An Appraisal of Prohibited and Restricted Names for Corporate Bodies Under the Companies and Allied Matters Act (CAMA) 2020

CONTRIBUTED BY UDOKA JANET ESQ.

INTRODUCTION

In accordance with Section 863 of the Companies and Allied Matters Act (CAMA) 2020, “a person or association of persons shall not carry on business in Nigeria as a company, limited liability partnership, limited partnership, or under a business name without being registered under this Act.”^[1] Hence, the only exemptions from this need are people who carry on business in their names or a combination of their own names as sole proprietors or general partnerships.^[2]

Selecting a name for a company is almost as significant as naming a natural person because, in essence, incorporation is the birth of a new person in law^[3] and the names are what set one firm apart from another. Consequently, despite the legal limitations on some phrases, many promoters use their creative talents to come up with distinctive, and memorable titles.

Hence, should the persons involved not be entitled to the full rewards of their inventiveness after coming up with a “nice” name?^[4] The fact that a registered business name does not confer separate legal personality is not a bar to the right of the business name owner or the CAC to prevent improper use of such name through wrongful registration.^[5]

Consequently, after examining the reasons corporate names are fiercely protected, this article takes a look at the problems caused by similar or conflicting corporate names in Nigeria and the crucial role that regulators, particularly the Corporate Affairs Commission (CAC), play in light of the applicable CAMA provisions,^[6] while highlighting the importance of continuous action in this area as Nigeria’s “orderliness” regarding corporate name registration and protection is an important component of the country’s “optics” for ease of doing business as same sends the proper signals to the investment community.

THE NEED FOR CORPORATE NAME PROTECTION

Profits are every business’ primary goal. To do this, firms need to stand out from other comparable businesses with a name that is simple for clients, colleagues, and the general public to recognize.^[7] The name of a business also serves to safeguard the interests of its clients by ensuring the distinction between related brands, which is important for clients to make decisions.

As a result, businesses spend a lot of money on advertising, Corporate Social Responsibility (CSR), and philanthropy to familiarize people with their names. Names are chosen, among other things, for distinctiveness – to differentiate from rivals, and potentially to arouse or foster loyalty, and have emotional ties with target clients, particularly where quality and cost are also favourable.^[8] As a result, a company’s name is crucial to its development and reputation, as it not only draws in new clients but also conveys the core of the company’s operations.^[9]

It is not surprising that businesses place a high value on their names, frequently basing a significant portion of their investment in establishing brand equity on such names and exerting every effort to avoid reputational risk and the associated detrimental effects on consumer perception (and thus the value of their goods/services) and even stock prices. Nowadays, it is typical for goodwill to make up a sizeable portion of certain organizations’ assets.

The corporation or enterprise that created the goodwill is entitled to profit from it, but legal policy (exemplified by passing off, for instance) frowns upon “impostors” who try to reap rewards from unsown seeds. According to studies, consumers base their judgments on products and services, investments, and careers, among other things, on how well-known a company is.^[10] A good reputation also enables businesses to command higher pricing and draw in elite talent and investors.^[11] There is no doubt that respectable businesses have an advantage over their rivals in the same sector.

PROHIBITION, RESTRICTION AND PROTECTION OF CORPORATE NAMES UNDER THE COMPANIES AND ALLIED MATTERS ACT 2020

The primary legislation controlling the creation, administration, and dissolution of corporations in Nigeria is the Companies and Allied Matters Act 2020. It offers protection for business names that have already been registered with the CAC. As per section 852(1):

“No company, limited liability partnership, limited partnership, business name or incorporated trustee shall be registered under this Act by a name or trademark which-

1. is identical with that by which a company or limited liability partnership in existence is already registered, or so nearly resembles that name as to be calculated to deceive, except where the company or limited liability partnership in existence is in the course of being dissolved and signifies its consent in such manner as the Commission requires.
2. in the opinion of the Commission, would violate or conflict with any existing trademark or business name registered in Nigeria or body company formed under this Act unless the consent of the owner of the trademark, business name, or trustees of the body company was obtained.^[12]

The aforementioned provision supports the CAC’s practice of disqualifying any names for registration that are similar to names of organizations or companies that are already registered in Nigeria. This further means that the above section absolutely prohibits the use of a name that is capable of misleading the public as to the: nature of the business; the nationality, race, or religion of the persons by whom the business is controlled; deceptive or objectionable in that it contains a reference or suggests association with any practice, institution; capable of undermining public peace. 

In addition, section 852(2) CAMA, provides that no company can be registered without the consent of the Corporate Affairs Commission (CAC) with the words “Federal”, “National”, “Regional”, “State”, “Government”, “Cooperative”, “Group”, or “Holding” in their names or ‘Government’, or any other word which, in the opinion of the Commission suggests or is calculated to suggest that it enjoys the patronage of the Government of the Federation, the Government of a State in Nigeria, any Ministry or Department of Government, or contains the word ‘Municipal’ or ‘Chartered’ or in the opinion of the Commission, suggests or is calculated to suggest, connection with any municipality or other local authority”.

Furthermore, In Mustapha v. CAC,^[13] the Court of Appeal found that: “The provisions of Section 30(1) and (2) of the Act addressing the prohibition and restriction of company names are quite obvious and straightforward. The criteria for such do not take into account or use the English definitions of the words used in the proposed companies’ names. All that must be proven is that the names are similar enough to raise confusion in the public’s mind. It is a well-established legal concept that statutes must be given their plain, unequivocal, and straightforward meaning. The courts are required to refrain from interpreting a statute outside of what the legislator intended and meant when they did so.^[14]

OVERSIGHT FUNCTION OF THE CORPORATE AFFAIRS COMMISSION (CAC)

The organization tasked with registering company names in Nigeria is the CAC.^[15] As a corporation with perpetual succession and a common seal, its duties include, among others, the administration of the Act, which includes registration, regulation, and oversight of company creation, incorporation, management, striking off, and winding-up.^[16] As a result, the CAC is crucial in corporate name conflicts. Actually, CAC is the one who decides whether a proposed name would conflict with an already existing name. CAMA requires that both the registration of a conflicting name be refused and that the name be changed.

CONCLUSION

In the above analysis, the argument is that it is crucial to safeguard the individual uniqueness of “business names” in corporate Nigeria, and in order to accomplish this goal while registering company names in Nigeria, the main regulatory body, the CAC, is crucial for a careful search. By effectively carrying out the due diligence required, one would avoid embarrassing situations, reputational harm, and the expense of filing and defending legal claims for infringement of Nigerian registered company names.

1. Section 863 CAMA 2020 ↑
2. John Akinselure, Regulation of Non-Governmental Organisations under the Companies and Allied Matters Act, 2020. The Nigerian Juridical Review 16 (2021): 1-18. ↑
3. Ejiroghene Eferakeya, What’s in a Name?’ Issues in Conflict of Corporate Names in Nigeria (2021). Available on Mondaq:https://www.mondaq.com/nigeria/trademark/1081998/-whats-in-a-name-issues-in-conflict-of-corporate-names-in-nigeria Accessed 14^th September 2023 ↑
4. This is the rationale behind the enactment of the Nigerian Cybercrime Act (Prohibition, Prevention, Etc.) No. 17 of 2015. Section 58 ↑
5. See sections 8(1)(a)(ii), 30(4), 41(1)(e), and 852(1) CAMA. Cited in Ejiroghene Eferakeya: Nigeria: What’s In A Name?’ Issues In Conflict Of Corporate Names In Nigeria. https://www.mondaq.com/nigeria/trademark/1081998/-whats-in-a-name-issues-in-conflict-of-corporate-names-in-nigeria Accessed 14^th September 2023

   ↑

6. Interestingly, it is rarely a problem when one person has the exact same name as another, to the extent that there is no impersonation. Usually, there would still be identifying traits; persons with the same names will typically still seem distinguishable. Even identical twins typically do not share the same forenames in addition to having the same last name. ↑
7. Ngozi C. Uzoka, An Appraisal of Limited Liability Partnership and Limited Partnership Under Nigerian CAMA 2020. Journal of Commercial and Property Law 9, no. 2 (2022): 159-167. ↑
8. Abu Zayyad, Hala Mohammed, Zaid Mohammad Obeidat, Muhammad Turki Alshurideh, Mohammd Abuhashesh, Mahmoud Maqableh, and Ra’ed Masa’deh. Corporate Social Responsibility and Patronage Intentions: The mediating effect of brand credibility. Journal of Marketing Communications 27, no. 5 (2021): 510-533. ↑
9. Ibid ↑
10. Pınar Özkan, Seda Süer, İstem Köymen Keser, and İpek Deveci Kocakoç. The effect of service quality and customer satisfaction on customer loyalty: The mediation of perceived value of services, corporate image, and corporate reputation. International Journal of Bank Marketing 38, no. 2 (2020): 384-405. ↑
11. Thanh Tiep Le, Corporate Social Responsibility and SMEs’ performance: Mediating Role of Corporate Image, Corporate Reputation and Customer Loyalty. International Journal of Emerging Markets (2022). ↑
12. Section 868(2) “A business name registered under this Act shall not be construed as authorizing the use of such name if, absent such registration, the use could be prohibited.” ↑
13.  [2009] 8 NWLR (Pt.1142), 35 ↑
14. Supra, p.54. ↑
15. Section 1 CAMA. ↑
16. Section 8(1)(a)(i) CAMA. ↑