Names, Deception, and Public Order

A Comprehensive Analysis of the Prohibition of Undesirable Names under the Zimbabwean COBE Act [Chapter 24:31]

Overview.

In the modern commercial landscape, the name of a business entity is its most valuable intangible asset. It serves as the gateway to corporate identity, the repository of commercial goodwill, and the primary vehicle through which a company interacts with consumers, creditors, and the public. However, because the right to trade under a specific name carries significant market power, the state maintains a legitimate regulatory interest in policing corporate names. This policing ensures the prevention of public deception, maintains public morality, and protects existing intellectual property rights.

This article presents a comprehensive statutory and judicial dissection of the Prohibition of Undesirable Names under Section 25 of the Companies and Other Business Entities Act [Chapter 24:31] (the “COBE Act”). By examining the historical shift from the old Companies Act [Chapter 24:03], deconstructing the five statutory pillars of name refusal, and analyzing landmark judicial decisions—most notably the seminal High Court case of Southbay Real Estate (Pvt) Ltd v Southbay Properties (Pvt) Ltd & Ors—this article illuminates how Zimbabwean corporate law balances administrative discretion, public interest, and commercial equity.

Introduction: The Commercial and Legal Primacy of the Corporate Name

Upon the incorporation of a company or a private business corporation (PBC), the state grants the entity a separate legal personality, a doctrine famously established in the English case of Salomon v A Salomon & Co Ltd [1897] AC 22 and codified in Section 19 of the COBE Act. This “juristic person” is endowed with all the capacity and powers of an adult natural person. However, unlike a natural person who is named at birth through familial choices, a juristic person must choose a unique commercial moniker.

The corporate name is not merely a linguistic label; it is a vital proprietary tool. It is the primary mechanism through which a company:

1. Executes legally binding contracts under Section 33 and Section 35 of the Act;
2. Establishes commercial goodwill and brand equity;
3. Avoids confusing the public, creditors, and administrative authorities; and
4. Preserves the integrity of public records at the Office for the Registration of Companies and Other Business Entities (the “Companies Office”).

Because the market values distinctiveness, the registration of a confusingly similar, offensive, or misleading name can lead to severe market distortions, unfair competition, and the dilution of established brands. Therefore, Section 25 of the COBE Act acts as a statutory gatekeeper, giving the Registrar of Companies the power to refuse the registration of “undesirable” names and establishing mechanism for the rectification of names that have slipped through the registry’s cracks.

Historical Evolution: From the 1951 Act [Chapter 24:03] to the COBE Act [Chapter 24:31]

To fully comprehend the design of Section 25 of the COBE Act, we must examine the historical deficiencies of the predecessor legislation, the old Companies Act [Chapter 24:03] (originally enacted in 1951).

The Weaknesses of the Old Section 24 Regime

Under the old Act, the regulation of company names was governed by Section 24. While it prohibited the registration of identical or misleading names, its implementation was severely hampered by several systemic realities:

1. The Limitations of Manual Databases: For nearly seven decades, name searches in Zimbabwe were conducted manually by registry clerks looking through physical index cards in Harare and Bulawayo. This paper-bound system made phonetic matching, spelling variations, and cross-registry searches between companies and Private Business Corporations (which were registered under a separate Act, [Chapter 24:11]) highly prone to human error.
2. Criminalization of Minor Defaulters: Under the old Section 24, a company that failed to comply with an administrative order to change its name was guilty of a criminal offence and liable to a nominal fine. Because the criminal justice system was heavily backlogged, prosecutions for corporate name infringements were virtually non-existent, leaving injured parties with no effective administrative recourse.
3. The PBC/Company Divide: Because companies and PBCs were governed by separate statutes and maintained separate registries, a PBC could easily be registered with a name identical to an existing company, or vice versa, leading to legal conflicts and commercial passing-off.

The Modernized COBE Framework

When the COBE Act came into force on February 13, 2020, it sought to harmonize, digitize, and decriminalize corporate administration. The new Section 25 unified the rules for both companies and private business corporations. It integrated name search systems, codified the transition to the electronic registry under Chapter V, and replaced ineffective criminal sanctions with a swift, administrative Civil Penalty Order framework.

Textual and Analytical Exposition of Section 25: The Statutory Architecture

Section 25 of the COBE Act contains five sub-sections that outline the powers of the Registrar, the procedures for name reservation, and the enforcement mechanisms of the High Court.

       ┌────────────────────────────────────────────────────────┐
       │     SECTION 25: STATUTORY FLOW OF NAME REGULATION      │
       └───────────────────────────┬────────────────────────────┘
                                   │
                    ┌──────────────┴──────────────┐
                    ▼                             ▼
       ┌────────────────────────┐    ┌────────────────────────┐
       │   PRE-REGISTRATION     │    │   POST-REGISTRATION    │
       │   (S25(1) & S25(2))    │    │ (S25(3), (4) & (5))    │
       ├────────────────────────┤    ├────────────────────────┤
       │ • S25(1): Refusal by   │    │ • S25(3): Registrar    │
       │   Registrar on five    │    │   issues Category 2    │
       │   specific grounds.    │    │   Civil Penalty Order  │
       │ • S25(2): Name         │    │   (12-month limit).    │
       │   reservation for up   │    │ • S25(4): Registrar    │
       │   to 1 month.          │    │   applies to High Court│
       │                        │    │   if default continues.│
       │                        │    │ • S25(5): Interested   │
       │                        │    │   parties apply to High│
       │                        │    │   Court (no time limit)│
       └────────────────────────┘    └────────────────────────┘

A. Section 25(1): The Five Pillars of Name Refusal

Section 25(1) empowers the Registrar to refuse to register a company or PBC with a name that falls into any of five distinct categories of undesirability:

1. Identical or Confusingly Similar Names (25(1)(a))

The Registrar must refuse any name which is:

“…identical to that under which another company or private business corporation is already registered under this Act, or which is so similar to any such name as to be likely to deceive…”

This is the most common ground for rejection. The test here is not whether the names are absolutely identical, but whether they are “so similar… as to be likely to deceive.” The standard of “likeliness to deceive” is an objective, legal standard evaluated from the perspective of the ordinary, reasonable consumer who has an average memory but is susceptible to imperfect recollection.

2. Likelihood of Misleading the Public (25(1)(b))

A name may be rejected if it is “likely to mislead the public.” This covers names that misrepresent:

• The Scale of the Entity: A sole proprietorship trying to register as “The Global conglomerate of Africa Limited.”
• The Nature of Business: A transportation company trying to register as “Harare Medical Research Laboratories (Pvt) Ltd.”
• Geographical Origin: A local company with no international ties calling itself “The Geneva Tobacco Corporation of Zimbabwe.”

3. Blasphemous, Indecent, or Offensive Names (25(1)(c))

The registry will not sanction names that are “blasphemous or indecent or likely to cause offence to any person or class of persons.” This preserves public decorum and protects religious, ethnic, or marginalized groups from having hate speech or highly offensive terminology codified as official corporate titles.

4. Suggestion of Government Patronage (25(1)(d))

A name is prohibited if it:

“…suggests patronage of the Government or some other authority or organisation unless the consent thereof has been obtained…”

This prevents companies from falsely claiming to be state-owned enterprises, government ministries, or agencies. Words like “State,” “Government,” “National,” “Presidential,” “Municipal,” or “Ministry” are strictly sequestered. To use such words, the promoter must produce written consent from the relevant Minister or authority (e.g., the Office of the President and Cabinet).

5. The Residual “Undesirable for Any Other Reason” (25(1)(e))

This provides the Registrar with a broad, residual administrative discretion. Under the ejusdem generis rule of statutory interpretation, this discretion must be exercised reasonably and in a manner consistent with the scope and spirit of the preceding clauses. It allows the Registrar to reject names that violate other statutes (e.g., using terms reserved for banking or medical professions under separate enactments without professional board approval).

B. Section 25(2): The Mechanism of Name Reservation

To protect promoters who are preparing incorporation documents from having their proposed names taken by others, Section 25(2) establishes a formal reservation system:

“The Registrar may upon application and payment of such fees as may be prescribed reserve, for a period not exceeding one month, a name for a company or a private business corporation pending its registration or change of name.”

The reservation of a name creates a temporary, absolute monopoly over that name for 1 month. During this period, the Registrar cannot register any other entity with an identical or deceptively similar name.

C. Section 25(3): Post-Registration Rectification and Civil Penalty Orders

Despite the best efforts of the Companies Office, identical or deceptively similar names are occasionally registered due to oversight, clerical error, or deceptive submissions. Section 25(3) provides a rapid administrative remedy:

If the Registrar, after due inquiry, finds that an entity is registered under an objectionable name, they must serve a Category 2 Civil Penalty Order on the company or PBC. This order:

1. Commands the entity in writing to change its name.
2. Mandates that the name change be executed within six (6) weeks from the date of service of the order (or a longer period if allowed by the Registrar).

The 12-Month Administrative Limitation Period

Importantly, Section 25(3) contains a critical proviso:

“…Provided that the Registrar may not make such an order if a period of more than twelve months has elapsed since the date of the registration of the company or private business corporation or the change of name…”

This proviso provides commercial security. Once a company has traded under its name for more than 12 months, the Registrar loses their unilateral administrative power to force a name change. This forces any disputing party to approach the courts, protecting established businesses from arbitrary or delayed administrative disruptions.

D. Section 25(4) and (5): The Enforcement Role of the High Court

If an entity defies a Section 25(3) administrative order, the Registrar does not have the power to physically change the company’s records. Instead, under Section 25(4):

“…the Registrar may apply to the High Court for an order to have the name of the company or private business corporation changed.”

Furthermore, to ensure that private parties are not left at the mercy of an inactive Registrar, Section 25(5) establishes a direct judicial pathway:

“The High Court, on application by an interested person, shall have the same powers as the Registrar to make an order in terms of subsection (1), but shall not be limited in the exercise of its powers by the period of twelve months referred to in the proviso to that subsection.”

This is a vital statutory provision. While the Registrar is bound by a strict 12-month time limit, an “interested person” (such as a competitor whose market share is being damaged) can apply to the High Court at any time, even years after the offensive name was registered.

The Judicial Interlock: Passing-Off, Trademarks, and the Statutory Remedy

The relationship between the statutory remedies under the COBE Act and the common-law remedies for unfair competition (specifically the delict of passing-off) is one of the most intellectually rich areas of Zimbabwean commercial jurisprudence.

┌────────────────────────────────────────────────────────────────────────┐
│               THE REMEDY DIVIDE: STATUTORY VS. COMMON LAW             │
├───────────────────────────────────┬────────────────────────────────────┤
│   COMMON LAW DELICT: PASSING-OFF  │   COBE ACT: S25 STATUTORY REMEDY   │
├───────────────────────────────────┼────────────────────────────────────┤
│ • Aim: Protect private proprietary│ • Aim: Protect the public from     │
│   rights and business goodwill.   │   being misled or deceived.        │
│ • Key Burden: Plaintiff must prove│ • Key Burden: Applicant only needs │
│   established reputation/goodwill.│   to prove a likelihood of confusion.│
│ • Scope: Confined to competitive  │ • Scope: Broad; accessible to any  │
│   market fields of endeavor.      │   "interested person" or the public.│
└───────────────────────────────────┴────────────────────────────────────┘

A. The Landmark Case of Southbay Real Estate (Pvt) Ltd v Southbay Properties (Pvt) Ltd & Ors (HH 150-09)

Decided under Section 24(13) of the old Companies Act [Chapter 24:03] (which is materially identical to the current Section 25(5) of the COBE Act), this High Court judgment by Makarau JP (as she then was) remains the definitive authority on statutory corporate name disputes in Zimbabwe.

1. The Factual Background

Southbay Real Estate (Private) Limited (the applicant) had changed its name from Vineyard Real Estate in October 2006. In November 2008, the applicant discovered that the Registrar of Companies had registered a competitor under the name “Southbay Properties (Private) Limited.”

The applicant wrote to the Registrar objecting to the registration, but the Registrar did not take action. The applicant then approached the High Court seeking an order to compel Southbay Properties (the respondent) to change its corporate name.

In response, the respondent argued that:

• The applicant had not proved that it possessed established “goodwill” or “reputation” in the name “Southbay.”
• The respondent was a subsidiary of “Southbay Investments (Pvt) Ltd,” which had used the prefix “Southbay” since 2001 (predating the applicant’s name change).
• The respondent was not actively trading with the public (it only managed its parent company’s private property portfolio) and was not registered with the Estate Agents Council, meaning no actual confusion had occurred in the market.

2. Justice Makarau’s Ruling: The Theoretical Distinction

Justice Makarau systematically rejected the respondent’s arguments by drawing a sharp distinction between the common-law delict of passing-off and the statutory remedy of a court-ordered name change:

“In my view, the statutory remedy of compelling a competitor company to change its name… is akin to but not the same with the delict of passing off. The right to protect a name under the delict of passing-off arises only when the name has acquired a reputation. Thus, it is a requirement, under the delict, for the applicant to establish a reputation or goodwill in the name.”

She went on to state:

“It appears to me that, under the statute, all that the applicant needs to prove is that the respondent’s name is likely to mislead the public or gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public or is likely to cause damage to any other person. My reading of the section is that such an applicant need not prove that it has a reputation or goodwill or a clientele that will be confused by the similarities in names.“

3. The Ratio Decidendi

The Court held that the primary purpose of the statutory provision is the protection of the public from being misled, rather than the protection of an individual company’s good name or business against competition.

On the facts, Makarau JP observed:

• Both companies had the same root name: “Southbay.”
• “Southbay” is an alien, uncommon name in Zimbabwe (it does not denote a local place, location, or common word).
• Both companies were registered to operate in the real estate sector.
• Consequently, the public was highly likely to confuse one for the other, regardless of whether the respondent was currently trading with the public or whether the applicant had established a commercial reputation.

The High Court granted the application and ordered Southbay Properties to change its name within six (6) weeks, perfectly aligning with the statutory remedy.

B. The Interlock with Trademark Infringement and passing-off Precedents

While Southbay clarified that statutory name disputes do not require proof of goodwill, the courts still draw on intellectual property principles to evaluate whether a name is “likely to deceive.”

1. Kellogg Co v Cairns Foods Ltd 1997 (2) ZLR 230 (S)

In this landmark Supreme Court case, the court defined passing-off as:

“…a representation by one person that his business (or merchandise…) is that of another, or that it is associated with that of another…”

The Supreme Court emphasized that to determine whether a representation amounts to passing-off, the court must ask whether there is a reasonable likelihood that members of the public will be confused into believing that the business of one is concerned or associated with that of another.

Although Kellogg was a trade dress and packaging dispute, the “reasonable likelihood of confusion” test is identical to the test applied by the Registrar under Section 25(1)(a) of the COBE Act when assessing corporate names.

2. Cairns Foods Limited v Netrade Marketing (Pvt) Ltd SC 106-21

In this case, the Supreme Court clarified the standard of evaluation for deceptive similarity. The court reaffirmed that:

• The comparison must not be made side-by-side. Instead, the court must consider the “imperfect recollection” of the ordinary consumer.
• The consumer is not a “moron in a hurry,” but an average buyer exercising ordinary caution.
• If a proposed corporate name contains the dominant, distinctive feature of an existing registered trademark or company name, it is deceptively similar, even if descriptive words are added to it (e.g., adding “Properties” to “Southbay”).

3. Unilever PLC & Anor v Vimco (Pvt) Ltd HH 175-04

In this case, Vimco (Private) Limited was sued by Unilever for trademark infringement and passing-off because its brand “VIMCO” closely resembled Unilever’s registered trademark “VIM.”

The High Court ruled in favor of Unilever. Crucially, as part of the equitable relief, the court did not merely interdict the respondent from selling its products; it ordered Vimco (Pvt) Ltd to change its corporate name.

This case illustrates how trademark infringement, passing-off, and statutory corporate name changes are closely intertwined in judicial practice.

Systemic Synergy: Use of Names, Assumed Names, and the Electronic Registry

Section 25 of the COBE Act does not operate in isolation. To maintain corporate hygiene, it must be read alongside other name-related provisions in the Act.

A. Section 26: The Change of Name Procedure

If a company is ordered to change its name under Section 25, or wishes to do so voluntarily, it must follow the formal procedure in Section 26:

1. Pass a Special Resolution: This requires a 75% majority vote of the shareholders (Section 175).
2. Obtain Written Approval: The proposed new name must be approved by the Registrar (who will evaluate it against the Section 25 criteria).
3. Publish Advertisements: The company must publish notice of its intended name change in the Government Gazette and a daily newspaper circulating in its district.
4. Obtain a Certificate of Change of Name: Once registered, the Registrar issues a new certificate, and the change is noted on all land and mining registers (Section 26(4)).
5. No Affect on Rights/Obligations: Under Section 26(5), a name change does not affect any existing rights, liabilities, or legal proceedings.

B. Section 28: Regulatory Penalties for Omission of Name

Under Section 28, every registered business entity must have its registered name engraved in legible characters on its official seal (if any) and mentioned in all its “business papers” (letters, notices, bills of exchange, cheques, invoices, and receipts).

Failing to comply is an offence under Section 28(4). Furthermore, Section 28(5) imposes a severe sanction:

“…any person acting on behalf of the registered business entity concerned who uses or permits the use of any seal or business paper so as to constitute such a default shall be personally liable for any debt incurred by the entity as a result of such use, unless the debt is duly discharged by the entity.”

This acts as a powerful incentive for directors to use their exact registered names, preventing them from hiding behind unregistered, deceptive trade names to escape corporate liability.

C. Section 29: Lawful Use of Assumed Names (“Trading As”)

In modern commerce, companies often wish to trade under brand names that differ from their registered corporate titles (e.g., Delta Beverages (Pvt) Ltd trading as Golden Glow Breweries). Section 29 of the COBE Act formalizes this practice:

• A company may assume a trade name by filing a formal Notice of Assumed Business Name (Form CR3) with the Registrar.
• Crucially, Section 29(3) states that:
  

  “Section 25 (‘Prohibition of undesirable name’) shall apply, with any necessary changes, in relation to the use by a registered business entity of an assumed name in terms of this section.”

This prevents companies from circumventing Section 25’s restrictions by simply using unregistered “trading as” names to confuse or mislead the public.

D. The Electronic Registry (Chapter V)

The establishment of the Electronic Registry under Section 280 has transformed the name search and reservation workflow.

• Name reservation requests can now be submitted online, and automated search algorithms can quickly flag exact name matches.
• This digitized system has significantly reduced clerical errors, preventing the simultaneous manual registration of identical names in Harare and Bulawayo.

Critical Appraisal: Strengths, Gaps, and Recommendations

While Section 25 of the COBE Act is a major step forward, a critical analysis reveals both strengths and areas that require reform.

A. Major Strengths of the New Framework

1. Decriminalization and Speed: By replacing criminal prosecution with the Category 2 Civil Penalty Order system (Section 25(3)), the Act allows the Registrar to swiftly resolve name disputes through direct financial and administrative pressure.
2. Unified Standards: Treating companies and PBCs under a single standard prevents cross-registry name-squatting.
3. The Court’s Unlimited Time Horizon: Allowing “interested persons” to approach the High Court at any time (Section 25(5)) ensures that bad-faith registrations can always be challenged, even if they have survived past the Registrar’s 12-month administrative window.

B. Identified Gaps and Gaps

1. The Ambiguity of “Undesirable for Any Other Reason” (25(1)(e)): Without formal Registry Guidelines, this residual power can lead to administrative inconsistency, where different registry officers apply varying personal standards of “desirability.”
2. The Registrar’s 12-Month Time Bar: If an identical name is registered due to a registry error, and no interested third party has the financial means to launch a High Court application, the Registrar is powerless to correct their own mistake after 12 months. This can permanently compromise the integrity of the public register.
3. Lack of Phonetic and Translation Checks: While the Electronic Registry checks for exact spelling matches, it does not consistently flag phonetic similarities (e.g., “Klean Co” vs. “Clean Co”) or translations between English and local languages (e.g., “Shumba Properties” vs. “Lion Properties”), which can still mislead the public.

C. Strategic Recommendations

• Formulate Registry Practice Notes: The Companies Office should publish clear, public guidelines defining the criteria used to assess “indecency,” “blasphemy,” and “undesirability.”
• Implement Advanced Matching Algorithms: The Electronic Registry should be upgraded to include soundex (phonetic) matching and cross-linguistic translation checks.
• Establish an Low-Cost Administrative Appeals Board: To make name protection accessible for small-to-medium enterprises (SMEs), Zimbabwe should establish an affordable administrative tribunal to resolve name disputes, bypassing the high costs and delays of formal High Court litigation.

Practical Corporate Hygiene Checklist for Zimbabwean Businesses

To avoid costly disputes and secure their brands, modern entrepreneurs and directors should utilize the following checklist when choosing and managing their corporate names:

Stage	Action Item	Statutory Reference	Key Legal Rule
1. Selection	Check that the proposed name is not identical or confusingly similar to any registered Company, PBC, or Trademark.	Section 25(1)(a) & (b)	Avoid common descriptive terms; choose unique, coined words (e.g., the Southbay principle).
2. Scrutiny	Ensure the name does not imply state patronage, violate public decency, or suggest restricted professional activities.	Section 25(1)(c) & (d)	Do not use words like “National” or “Ministry” without written government consent.
3. Reservation	File an application for name reservation to secure the chosen name for 30 days while preparing incorporation documents.	Section 25(2)	The name is locked once reserved, protecting you from name-squatting.
4. Assumed Names	Register any “trading as” names formally using Form CR3.	Section 29	Assumed names must satisfy the same Section 25 rules as registered corporate names.
5. Publicity	Print the exact registered name on all corporate seals, invoices, letterheads, receipts, and financial documents.	Section 28	Omissions can lead to personal liability for the acting director.
6. Monitoring	Monitor the market and public registry for any confusingly similar registrations.	Section 25(5)	If a competitor registers a deceptively similar name, act immediately. While you can approach the High Court at any time, prompt action minimizes market confusion.

Conclusion

The corporate name is the cornerstone of a business’s public identity. Section 25 of the Companies and Other Business Entities Act [Chapter 24:31] provides a robust, modernized framework to police corporate names, balancing administrative oversight with judicial equity.

As Justice Makarau masterfully articulated in the Southbay case, the statutory prohibition against undesirable names exists to protect the public from being misled. It operates independently of the common-law requirements of passing-off, offering businesses a direct, low-barrier pathway to challenge deceptive competitor names.

In Zimbabwe’s evolving economy, businesses must prioritize strict compliance with name regulations. By choosing distinct names, registering assumed titles, and actively monitoring the registry, businesses can safeguard their commercial goodwill, maintain regulatory compliance, and operate with confidence.