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COMPANIES TRIBUNAL OF SOUTH AFRICA

 

 

Case Number: CT00500ADJ2020

 

In the matter between:

 

LBK CONSULTING (PTY) LTD                                      Applicant

 

and

 

COMPANIES AND INTELLECTUAL                             Respondent

PROPERTY COMMISSION

 

 

Presiding Member                                          :           Khashane La M. Manamela (Mr.)

 

Date of Decision                                             :           17 December 2020

 

Summary: Application for the variation (or review and setting aside) of the decision of the Companies and Intellectual Property Commission (the CIPC) refusing to reserve a name applied for by the applicant – the CIPC erroneously purporting to act in terms of section 11(2)(b) of the Companies Act 71 of 2008 (the Companies Act) refused to reserve the name LBK GROUP on the basis that the name is confusingly similar or in conflict with another identical name LBK GROUP, already registered in favour of a third party and appearing on the CIPC’s name register – held that CIPC ought to have refused to register the name on the basis of section 12(2) of the Companies Act as the name is the “same as” or identical to an existing name on the CIPC’s register and therefore proscribed by section 11(2)(a) of the Companies Act – held that application is dismissed.

 

 

DECISION (Reasons and an Order)

 

 

Khashane La M. Manamela

 

Introduction

 

[1]          The applicant, LBK Consulting (Pty) Ltd, seeks in terms of this application the review and setting aside of a notice or decision of the respondent, the Companies and Intellectual Property Commission (the CIPC), refusing to reserve a company name proposed or applied for by the applicant. The applicant sought to reserve the company name LBK GROUP, but the CIPC refused to reserve the name on the ground that the proposed name is confusingly similar to or “conflicts” with another name LBK GROUP, already appearing on the CIPC’s name register.

 

[2]          The application is unopposed by the CIPC and, therefore, is before me by way of an application for default order. The documents in the application were reportedly served by way of electronic mail on the CIPC’s functionaries.[1] I am satisfied that the application was adequately served, as contemplated by regulation 153[2], read with regulation 7,[3] of the Companies Regulations, 2011 (the Regulations). The latter regulation deals with methods for delivery of documents envisaged by the Regulations and the Companies Act 71 of 2008 (the Companies Act). Also the period of 20 business days allowed to respondents, such as the CIPC, to file an answer to applications before this Tribunal has already lapsed.[4] Therefore, the application for a default order before me is ripe for hearing or determination in terms of the Regulations.

 

Brief background (incorporating the respondent’s or the CIPC’s decision)

 

[3]          A brief narration of the issues in the background of this matter would assist in putting in context the relief sought in terms of this application. This would be derived from the documents solely furnished by the applicant, as record for the review.

 

[4]          On 01 July 2020, Mr Moshabane Brian Kgariya, acting on behalf of the applicant, lodged an application to reserve a company name in terms of the CIPC’s Form COR 9.1. The name “LBK GROUP” was proposed for reservation. The next day, on 02 July 2020, the CIPC issued to Mr Kgariya Form COR9.5 notifying him of its refusal to reserve the name proposed by him. The notice read as follows in the material part:

 

“Notice Refusing Name Reservation

We received a COR9.1 from you dated 01/07/2020.

The names proposed on the form were compared to our database and the results of the comparison are listed below:

1     LBK GROUP      Confusingly Similar Name Exists The following conflicts were identified: LBK GROUP

 

We regret to inform you that no name has been approved for your use for the following reason(s):

Unfortunately none of your name/s can be approved due to the fact that it is confusingly similar to name/s already registered within the meaning of our name register in particular in terms of Sec 11 (2) (b) of the Companies Act”[5]

 

[5]          The CIPC also informed the applicant in terms of the notice that the applicant may review the CIPC’s decision with this Tribunal under section 160 of the Companies Act[6] and regulation 13[7] of the Regulations. But after receipt of the notice the applicant appears to have attempted to engage the relevant functionaries within the CIPC regarding the name reservation, but in vain. According to the CIPC its notice “already provides the reasons for the rejection” meaning that no further correspondence shall be entered into. Consequently, the applicant launched this application in November 2020.

 

Applicant’s grounds for review

 

[6]          The applicant disputes the CIPC’s decision or reasons for refusal to reserve the impugned name. It is argued on behalf of the applicant that the applicant had previously successfully applied for and subsequently registered the following companies bearing the letters or acronym LBK: LBK Capital, LBK Logistic and LBK Resources. These entities have the same directors and shareholders and form part of a “Group” of companies, the applicant, hence the application for the impugned name.

 

[7]          Further, a company search of the CIPC’s records or register of names conducted by the applicant revealed existence of the following names: LBK Investment Holdings, LBK Holdings and PPP LBK Holdings. The applicant further disputes or denies that the name LBK Group is confusingly similar as asserted by the CIPC in its notice.

 

Applicable legal principles and the facts of this matter (a discussion)

 

[8]          Reservation of names is governed by section 12 of the Companies Act. Section 12 reads in the material part:

“(2) The Commission must reserve each name as applied for in the name of the applicant, unless –

(a)     the applicant is prohibited, in terms of section 11(2)(a), from using the name as applied for; or

(b)     the name as applied for is already reserved in terms of this section.

 

(3)     If, upon reserving a name in terms of subsection (2), there are reasonable grounds for considering that the name may be inconsistent with the requirements of-

(a) section 11(2)(b) or (c)-

(i)        the Commission, by written notice, may require the applicant to serve a copy of the application and name reservation on any particular person, or class of persons, named in the notice, on the grounds that the person or persons may have an interest in the use of the name that has been reserved for the applicant; and

(ii)      any person to whom a notice is required to be given in terms of subparagraph (i) may apply to the Companies Tribunal for a determination and order in terms of section 160.”

 

[9]          It is clear from the above that section 12(2), among others, enjoins the CIPC to “reserve each name as applied for … unless the applicant is prohibited, in terms of section 11(2)(a), from using the name as applied for; or … the name as applied for is already reserved” in terms of section 12. There are two grounds of prohibition or refusal to reserve a proposed company name suggested by section 12(2).

 

[10]      Firstly, section 12(2)(a) proscribes reservation of name applied for where the applicant for such a name is prohibited by section 11(2)(a) from using the name as applied for. Section 11 of the Companies Act deals with criteria for names and its subsection 11(2) reads in the material part:

“(2) The name of a company must-

(a)     not be the same as -

(i)        the name of another company, domesticated company, registered external company, close corporation or co-operative;

(ii)      a name registered for the use of a person, other than the company itself or a person controlling the company, as a defensive name in terms of section 12(9), or as a business name in terms of the Business Names Act, 1960 (Act No. 27 of 1960), unless the registered user of that defensive name or business name has executed the necessary documents to transfer the registration in favour of the company …

(b)     not be confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a) unless -

(i)        in the case of names referred to in paragraph (a)(i), each company bearing any such similar name is a member of the same group of companies;

(ii)      in the case of a company name similar to a defensive name or to a business name referred to in paragraph (a)(ii), the company, or a person who controls the company, is the registered owner of that defensive name or business name …”

 

 

[11]      Secondly, section 12(2)(b) proscribes reservation of name applied for where such name “is already reserved” in terms of this provision. Put differently, the name applied

for reservation cannot be reserved if it has already been registered for use in favour of another person and appears on the CIPC’s name register.

 

[12]      This then brings us to the name applied for reservation by the applicant and turned down by the CIPC. To recap: the applicant applied for reservation of the name “LBK GROUP”. The CIPC refused to reserve the name applied for by the applicant on the bases of existence of a “confusingly similar name” and/or conflicts identified due to the following name already appearing on the CIPC’s name register: “LBK GROUP”. The CIPC motivated the refusal by stating that the applicant’s proposed name “is confusingly similar to name/s already registered within the meaning of [the CIPC’s] name register”. The CIPC appear to have relied on section 11(2)(b) of the Companies Act in this regard.

 

Conclusion

 

[13]      The CIPC’s reasons or grounds – with respect – appear erroneous, in as much as they are unnecessary under circumstances of this matter. The name applied for reservation by the applicant (i.e. LBK GROUP) is clearly “the same as … the name of another company, domesticated company, registered external company, close corporation or co-operative” (i.e. LBK GROUP). Therefore, the name is prohibited for use by the applicant in terms of section 11(2)(a), read with section 12(2)(a), referred to above. Further, the impugned name is already reserved for use (or registered) by another person and appears on the CIPC’s register of names. This is confirmed by the CIPC’s notice (i.e. Form COR9.5) whose contents the applicant sought to review and set aside.

 

[14]      Therefore, there was no need to rely on the provisions of section 11(2)(b) that the name sought to be reserved is confusingly similar to an identical name already on the CIPC’s register, as the applicant purported. The two names are identical or the “same as” each other and therefore proscribed by section 11(2)(a). There is no room for application of any other provision when refusing the name. The reliance upon an incorrect provision may actually have precipitated this application. If it is any consolation to the applicant, I will direct that this decision be brought to the attention of the CIPC or its Commissioner in a quest to avoid or limit recurrence of this type of decisions or the recrafting of what appears to be a generic notice to applicants of reservation of names.[8]

 

[15]      Despite this incorrect reliance or citation of the statutory provision or ground for refusal, which appears to be generic,[9] the application cannot succeed. The applicant cannot be allowed to reserve the name for use when this would clearly be an affront to the sections 11(2)(a) and 12(2) of the Companies Act. Therefore, the application would fail and an order will be made to confirm this.

 

Order

 

[16]      Therefore, I make an order as follows:

 

a)            the application is dismissed, and

 

b)            the registrar or recording officer of the Companies Tribunal is requested to send a copy of this order to the Companies and Intellectual Property Commission and/or its Commissioner by not later than 15 January 2021 for noting, especially what is stated in paragraphs [13] – [15] above.

 

 

Khashane La M. Manamela (Mr.)

Member, Companies Tribunal

 

17 December 2020

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