On 28 May 2012 registration of business names became national rather than state based and is now handled by ASIC.
Previously to transfer a business name which occurred upon the sale of a business or change in partnership was carried into effect by lodging a paper form signed by all relevant parties with the Office of Consumer and Business Affairs.
A new procedure is now required. Each Business Name will have an "ASIC Key". This is a unique security number. (For some time each company has had a "Corporate Key" issued by ASIC).
If the Business Name was registered from 28 May 2012, the ASIC key was sent on registration. If the Business Name was registered prior to that date then the ASIC Key is sent with the first reminder notice to renew the business name (every 3 years).
If the business does not yet have an ASIC Key it can request one in the course of the transaction from ASIC.
It is important for all business name owners to retain the information of the ASIC Key. To change the ownership of a business name, including adding new owners, deleting existing owners or transferring to a new owner, now requires a new procedure.
If selling a business, there are steps which the vendor should undertake prior to any settlement.
The existing owner must enter the “ASIC Connect Portal” which may require registering or logging in, and then select a transaction from a list of transactions.
In the case of a transfer, the "Cancel/Transfer Business Name" transaction is to be selected.
The procedure for a proposed transfer requires the person to select "Cancel and Transfer" (as opposed to the alternative of just "Cancel"). This request triggers cancellation of a business name and serves as notice that the person has given consent to another person to register the same business name. Once submitted the transaction cannot be withdrawn (so a contract which does not settle presents a problem).
ASIC will send the person who has sought the information:
- a "Notice of Intention to Cancel a Business Name"; and
- a Consent to Transfer Number.
The cancellation will come into effect 28 days after the person receives the "Notice of Intention to Cancel a Business Name" from ASIC.
Prior to settlement, or endeavouring to register the transaction following settlement, the new owner must obtain an ABN from the Australian Business Register website.
At settlement the vendor should deliver the "Consent to Transfer Number" to the purchaser or new owner. The purchaser, being the proposed new business name owner, can then apply to register that business name using the "Consent to Transfer Number", which is a "1" followed by 10 digits. This Number enables that owner to register the name before it becomes available to the public, subject to meeting other requirements of registration such as providing an ABN, paying the fee and not being disqualified under the Business Names Registration Act 2011.
The online application will be registered but the business name will not display on the national business names register until 28 days after the issue of the "Consent to Transfer Number".
The details will appear on the "Register of Recently Transferred Business Names". After applying to register the business name, the new owner can conduct business under the business name for up to 3 months without committing an offence.
The name will not be available for registration by anyone who cannot provide the “Consent To Transfer Number” until 3 months have passed.
Any contract or precedent relating to the sale of a business should be thoroughly checked. If they specifically provide for a vendor to deliver at settlement a “Transfer of Business Name” then that provision should be amended to provide that prior to settlement the vendor will apply to "Cancel and Transfer" the business name and obtain a “Consent To Transfer Number” and at settlement will deliver the "Consent To Transfer Number" to the purchaser.
It can be a daunting process and you must ensure, as a business owner wishing to transfer a business name, that you comply with all these requirements.