The recent introduction of the new national Business Names Register has significantly changed how business names are registered, cancelled and transferred.
The Business Name Registration Act 2011 (Cth) (the Act) established the new national business name register, operated by ASIC, and transferred across all existing state-based business name registrations as of 28 May 2012. Paper forms have been abandoned and the registration, transfer and cancellation of business names is now done online through ASIC’s new “ASIC Connect” website. The rollover to the new national register has not been without problems as ASIC is currently experiencing a high volume of business name transactions resulting in delays in processing times. These delays, together with the new and unfamiliar online processes for transferring a business name, could cause problems for parties, e.g. at completion of a sale of business.
A new feature of the Act is that ASIC must give 28 days’ notice to holders of registered business names prior to cancellation. ASIC states that this is designed to ensure that no cancellations occur to a business name without the knowledge of all holders, however, the practical implication is that most dealings with registered business names, especially in the context of transferring business names as part of a sale of business, are now subject to statutory delays.
The Act, however, does not contain a formal transfer procedure. Instead, the holder of a business name effectively cancels their registration, and the purchaser is given a priority period (i.e. the 28 day cancellation notice period) during which they can register the business name before it becomes generally available to the public.
The first step to acquire a registered business name is to obtain the “ASIC Key” associated with that name. This is an unique identifier of the business name that is automatically issued for each new registration and renewing registration after 28 May 2012 (or may be issued on request). An ASIC Key is required to deal with a business name. The high volume of business name transactions has currently overwhelmed ASIC’s business name register. It is advisable, therefore, for a vendor who does not have an ASIC Key to request one as soon as possible, in order to avoid any delays.
Once the ASIC Key has been obtained, the vendor can log into ASIC Connect and lodge the online “maintenance smart form” to cancel and consent to the transfer of the business name. ASIC will issue a “consent to transfer number” that the vendor will need to provide to the purchaser at completion. As ASIC is required to give 28 days’ notice before the cancellation is finalised, the name will remain registered during this time and will be unavailable for registration. However, upon completion of the sale of business, the purchaser should obtain the “consent to transfer number” and can use it to pre-register the unavailable name. Once the 28 day cancellation period expires, the business name will be automatically registered to the purchaser.