Change of Company name in Zimbabwe

FUNGAI CHIMWAMUROMBE AND BHEKIMPILO MANGENA

Overview

The Companies and Other Business Entities Act [Chapter 24:31] provides for change of company name.

Most companies in Zimbabwe were created out of shelf companies with names which are not linked to the nature of business or names which do not speak to its vision or purpose prompting the need to change a company name.

This article seeks to consider reasons for change of company name, provide guidance on how companies may change names when the need arises and consider effects of change of company name.

Reasons for change of company name

There are various reasons why a company may find it necessary to change its name. The key question is – Is your entity name relevant and/or there is need to change?

 Most companies change names due to trademark issues, especially if the name is already registered as a trademark by an existing entity. Registered trademarks would affect growth beyond a particular jurisdiction since continued use of a name may be prohibited. Rebranding is also a dominant reason, especially if the existing name has been affected by bad reputation and/or is linked to a specific geographical location at a stage a company need national, regional and/or global presence. A change of industry, product and strategy, may also lead to change of company name. Some changes may be a result of acquisitions, where there is a need to assume a name aligned to the parent company. Whilst reasons do vary, the change of name may bring with it enormous benefits in most cases.

Procedures and effects of change of company name

Section 26 of the Act provides for change of name whereby public companies are required to do so through a special resolution which is filed with the Registrar whilst private limited companies should first obtain a written approval from the Registrar. Private limited companies should first seek members’ consent through a resolution approving the change of name. The company whose name has been changed, should publicise a notice in the Gazette and other daily newspapers in line with section 126(2) of the Act. The Registrar of Companies shall then enter the new name in the register.

It is critical to note that change of name does not affect a company’s rights and obligations in as much as it does not render defective any legal proceedings by or against it as provided for by section 126(5) of the Act. Litigations and/or other legal cases may therefore start and/or continue under the new name of the company. The change of company name also has a huge effect on the company’s budget in that the change should incorporate changes to official documents such as company letterheads, signage e.g. billboards, uniforms and related items. A name change may bring forth a new culture and is better initiated through a strategic process which includes all employees. Some companies may involve customers in the process of name change to remain relevant and help avoid confusion on product quality and performance. Where clients are not involved in the process, awareness campaigns are required to maintain the existing market share through clear, concise communication.

Conclusion

The change of company name is therefore a strategic decision, which requires proper due diligence during planning, adoption and implementation stages given the procedures and effects. Provisions of the Act provide a useful guidance on change of name, which makes it easy to go through the critical process.

. . Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Chimwamurombe Legal Practice and can be contacted for feedback at fungai@zenaslegalpractice.com and WhatsApp 0772 997 889.

Bhekimpilo Mangena is a registered Legal Practitioner, Public Accountant and a Business Consultant at Zenas Consulting (Pvt) Limited and can be contacted for feedback at bheki@zenasconsulting.co.zw and WhatsApp 0712500490