What’s in a Name? Understanding the Legalities of Naming

In the words of Dale Carnegie: “A person’s name is to that person the sweetest and most important sound in any language.” No truer words when your business bears your name.

If you own your own business, it is likely that you spent many hours agonising over just the right name. Perhaps your business is named after yourself. Perhaps the name of your business reflects some meaning that is personal to you. Or perhaps you just really like the sound of it. But be open to the very real likelihood that your business venture will undergo a myriad of changes as time progresses. And consider whether you need to put in place any protection with regards to the company name, particularly if it is named after you or if you have a sentimental attachment to the name.

When you run your business in association with someone else, you may want to protect the use of your name. For example, if you are “Mogale” in “Mogale-Jones Consulting”, and you and Jones decide to go your separate ways, you would probably want to have a say in whether or not Jones can continue to use the “Mogale” part.

The High Court has dealt with a situation where two attorneys agreed to practice from shared premises using both their names. Although they weren’t in partnership, they shared facilities and overheads. When they split, the one continued using the joint name. The other objected as he didn’t want his name to be associated with the practice now that he had left. While the court agreed with him in this case, it was noted that there may in certain cases be public policy considerations justifying an impingement on a person’s identity.

A company’s name, and the associated goodwill, is an asset of the business. One way to control the use of the name is to have a written agreement in place. For example you can ensure that your Members’ Agreement or Shareholders’ Agreement contains an additional clause clarifying what is to happen to the name of the business when/if you sell.

When selling your business to someone else, you may want to exclude the business’ name from the sale. Remember that the business name comprises an asset belonging to the business, particularly if the name has been registered. If you want to exclude the name from the sale, you could consider adding a clause to your Sale of Member’s Interest Agreement, Sale of Shares Agreement or Sale of Business Agreement  requiring the purchaser to change the name of the business within an agreed period of time, and restraining the purchaser from operating the business using that name.

Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.