There are numerous reasons to change the company name, but many people ask us if it may be done during administration.
The goal of administration is to attempt to save the company. It is an insolvency procedure used to regain control of a firm when creditors threaten to take action against it.
According to The Insolvency Service, there were 2,315 insolvencies in October 2023, which is 18% more than the same month in 2022. The overall amount of administrations has also increased year to year.
When a corporation enters administration, this is what happens. However, entering administration is not the only reason a firm might want to change its name.
What are the reasons for changing the company name during administration?
It has become quite usual for a firm to change its name. Below are some instances of why a company in administration changes its name,
- Name change frequently indicates that a brand’s personality or basic beliefs have changed.
- In terms of marketing, a firm name may not stand out or be difficult to find on search engines. Sometimes the name is too similar to that of another company, which causes confusion among customers or prospects.
- Persons in charge of a company can decide to change the name after it has gone through a difficult period, such as insolvency and administration.
- With the intention of providing a fresh start for a struggling company, it stands to reason that directors might want to represent new beginnings by changing the company’s name.
During the administration process, creditors have no ability to pursue legal action against the corporation unless a judge orders it. This protection from creditors during the administration process allows the corporation to establish plans to repay its obligations.
In addition, if a winding-up petition is filed, the company might enter into administration to avoid forced liquidation. Keep in mind that if the administrators decide that there is no option to save the business, they may have to transfer company assets to creditors.
Given the legal limitations of administration, directors often wonder if it is allowed to change the company name during this time.
Can a company’s name be changed during administration?
Yes, the company name can be changed during administration. You must first seek approval from a licensed insolvency practitioner, but administration may not stop a company name change.
During administration, the insolvency practitioner has significant power over all company actions, thus they should carefully consider the option to change names.
Lastly, other clearances are required: you must register the name change with the government through Companies House.
How to Change a Company Name with Companies House
In general, the procedure of changing a company name during administration may go as follows:
- Speak with your insolvency practitioner regarding the name change.
- Choose a new name that reflects the company’s fresh start during the administration process.
- Have a written or special resolution with a vote by members, with 75% of shareholders by value agreeing to the change before passing.
- Submit the signed resolution to Companies House with form NM01, the fee (£8 for online submissions, £10 for paper), and the modified articles of association.
- Get your certificate of incorporation from Companies House.
Directors arrange a board meeting to discuss a name change by special resolution. They may propose a special resolution either at a general meeting or in writing for private limited companies.
Directors must send a notice to the company’s members prior to a general meeting; the notice must meet the conditions of the Companies Act 2006 in terms of content and notice duration. The general meeting is then held on the appropriate day, and shareholders vote on the resolution.
According to a defined protocol, directors have to provide a copy of the proposed special resolution to company members during the company voluntary arrangement.
Summary
During administration, a company’s name can be changed if the insolvency practitioner approves that directors can do so.
Attempting to rescue the company through administration is an opportunity to start a new chapter, which a new name may represent.
McLaren Insolvency Practitioners are here to help. Get in touch with us if you need additional information about company administration or have any other questions.
