CPA states that a person (which includes a company) must not carry on business under any name except the person’s full name as recorded in their identity document, their registered name in the case of a company, or a business name registered to, and for the use of, that person in terms of section 80 of the CPA or any other public regulation.
The term “business name” is defined in the CPA as “a name under which a person [or company] carries on a business other than the person’s full name [or registered company name]”. “Business names” in the CPA therefore clearly refer to the more commonly known as “trading as” names when such names are not the registered names as registered with CIPC.
However, many read these sections without being aware of the provisions set out in Schedule 2 Item 5 of the CPA (“Schedule 2”).
Schedule 2 stipulates that sections 79 to 81 of the CPA do not come into effect until a date determined by the Minister by notice in the Gazette and that the Minister must publish such notice at least six months before the notice is to take effect.
Schedule 2 further stipulates that the National Consumer Commission may not enforce section 79 of the CPA against anyone if that person (or company) had registered their business name in terms of any public regulation or repealed law or was conducting business under that name for a period of at least one year before the date on which section 79 takes effect.
We have scoured our databasis, government gazettes and the internet, and found that the Minister has not published such a notice, meaning that sections 79 to 81 of the CPA remain inoperative.
Therefore, as it stands today, “trading as” names remain legally permissible without any requirement to have them registered - In any event, registering a “trading as” name with CIPC is currently impossible, so that should have been a dead giveaway. You can however register a "defensive name" with CIPC. Defensive name registrations with CIPC are valid for 2 years and can be renewed. This prevents other from using a similar name for a company or close corporation.
Furthermore, even if sections 79 to 81 of the CPA come into operation soon, you will be exempt from the registration requirement if you have traded under your “trading as” name for a period of at least a year at the time that the provisions take effect.
We will dive further into the implications of these provisions for businesses and business transparency as soon as the Minister publishes the necessary notice – for now, despite what several published articles (and even the Western Cape Government website: https://www.westerncape.gov.za/red-tape-reduction/our-guides-and-resources/starting-your-own-small-business/your-business-and-law) tell you. We have even seen practicing attorneys threaten clients for contravening section 79 and 81 of the CPA due to them being unaware that these requirements are not yet effective. You therefore do not have to spend your time and energy worrying about registering your “trading as” name in terms of the CPA (not yet anyway).
At Van Zyl Scheepers Attorneys, we stay on top of all the recent legal developments. Contact us today if you have any questions about your business’ compliance or would like to register defensive names with CIPC to ensure that no one tries to abuse your business reputation by registereing a name similar to your trading name.
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