Business Name Reservation is a crucial first step in establishing a Business Entity in Nigeria. It involves reserving a specific name for a business before formal registration with the Corporate Affairs Commission (CAC), the regulatory body responsible for incorporating and regulating businesses in Nigeria.

Understanding Business Name Reservation, Restricted, and Prohibited Names under CAMA 2020

This article delves into the essential provisions related to name reservation, restricted names, and prohibited names under CAMA 2020.

What is Business Name Reservation?

Business Name Reservation refers to the process of reserving a specific name for a business before registering it with the appropriate government agency. It is a preliminary step taken by entrepreneurs or business owners to secure a unique and distinctive name for their business entity.

The Business Name Reservation process is typically carried out with the Corporate Affairs Commission (CAC), which is the regulatory body responsible for the incorporation and regulation of businesses in Nigeria.

Purpose and Process

The primary purpose of Business Name Reservation is to secure a unique and distinctive name for your business entity. This process:

  1. Ensures the proposed name is available and not already in use
  2. Prevents others from registering the same name during the reservation period
  3. Is a preliminary step before full business registration

 

Duration and Exclusivity

  • As per Section 31(2) of CAMA 2020, a name can be reserved for up to 60 days
  • During this period, no other entity can register under the reserved name or any similar name as determined by the Commission.

The importance of Business Name Reservation

Reserving your Business Name has advantages including:

  1. Brand Protection: Reserving your business name prevents others from using it, safeguarding your brand identity in the marketplace.
  2. Legal Compliance: It ensures compliance with Nigerian laws regarding business registration, as operating under an unregistered name can lead to legal complications.
  3. Facilitates Registration: Securing a name in advance streamlines the subsequent registration process, allowing entrepreneurs to focus on other aspects of their business setup.
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CAC Guidelines for Business Name Reservation

1. Name Availability Check

Before submitting a name reservation request, it is essential to conduct a preliminary search on the Corporate Affairs Commission (CAC) portal to confirm the availability of your desired business name.

 

2. Name Requirements

To reserve a business name, ensure that the following criteria are met:

  • The name must be unique and not already in use.
  • It should not be misleading or offensive.
  • Avoid names that suggest affiliation with government bodies unless authorized.
  • The name must not infringe on existing trademarks.

 

3. Restricted Words and Names

Certain words and names are subject to special approval or restrictions as per Section 852(1)(a), (b), (d) & (2) of CAMA 2020. These include:

  • "Federal," "National," "Government," "Regional," "State," or synonyms.
  • "Chamber of Commerce."
  • Professional titles such as "Chartered" or "Institute."
  • "Cooperative," "Building Society," or equivalents.
  • "Group," "Holding," or their variants.

These words require express consent from the Commission.

 

4. Prohibited Names

The CAC is prohibited from approving names that:

  • Mislead the public about the nature or extent of the entity's activities.
  • Are undesirable, offensive, or contrary to public policy.
  • Mislead the public about the nationality, race, or religion of the business owner.
  • Deceptively reference any institution, person, foreign state, government, or international organization.
  • Undermine public peace or national security.

 

5. Format Requirements

When selecting a business name, it must adhere to the following format rules:

  • The name must consist of at least two words.
  • It should end with the appropriate designation, such as "Limited," "LTD," or "Company."
  • Abbreviations should be avoided in the main part of the name.

 

6. Special Considerations for Foundations and Associations

For Foundations and Associations, the name must:

  • Include the full name of the principal benefactor(s) and the initials of other benefactors.
  • Clearly reflect the principal objectives of the entity if it aims to pursue specific goals.
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Key Provisions for Business Name Reservation under CAMA 2020

The Companies and Allied Matters Act (CAMA) 2020 introduces essential provisions regarding name reservation, restricted names, and prohibited names, ensuring that the chosen business name complies with regulatory standards for smoother registration.

Name Reservation with CAC

  • Duration and Exclusivity

Under Section 31(2) of CAMA 2020, a reserved business name is exclusive for 60 days. During this period, no other entity can register under the reserved name, or any name that is deemed too similar by the CAC. This ensures exclusivity and gives the business owner sufficient time to complete the registration process.

 

  • Withdrawal or Cancellation of Reserved Names

The CAC has the authority to withdraw or cancel a reserved name in certain circumstances, even before formal registration. According to Section 31(3) and 31(5) of CAMA 2020, this can happen if:

  • The reserved name is found to be identical or too similar to an already registered entity, causing confusion.
  • The name was fraudulently or improperly reserved.
  • The reservation was based on misleading or false information.

In such cases, the CAC may revoke the reservation to maintain fairness and transparency.

 

Reuse of Names

If a name becomes available due to a change or deregistration, it may be approved for use by another entity after 60 days from the approval date of the name change (Section 31(4)).

 

Restricted and Prohibited Names

  • Restricted Names

Certain names require special conditions for approval, as outlined in Section 852 of CAMA 2020. These include names that:

  • Resemble an existing company.
  • Contain terms like "Federal," "National," "Government," or imply an affiliation with government or local authorities.
  • Include words such as "Cooperative," "Chamber of Commerce," "Building Society," "Group," or "Holding."
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These names require consent from the CAC to avoid misleading associations.

 

  • Prohibited Names

The CAC will not approve certain types of names, according to Section 852(1)(c), (e), (f) & (g) of CAMA 2020. Prohibited names include those that:

  • Mislead the public about the business's activities.
  • Are offensive, undesirable, or violate public policy.
  • Misrepresent the nationality, race, or religion of the business owner.
  • Deceptively reference institutions, foreign states, governments, or brands.
  • Pose a threat to public peace and national security.

Steps for Business Name Reservation in Nigeria

To ensure a smooth Business Name Reservation process, follow these steps:

  1. Conduct a Name Availability Search: Before submitting a name reservation request, ensure the name is available and not already in use by another business.
  2. Choose a Unique and Compliant Name: Avoid names that are misleading, offensive, or prohibited under CAMA 2020. Ensure that your name complies with the specific regulations set by the CAC.
  3. Submit a Reservation Request: File your name reservation with the CAC, including any necessary documentation for restricted names. The CAC will notify you once the name is reserved.
  4. Complete the Registration Process: Once your name is reserved, complete the formal business registration process within the 60-day reservation period to secure your business name.

Conclusion

Understanding the intricacies of name reservation, restricted names, and prohibited names under CAMA 2020 is crucial for anyone looking to establish a business entity in Nigeria.

By adhering to these guidelines, businesses can avoid potential legal issues, ensure a smooth registration process, and contribute to a transparent and trustworthy business environment.

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