Why The Company Registrar Rejects A Business Name
Several Ugandans are heeding the government’s call for business formalization, especially the ‘simple’ step of registration, but how much one knows before starting the process is vital.
It is a common scenario for a proposed name for a business to be rejected by the authorities at the Uganda Registration Services Bureau for various reasons.
The most common, or what the sensitization campaigns usually mention is that you cannot register a name that is already registered by another person, which is obvious, practical, and logical.
Relatedly, ‘generic’ words in a name can lead to one’s preferred business name being rejected.
Section 16 of the Business Names Registration Act bars words that have a connotation of a relationship with the state or government are not allowed, for example, President, Lord, King, National, Uganda, and Chairman, especially at the beginning.
“The registrar shall not register any business name containing any word or words expressing or implying the sanction, approval or patronage of the Government, the administration of a district, or of any officer thereof except with the approval of the Minister,” it states.
Steven Baryevuga, Senior Communications Specialist at URSB says state titles, the name of a country, and related works cannot be used in a name except at the discretion of the government, adding that those with such names were registered before the Act was amended.
When entrepreneurs set out to do business, they have in mind what they are going to trade in and, according to experts, it is most prudent that the name of the business describes what the business does.
However, other entrepreneurs are taken up by the urge to have as fancy a name as possible, and this can lead to the business not easily attracting customers. They might think it is irrelevant to their needs.
It is therefore advisable, that fancy words are just part of the name, while a word of two describing the business should be included to make the name better and more attractive to the market. However, there are dos and don’ts in registering a business.
URSB advises that at least three name suggestions are submitted after doing a search at URSB for the availability of the names proposed.
URSB says the importance of this is to avoid using a name that is the same as or similar to one already registered. In case the original owner of the name successfully challenges the new business, it can be costly in terms of meeting the legal costs, but also rebranding with another name.
The similarity in a name may also arise from the use of a ‘dominant and unique word’ in a name, while the other words may be different, says Baryevuga. He says that rejecting a name on this ground is also aimed at protecting existing companies or businesses.
In this case, similarity may be either in spelling or pronunciation, or both. After conducting a name search, the officer in charge will reserve your business name having presented proof of Payment of a fee equivalent to 20,000 Shillings.
Upon payment of the required fee, URSB will subject the proposed name to a search in the business registry database.
This is intended to ensure that the name passes the “similarity, defensive, offensive, and desirability” tests for it to be used in business.
The laws also require that the name of the company should not be such that its use constitutes an offence, under any law or is undesirable in the opinion of the Central Government.
These may also include immoral or vulgar names, according to Baryevuga.
The right name can mean the difference between whether or not someone checks out your business, which is why you need to put a lot of thought into your name and make it as unique as possible.
Business startup advisor, OPSTART, advises against using ‘obscure’ words for purposes of enhancing business visibility and making them memorable.
A name difficult to spell or pronounce will be hard to memorize.
“Businesses that choose names that include obscure words or spellings can, unfortunately, get lost in the shuffle. If customers aren’t able to remember your business name, they can’t locate you and may end up going to a competitor,” says OPSTART.
The experts also advise triple-checking all the information you enter when filling out a form because a typing error can lead to a name being rejected.
Global business magazine, Forbes, advises that it is important to go beyond the legal requirements when picking a name.