Investment company ordered to change name under Companies Act
The Companies Act (71/2008) came into effect on May 1 2011 and brought about substantial changes in the procedure for objecting to company names in South Africa. Previously, under Section 45 of the 'old' Companies Act (61/1973), any person could lodge an objection to a company name on the basis that the company name was “calculated to cause damage to the objector or [was] undesirable”.
Section 11 of the new Companies Act sets out the criteria for company name objections. Section 11 deals with a range of requirements of which, from a trademark perspective, Sub-sections 11(2)(a)(iii), 11(2)(b)(iii) and 11(2)(c)(i) are the most relevant. Section 11(2)(a)(iii) reads:
“The name of a company must not be the same as... a registered trademark belonging to a person other than the company, or a mark in respect of which an application has been filed in the Republic for registration as a trademark or a well-known trademark as contemplated in Section 35 of the Trademarks Act 1993 (Act 194 of 1993), unless the registered owner of that mark has consented in writing to the use of the mark as the name of the company.”
The word 'same' is unfortunately not defined in the new Companies Act, but must be interpreted as meaning identical.
Section 11(2)(b)(iii) reads:
“The name of a company must... not be confusingly similar to a name, trademark, word or expression contemplated in Paragraph (a) unless... in the case of a name similar to a trademark or mark referred to in Paragraph (a)(iii), the company is the registered owner of the business, name, trademark or mark, or is authorised by the registered owner to use it.”
Section 11(2)(c)(i) reads:
“The name of a company must... not falsely imply or suggest, or be such as would reasonably mislead a person to believe incorrectly, that the company is part of or associated with, any other person or entity.”
While Section 11 sets out the criteria for company name objections, Section 160 regulates the dispute procedure. In terms of the old Companies Act, an objection to a company had to be brought within one year of the registration of the company. In terms of the new Companies Act, an objection to a company name “may be made on good cause shown at any time after the date of the reservation or registration of the name that is the subject of the application”. This takes away some pressure on an objector and allows the company name objection to be brought at any time, although an objection would need to be brought within a reasonable period.
In terms of Section 160(1), a party may apply to the Companies Tribunal for a determination on whether a company name satisfies the requirements of the Companies Act (as set out in section 11). The Companies Tribunal may, if it finds that a company name does not meet the requirements of the act, make an administrative order against the company requiring it to choose a new company name. The problem in terms of the old Companies Act was that the registrar was empowered to make an order that a company change its name, but was not empowered to enforce that order – this meant that a company could be forced to do so only by a subsequent court order.
In a decision delivered by the Companies Tribunal on March 13 2014 in the matter of Massachusetts Financial Services v MFS Investments (Pty) Limited, the Companies Tribunal had to decide whether the name MFS Investments (Pty) Limited was undesirable and did not satisfy the requirements of Section 11 of the new Companies Act.
Massachusetts Financial Services was the registered proprietor of the following trademarks:
- MFS INVESTMENT MANAGEMENT (and design) (No 2006/29337) in Class 36 in respect of “financial services for investment companies, namely establishing mutual funds for others; investment advisory and management services; administration of mutual funds; mutual fund distribution services”;
- MFS (No 2006/29338) in Class 36 in respect of “financial services, namely, mutual funds and investment, advisory, management, administrative and distribution services for investment companies”; and
- MFS MERIDIAN (No 2006/29339) in Class 36 in respect of “investment management services and mutual funds”.
Massachusetts argued that the company name MFS Investments (Pty) Limited offended against the provisions of Sections 11(2)(b) and 11(2)(c), as discussed above, and requested an order that MFS Investments change its name to a name that did not contain the element 'MFS'.
Massachusetts argued that the name MFS Investments (Pty) Limited, specifically the suffix 'Investments', alludes to the goods and services for which Massachusetts had obtained registration. Massachusetts also argued that the confusion which was likely to occur included a possibility that an average member of the public may think that MFS Investments and Massachusetts were so-called “horses from the same stable”, or a part of the same group, when that was definitely not the case.
MFS Investments did not respond to the objection and Massachusetts was forced to bring an application in terms of Regulation 153, which is akin to a default judgment application in the High Court.
The Companies Tribunal found that the name MFS Investments (Pty) Limited offends against the provisions of Section 11(2)(b) and 11(2)(c) of the act. It found that the name is confusingly similar to the registered trademarks of Massachusetts and that the name could reasonably mislead a person to believe, incorrectly, that MFS Investments is part of, or associated with Massachusetts. Accordingly, the Companies Tribunal ordered MFS Investments to change its name and to file a new memorandum of incorporation.
Andre du Plessis, under the supervision of Megan Reimers, Spoor & Fisher, Pretoria
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