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Thread: Two companies with same "trading as" name

  1. #1
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    Question Two companies with same "trading as" name

    Hi,

    I have a company - let's call it "Wonder Apparel Pty Ltd". This company has a subsidiary company called "Wonder Shoes Pty Ltd". Is it legal for both of these companies to trade as "Wonder Wear"? Both companies have their own registration number and VAT numbers.

    This means that Wonder Apparel will invoice as "Wonder Apparel Pty Ltd t/a Wonder Wear", and Wonder Shoes will invoice as "Wonder Shoes Pty Ltd t/a Wonder Wear".

    We then have inter-company invoicing, so Wonder Apparel will invoice Wonder Shoes or vice versa. The invoice from both companies look almost identical - the same "trading as" name, the same company logo, the same address, but different legal name, registration number and vat number.

    Is this allowed?

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    I would be cautious with this arrangement as the customer needs to know who they are dealing with. So if all your documentation clearly states the full name and reg numbers, then you'd be on safer ground. If any litigation arose in the future against one of them you might find both companies at risk because of the possibility of confusion.

    That said, as long as you register "Wonder Wear" at CIPC as a trading name, you should be safe in using it ... but that's not a legal opinion. I'm getting the feeling that the concept of a "trading name" is trying to be phased out.

    Have you not considered an arrangement such as Wonder Wear Holdings Pty Ltd and Wonder Wear Pty Ltd?

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    Hi BusFact - thanks for your response. All invoices do clearly state the correct legal company name, registration number and vat number - it's just that the logo's are the same on both invoices. So at a glance,invoices from both companies look the same, but with a closer look you will see different legal name, registration number, vat number and bank details.

    Even if we do set up a holding company sas you suggested, we would still want all subsidiaries to trade under the same brand, so wouldn't we be back to the same problem anyway?

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    Hi David

    I think you might be courting a hassle by having both trading as the same name. In essence it's a contradiction in terms and some might hold that it is misleading to 3rd parties.

    The whole reason for the CPA addressing the issue is so that a 3rd party knows clearly with whom they are dealing and I think your situation confuses that.

    I assume your reasons are for branding and are honourable, but there may come a time when you rue the arrangement. Off the top of my head one I can think of is if you ever wished to sell one or both entities; it would be impossible to sell the trading name because neither entity has exclusive right thereto.

    You might also be exposing the companies to joint risk; by using the same trading name you yourself are essentially saying that they are one entity, and a potential litigant can have a field day with that!

    There are perhaps other ways you can achieve much the same thing. An example is a statement "a member of the Wonder Wear Group" or something similar. A branding consultant I am sure would be able to better advise.

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    Dave A (24-May-14)

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