If you are thinking of selling your business then there’s a good chance that you’ll need to transfer your Business Name along with it.
While this used to be a relatively simple process when the Business Name registry was controlled by the NSW Department of Fair Trading the migration to ASIC has presented a number of difficulties of which you should be aware.
You should first note that if you had previously registered your name under the state system your registration remains in effect. You will however need to obtain an “ASIC Key” to be able to deal with it. Your previous registration number will not be sufficient. You can request the “ASIC Key” through ASIC’s website. This will be posted to the registered address for the business. Experience suggests this can take 5-10 business days.
Should you need to register the name under ASIC there are a few points to be aware of:
- The system is wholly online. You are not able to fill out a paper form for registration.
- The current online system automatically checks for a similar business or company name and blocks registration if one is found. However, it cannot recognise if a duplicate company name is also the name seeking registration. The effect is that if you seek to register a business name the same as your company name your application will be blocked and you will need to apply for permission to proceed. This takes up to 28 days.
- Once you have lodged the registration application be careful to review all communications from ASIC, taking special care to open all attachments and links, as the form emails sent do not always contain the information required.
- Once your name has been registered and you are issued with the “ASIC Key” be sure to keep it in a safe place. You don’t want to have to apply for it again.
Once you are in possession of your “ASIC Key” you then need to apply for a transfer. This is no longer done by means of a form that you sign and hand over to the proposed transferee. You must cancel your existing registration, noting that the reason is a transfer of the business name. ASIC will then take up to 28 days to process your request. This request is irrevocable and as such should never be lodged prior to completion of your contract for sale of business.
Once the application is processed you will be provided a “Consent to Transfer Number”. You hand this to the transferee who has to wait a mandatory 28 day period before being able to register the name. They have up to 4 months to do so or the name may be registered by another party.
This all obviously presents a difficulty for contracts for sale of business. These generally provide that a business name will be transferred on completion; however, under the new system this is impossible. You should ensure when you enter into such a contract that there is a special condition allowing for the above delays, otherwise you are likely to find yourself in breach and liable for the consequences.
We can assist you with these issues. We highly recommend taking as many of the above steps as possible and as early as possible to alleviate the risk of delay or difficulty in finalising your sale. Please contact our commercial team if you would like more advice.