Insolvency Act 1986, section 216

Restriction on re-use of company names

Part IV Winding Up of Companies Registered under the Companies Acts

(1) This section applies to a person where a company (“the liquidating company”) has gone into insolvent liquidation on or after the appointed day and he was a director or shadow director of the company at any time in the period of 12 months ending with the day before it went into liquidation.

(2)For the purposes of this section, a name is a prohibited name in relation to such a person if—

(a)it is a name by which the liquidating company was known at any time in that period of 12 months, or

(b)it is a name which is so similar to a name falling within paragraph (a) as to suggest an association with that company.

(3)Except with leave of the court or in such circumstances as may be prescribed, a person to whom this section applies shall not at any time in the period of 5 years beginning with the day on which the liquidating company went into liquidation—

(a)be a director of any other company that is known by a prohibited name, or

(b)in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of any such company, or

(c)in any way, whether directly or indirectly, be concerned or take part in the carrying on of a business carried on (otherwise than by a company) under a prohibited name.

(4)If a person acts in contravention of this section, he is liable to imprisonment or a fine, or both.

(5) In subsection (3) “the court” means any court having jurisdiction to wind up companies; and on an application for leave under that subsection, the Secretary of State or the official receiver may appear and call the attention of the court to any matters which seem to him to be relevant.

(6)References in this section, in relation to any time, to a name by which a company is known are to the name of the company at that time or to any name under which the company carries on business at that time.

(7)For the purposes of this section a company goes into insolvent liquidation if it goes into liquidation at at time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.

(8) In this section “company” includes a company which may be wound up under Part V of this Act .

Definitions used in section 216 1

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act

Cases considering section 216 25

PSV 1982 Limited v Sean Anthony Edward Langdon

[2022] EWCA Civ 1319 · 12 October 2022Limits

The court treated section 216 as the prohibition whose contravention triggers section 217, including management of a company under a prohibited name (see paras [20]; [37]-[41]). The court applied the requirement that the person was a director of the liquidating company within the statutory period as part of the admitted contravention (see paras [20]; [26]). The court accepted that Discovery Yachts was a prohibited name for the appellant, without needing to resolve a separate construction of the definition (see paras [11]; [20]; [26]). The court treated the statutory prohibition as subject to court leave or prescribed exceptions and referred to the insolvency rules as mechanisms by which a director could avoid the consequences (see paras [20]; [45]). The court relied on the criminal liability for contravention when balancing the director’s position against creditors and assessing whether automatic liability under section 217 produced injustice (see paras [38]; [41]; [45]).

Neuberg, R. v

[2016] EWCA Crim 1927 · 15 December 2016

The court construed the offence as criminalising the carrying on of a business under a prohibited name, rather than merely failure to obtain permission for otherwise lawful trading. On the findings, that criminal conduct enabled the business to trade and generated benefit. (see paras [28]-[31])

Hawkes v Cuddy & Ors

[2009] EWCA Civ 291 · 2 April 2009

The court accepted the findings that participation in management under a prohibited name contravened the provision. A petitioner who had knowingly participated in the underlying arrangement could not found an unfair-prejudice petition upon that conduct (see paras [71]-[74]). The provision prohibited involvement in the management of a company using a prohibited name unless leave was obtained. The alleged contravention did not justify further relief because the petitioner had participated in the arrangement and future contravention was no longer relied upon (see paras [17]; [71]-[74]).

5 more judgments, and what each says about section 216, are in the case-law panel in the full Act.

Amendments and notes

4 notes from legislation.gov.uk

Modifications

  1. C682S. 216 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 103, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 2
  2. C683S. 216 applied (with modifications) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), regs. 2, 37 (with reg. 5) (as amended (4.1.2024) by S.I. 2023/1399, regs. 1(2), 4, 11)
  3. C684S. 216 modified (16.7.2026) by The Modification of the Law (British Steel Limited Property Transfer) Regulations 2026 (S.I. 2026/833), regs. 1(2), 6(2), Sch. para. 3
  4. C685S. 216 modified (cond.) (16.7.2026) by The Modification of the Law (British Steel Limited Property Transfer) Regulations 2026 (S.I. 2026/833), regs. 1(2), 5