Yesterday, the process of registering a business name in Australia underwent a significant change when the Australian Securities and Investments Commission launched the new National Business Names Registration Service. The new service, which is effective immediately and has no transitional period, eliminates the need to register a business name in each State. Instead, a business name only needs to be registered once and is registered nationally.
So what does this change mean for you and your clients?
Until yesterday, each State and Territory had its own business name system administered by a State government department (such as Consumer Affairs Victoria). This meant that if you wanted to extend your business beyond your State’s borders, you needed to register in each State in which you were going to trade, and pay for every registration in each State.
The new National Business Name Register is one national register, thus creating the following benefits:
• it simplifies the registration process – only one application is required rather than one for each State
• the registration and renewal fees associated with business names have been discounted under the new system. To register or renew a business name it will cost $30 for one year or $70 for three years
• it alleviates the need to rush to register a business name in multiple States
• it helps prevent unscrupulous persons interstate registering identical business names to a current business and operating as though the businesses were related.
In order to register for a new business name under the new system, you need to hold an ABN. If a business name is to be held jointly, both parties must have an ABN or the registration will only apply to the party with the ABN.
This reflects the Government’s stance that business names are for those who are operating businesses actively, rather than a way for individuals to tie up business names for their own profit or protection. It is possible that ASIC may seek to cancel business names owned by persons who are not conducting an active business and may use ATO data attached to an ABN to determine whether a business is being conducted actively.
What happens to existing business names?
For existing holders of business names, no action is required. On 28 May 2012, existing business names were automatically transferred to the new system without any further action being required. So far, ASIC has transferred 80 million business name records from the States and Territories to the national register. This includes 1.6 million existing business names and 17 million address records.
In the event of a party owning multiple business names across multiple States, each of these registrations will be transferred individually and parties may elect to combine all similar registrations into one registration for their convenience. However, there may be good reasons to retain separate business names, despite their identical nature (for example, if you were operating a business nationally with a view to selling off the business operated in each state separately with a business name).
All existing business names will be issued with a unique ASIC key similar to a corporate key. Clients should ensure that this key is kept in a secure location, as this key will be required to make any changes to the business name registration in the new system.
The new system will allow corporate holders of business names to align the renewal dates for their business name registrations with their ASIC review date. This means that a company with multiple business names can align the renewals of these multiple business names to one date for their convenience.
Clients should however note that where they do not renew their business names within the stipulated time period under the new system, the business name will be automatically cancelled and there is no way to reinstate the business name.
We anticipate that there may soon be a growing business in third parties scooping up popular business names which have expired (via a new registration) and then attempting to sell these business names back to the original owner.
What if there are multiple names on the new register?
If you have registered your business name in several different States, each of those names has been transferred to the ASIC database. You can choose to either:
• renew and keep all of the identical names, or
• cancel all of them except one (this is likely to be easier to administer and cheaper going forward).
You can do this without incurring a fee. Simply check that your details have transferred correctly to the ASIC database.
Castle can help
Castle Corporate are well placed to immediately begin assisting you with navigating the new system, including applying for business names, transferring business name ownership and cancelling business names. Give us a call on 03 9898 6666 and we’ll be happy to help.
The article contained in this newsletter constitutes general advice only and may or may not be applicable to your individual circumstances. You should seek specialist advice from Castle Corporate n relation to your specific circumstances prior to relying on any of the advice contained herein.