Companies House’s New Powers to Challenge and Change Company Names

Stronger checks on the Company Names to maintain integrity of the Registrar.

The Economic Crime and Corporate Transparency Act (ECCTA 2023) started its gradual roll out on the 4th of March 2024. The enhanced new powers granted to the Companies House’s allowed the Registrar of Companies to carry out more thorough checks on the proposed names for new business entities (business entity would cover both limited companies and limited liability partnerships) that are applying to be registered in UK – England & Wales, Scotland or Northern Ireland – as well as the names of Companies already registered.

All this is done in an attempt to increase the accuracy and integrity of the information held on the Registrar’s records, as well as to prevent fraud and economic crime, and to provide UK’s business environment greater transparency and better representation.

It all might sound a little confusing, but here's a breakdown of some key points you should keep in mind:

Stronger Checks:

Companies House can now perform more thorough checks on company names to ensure they are not misleading or potentially used for fraudulent purposes.

Challenging misleading names:

Companies House can now reject proposed company name or challenge a name of already registered company if they believed to give a false or misleading impression to the public. This includes names that:

• 1. Suggest a connection to a UK government department or international organization;
• 2. Are likely to be confused with an existing company name;
• 3. Contain offensive or sensitive language.

With the new powers, Companies House can now reject registration of a company name on the following grounds:

• ‣ False or Misleading Impression: Names that could mislead the public about the company's activities or affiliations are subject to rejection;
• ‣ Intended to Facilitate Fraud: If Companies House has reason to believe the name is intended to be used for fraudulent purposes, they can reject it;
• ‣ Computer Code: Names solely comprised of computer code or containing code that could be obstructive are not allowed;
• ‣ Foreign Government Connection: Names suggesting a connection to a foreign government or international organization (unless it's true) can be rejected.

To maintain records of the Companies Registrar in a due order, Companies House has been grated the power to “Direct Name Change”. What does it mean? Well, simply put, Companies House can now instruct Companies to change their names if they violate any of the regulations mentioned above.

If the company doesn't comply within 28 days of the notice, the Registrar of Companies can assign Company a new name, potentially the company registration number.

Suppression During Dispute:

While a company responds to a name change direction, Companies House can suppress the old name from the public register, which may cause problems to the business.

Potential benefits:

• ‣ Improved transparency: By preventing misleading names, the public can have greater confidence in the legitimacy of registered companies;
• ‣ Reduced fraud: Making it harder to use company names for fraudulent purposes can help protect consumers and businesses;
• ‣ Enhanced data quality: A cleaner company register with accurate information benefits all stakeholders.

It might seem a bit daunting, and any entrepreneur looking to start a business in the UK should be very careful in their consideration for a new company name. To make things a little bit easier, we have highlighted a few important things to keep in mind.

Things to consider for businesses:

• ‣ Careful name selection: When choosing a company name, ensure it's clear, descriptive, and doesn't fall under the restricted categories;
• ‣ Checking availability: Before registering, check proposed company name using our FREE NAME CHECKING TOOL service to confirm the name is available;
• ‣ Potential name challenges: Be prepared for the possibility that Companies House might challenge your chosen name, requiring you to choose another one.

Overall Impact:

Here, at Coddan, we strongly believe that recent changes to UK Company Legislation are long overdue steps in a right direction. These new powers aimed at improving the transparency and integrity of the UK Company Registrar by preventing misleading or fraudulent names, will benefit both – legitimate businesses and the public by reducing the risk of confusion and financial scams.

And, as always, should you have any questions regarding anything that was mentioned in this particular article or any questions regarding setting up a business in the UK, selecting a correct business structure, choosing an appropriate business name, registration of Corporation Tax or VAT or annual compliance services of filing your company's Annual Confirmation Statement, get in touch with us by phone +44 207 935 5171, Submit A Consultation Request Form or drop us an email!