Two business name acts on the books in PNG

In May 2014 the National Parliament enacted the Business Names Act 2014 (New Act). At the time the New Act came into force, PNG already had business names legislation – the Business Names Act (Chapter 145) (Old Act) in force. The New Act does not repeal or amend the Old Act so that, technically at least, PNG now has two business names acts in similar (but not identical) terms. The Legislative Counsel intended the New Act to repeal the Old Act, however, the provisions repealing the Old Act were omitted from the New Act. The government intends to introduce legislation amending the New Act so that it repeals the Old Act. In the meantime the Companies Office will apply the New Act as if it is the only business names’ legislation.

Differences

Although similar in terms to the Old Act, the New Act is different in important respects. Under the New Act a person wanting to transact business in PNG under a “business name“ must, before commencing business under that name, obtain from the Registrar of Companies (registrar) a certificate of business name registration. In the New Act, “business name” means a name other than the true name of a sole proprietor, partnership, firm, company, association, business group, other entity or unincorporated collection of persons or entities, under which it conducts business or holds itself out for business, whether or not it is conducted for profit. Under the New Act:

• A separate certificate of business name registration must be obtained for each business name used;
• The certificate must list the business address for each location for which the exact same business name is being used; and
• A separate certificate is not required if the exact same business name is used in multiple locations. The New Act (unlike the Old Act) does not define “carrying on business”. The New Act, however, provides that a person is not carrying on business if only the
• are party to an action or suit, or an administrative or arbitration proceeding, or effect settlement of an action, suit or proceeding or of a claim or dispute;
• maintain a bank account;
• effect a sale through an independent contractor;
• create evidence of a debt or a charge on property;
• secure or collect any of its debts or enforce its rights in regard to securities relating to its debts;
• conduct an isolated transaction that is completed within 31 days, not being one of a number of similar transactions repeated from time to time; or
• invest any of its funds or holds property. The New Act (unlike the Old Act) does not restrict who may carry on business in PNG under a business name. This contrasts with the Old Act which provides that certain convicted persons may only carry on business in PNG with the leave of a magistrate. Under the New Act (Section 7), a certificate of business name registration is effective from the time of registration unless it is cancelled by registration with the registrar; or it is cancelled by action of the registrar.

Compliance

A registrant who fails to begin business within three months of the issuance of a certificate of business name registration or ceases to transact business under the business name, must cancel the certificate. Under the New Act the certificate of business name registration remains in force for one year (three years under the Old Act), but the registration may be renewed by lodging, within one month before the registration expires, a statement of renewal accompanied by the prescribed fee. The New Act does not allow the statement of renewal to be lodged after the registration expires. The New Act (Section 11) (unlike the Old Act) provides that any person who transacts business under a business name without complying with the requirements of the New Act may not maintain any legal action in PNG. The New Act also introduces for the first time detailed provisions dealing with the consequences of non-compliance with the registration requirements.