Limited companies can either trade under their name or use another business name. But what are the rules around using the word ‘limited’ in their names?
There are various rules which must be adhered to when choosing a company name. Some of these relate to names which are similar to an existing company name (known as ‘same as’ and ‘too like’ names), while other rules prohibit offensive or ‘sensitive’ words from being used in a company name.
Another important rule is that limited private company names should generally end in either ‘Limited’ or ‘Ltd’ (the Welsh equivalents ‘Cyfyngedig’ and ‘Cyf’ can be used instead for companies registered in Wales). Public limited company names should similarly end in “Public limited company” or “plc”. But this rule is subject to certain exceptions (see below).
‘Limited’ should not be used in trading names
Companies often trade under their official registered name. As discussed above, registered company names should generally end in ‘Limited’ or ‘Ltd’ and this last part should be included as part of the full name when it is used. However, it is also possible to trade under an alternative business name.
Business names (also known as trading names) can be any name which does not infringe another company’s trade mark, and which does not contain an offensive or ‘sensitive’ word. Furthermore, it must not include the words ‘Limited’, ‘Ltd’, ‘Limited Liability Partnership, ‘LLP’, ‘Public Limited Company’ or ‘plc’.
Where must the full company name including ‘Limited’ be displayed?
Although business names can be used for general purposes of trading, the registered company name (i.e. which includes the words ‘Limited’ or ‘Ltd’ at the end, or Welsh equivalents) must also be displayed on:
Apart from people running a business from home, companies are required to display a sign which clearly displays the registered company name at the registered company address as well as any other addresses from which the business operates. The sign should be visible 24/7.
Websites, email and stationery
The registered company name must also appear on company websites, emails, letters, promotional material, etc.
It is vital to demonstrate the fact that it is a limited company (i.e. spelling out the full company name including the ‘Limited’ or ‘Ltd’ at the end); a business name is not sufficient. Other information which must be shown includes the company’s registered number and address.
Are there any exceptions to using the word ‘Limited’ in a company name?
In accordance with section 60 of the Companies Act 2006, there are certain circumstances in which limited companies are permitted to omit the word ‘Limited’ or ‘Ltd’ (or the Welsh equivalents), namely if:
- the company is a registered charity or limited by guarantee (as opposed to limited by shares); and
- its articles of association state that the company:
- promotes or regulates commerce, art, science, education, religion, charity or any profession; and
- is prohibited from paying its shareholders (e.g. through dividends); and
- requires each shareholder to contribute to company assets if it’s wound up during their membership, or within a year of them ceasing to be a shareholder.
When it is first incorporating, a company can use form IN01 to claim an exemption from using the word ‘limited’. Companies limited by guarantee must apply to Companies House using form NE01 if they later want to gain an exemption.