Is it still possible for a business to use a trading name other than its registered name?

It is not uncommon for a company to use a trading name which is not the same as the registered name of the company, as recorded at the Companies and Intellectual Property Commission (“CIPC”).

However, in terms of chapter 4 of the Consumer Protection Act 68 of 2008 (“CPA”) and more specifically in sections 79 to 81, the legislator made provision that companies are no longer allowed to trade under names which are not similar to their registered names. The provisions of section 79(1) stipulate that:

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 a 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.

It is necessary to note that section 79 must be read in conjunction with Item 5 of Schedule 2 of the CPA. Item 5 of Schedule 2 stipulates that sections 79 to 81 will come into operation on such date as published by the Minister of Trade and Industry in the Government Gazette. Despite the fact that the CPA came into effect during 2008, the Minister has not published the date on which using trading names in their current form will no longer be permitted.

The fact that the date of commencement has not been made public yet, makes the use of trading names still an option. However, it should be taken into account that as soon as the Minister announces the date on which sections 79 to 81 in the CPA will take effect, all companies using trading names, will have to register those names at the CIPC.

Should companies not comply with the provisions of the CPA once the aforesaid date is known, the Consumer Commission can penalise companies by issuing fines. It is at this time unsure what amount such a fine may be.

In conclusion, it is advisable to consider not using a trading name in isolation anymore and to instead register a trademark and/or name of the company which can be used as the trading name as well. Should the provisions of sections 79 to 81 of the CPA come into operation it would therefore not result in situations where trading names will need to be changed and/or where parties would need to adhere to strict time periods in order to avoid heavy penalties.