'Shadow firms' with copycat trademark names to be targeted

So-called 'shadow companies' could be forced to change their names if they are too similar to those of trademark owners under proposals to arm the Registrar of Companies with new enforcement powers.

The proposal is part of an overhaul of the complex Companies Ordinance and attempts to plug a legislative loophole that has long been exploited, especially by firms producing counterfeits on the mainland.

Under the proposal, the Registrar of Companies would be able to enforce a court order requiring a company to change its name for trademark infringement. The name change would need to take place within a specified period of time, after which the registrar may substitute the company's name with its registration number.

Existing laws do not give the registrar any such enforcement powers. The ordinance only allows the registrar to require a company to change its name within 12 months of its incorporation if it is 'too like' that of another firm.

In a paper published by the Financial Services and the Treasury Bureau on the proposals for the Companies Ordinance, the government said that 'there is a strong case for strengthening the company name registration regime to tackle any possible abuses by shadow companies'.

But the paper said that including the power to deregister a company for not complying with a name change order was not recommended as this may affect the interests of creditors and other third parties.