This update will focus on:
- More SME funding for new technology, equipment and specialist advice;
- Some horizon scanning in terms of what exactly is the Omnibus Directive and how is it strengthening consumer rights; and
- In light of the number of new starts we have been advising on and questions around this, a quick recap on company names.
New SME Funding available
A further £20 million in new grants has been made available to help SMEs to access specialist advice, new equipment and technology to assist with pandemic recovery.
Under the scheme, small and medium sized businesses in England will be able to apply for grants to support all SMEs in all sectors. The nature and value of grants awarded will be tailored to local circumstances and are expected to typically be up to £3,000. Under certain circumstances, and on a case-by-case basis, grants of the maximum of £5,000 may be awarded. Activities supported through the funding must be to directly respond to the impact of COVID-19 and can include one-to-many events providing guidance to respond to coronavirus or grants to help businesses access specialist professional advice e.g. human resources, accountants, legal, financial, IT / digital, and purchase minor equipment to adapt or adopt new technology in order to continue to deliver business activity or diversify.
The funding is being provided to address immediate needs, and all grants must be awarded by 28 February 2021 and all activity fully completed by 31 March 2021.
The funding has been allocated to Growth Hubs within each Local Enterprise Partnership and the scheme is expected to open shortly. Further confirmation from the Government on the date the scheme will open is awaited, but in the interim if this is a package of support that would benefit your business, you are advised to register your interest with your relevant Local Enterprise Partnership Growth Hub.
What is the Omnibus Directive?
As part of the EU’s strategy to improve consumer protection, the Omnibus Directive (Directive) came into force on 7 January 2020. Since it appears that the UK will not be part of the EU, it is likely that there will be no obligation to adopt it here, but a publication from the UK Government suggests that it may have similar domestic consumer protection legislation in mind, which makes this change worth being aware of.
What are the key issues?
- Digital goods and services will be defined in the same way and rights harmonized to match physical goods and services. Traders need to provide information on their criteria for rankings search results, justify steps taken to ensure reviews on their site are genuine, and inform consumers whenever prices have been personalised.
- Online marketplaces must inform consumers whenever an item is bought from an individual, and if so that they will not benefit from EU consumer protection law.
- There will be new obligations on traders and online platforms with existing EU consumer protection laws will now extend to services paid for with personal data, due to a change in the definition of “price”.
- The EU Directive grants rights directly to consumers, allowing them to individually pursue claims against any companies in breach with GDPR-style fines worth a minimum of 4% of a company’s annual turnover in the relevant Member State or €2m if a calculation is not possible.
What should businesses do now?
The key points are to firstly make sure that the transparency mechanisms in your online marketplace are up to scratch in line with what is being proposed; and secondly that any involvement in the provision of “free” digital services meets the same consumer protection standards as anything which is paid for.
Company Names and their use
A key headline point is that it is not possible to have the same name as or a name too similar to another registered company. Companies House provides a company name availability checker, so before incorporating a company, please check whether you can use the proposed name. Even if a name is different enough, you could still be challenged if you have used a name similar to the name of another business, “passing off” actions can also be brought against a person who uses a name similar to that of another established company to try to profit from the goodwill and reputation associated with that company. That other company could also complain, and Companies House will then contact you and advise what you can do.
In the UK, private companies limited by shares must generally use the ‘Limited’ or ‘ltd’ suffix to show that they have limited liability. If the company is a public company, it must use either ‘plc’ or ‘public limited company’ at the end of its name. An exception to the requirement to use one of these suffixes is a where it is a company limited by guarantee providing it meets certain criteria regarding the company’s objects.
It might seem obvious, but company names must not be offensive and there are also certain sensitive words and expressions which require specific authorisation to use either from the Secretary of State or other bodies. These include words which suggest some connection to a government or local authority or suggests a qualification or a regulated profession and are all listed on the Companies House website.
It is possible to trade under a different name to the official name on the Companies House register. The business name must not include any of the suffixes, such as ltd., referred to above. It is really important though not to use one similar to another company’s name, especially if it is a trademark, as it can still be challenged as set out above.
As a general rule (and subject to exceptions such as if that place is primarily a residential address and it is not your company’s registered office), a company is required to display its name both at its registered address and wherever it is running its business. The company’s name must also be included on company documents and communications. In addition, when it comes to business order forms, letters and websites, the company’s number, registered office address, country in which the company is registered must be displayed plus showing that that the company is a limited company (for example, by giving its full name including suffix).
Do remember that to change a company’s name after it is incorporated will usually require a special resolution, passed by its shareholders. A good first step here would be to check the company’s articles of association (or memorandum) as they may either restrict this power or alternatively give permission for the company’s name to be changed using a different method, such as by allowing directors to make this decision. This proposed name change must then be registered at Companies House either online or by post by filing the correct form and fee.
As a result of the Covid-19 pandemic, businesses have become used to the wide array of new funding schemes and legislative changes designed to support businesses rolled out over recent months, but getting to grips with all of these plus dealing with the impact of months of lost or reduced revenue will be the real challenge. It is now more important than ever for businesses to obtain proper advice as they seek to recover and rebuild, to avoid mistakes that could cost many thousands of pounds further down the line.
In terms of the Omnibus Directive, the key point is that consumer protection continues to be strengthened, with increased enforcement and transparency measures, including but not limited to extending rights in respect of “free” digital services. Please note that if the UK does not implement this Directive but follows through with what has been proposed domestically, fines for consumer protection non-compliance could reach up to 10% of a firm’s revenue. One to watch in future weeks…
Finally, it almost goes without saying, but deciding on a name that will promote and underscore your business can add real value to your business – the costs of getting this wrong can be the difference between success and failure in your sector.
Please drop me an e mail or call if you need any further details and stay safe and well.