Case Law Update: Careful how you pick a trading name

Dispute Resolution - 1 minute read

A limited company had used a particular trading name, and when the company went into liquidation, one of its directors set up a new limited company of which he was sole director – then used the same trading name. 

Not only can this be a criminal offence, but the Court has power to make a confiscation order against the the sole director (personally) of the new company. In this case, the order required the sole director to pay £100,000 , plus legal costs. 

The Court of Appeal said, that courts are entitled to make such orders against sole directors and the calculation for confiscation can be based on the entire turnover for the period when the prohibited name is being used, and not just the net profit. 

The case? R v Neuberg [2016] EWCA Crim 1927

Promoters of a business deciding on a registered or trading name for it should ensure the name they choose is not a name previously used by a company they were director of, which has gone into insolvent liquidation, or risk a penalty up to the entire turnover of the new business