Re: [DNS] Is auDA auctioning non-transferable or transferable domain name licences?

Re: [DNS] Is auDA auctioning non-transferable or transferable domain name licences?

From: Patrick Corliss <patrick§quad.net.au>
Date: Fri, 25 Jan 2002 23:43:11 +1100
On Fri, 25 Jan 2002 13:02:42 +1100, Ian Johnston wrote:

> However, there can be significant costs and risks in acquiring a company or
> other business for the purpose of acquiring a domain name licence.  As a
> matter of good management, to minimise these costs and risks would require a
> measure of due diligence on the part of the acquirer (costly in itself) to
> ascertain the nature and extent of any liabilities (e.g. tax or contingent),
> obligations, etc. of the business under the laws of Australian States,
> Territories and the Commonwealth, and any other jurisdiction for that
> matter.

Hi Ian

I find most people get confused with the law and I am probably no exception.
However, I have had the benefit of working for the NSW Department of Business
and Consumer Affairs (now the NSW Department of Fair Trading) as a compliance
officer wrt business names.

My understanding is that a "business name" is not a legal entity.  Unlike a
corporation, it cannot sue or be sued.  The purpose of the registration is
simply to record the details of the owner who could be a sole trader,
partnership or corporation.  It is almost exactly analogous to the
registration of a motor car where you don't sue the car but you do sue the
owner of the car.

What that means is that a person who slips on a milkshake in Coles New World
(a registered business name) goes along to the Dept of Fair Trading to perform
a search.  The last time I did one, about a year ago, the cost was $10.

That search will inform you that the owner is G. J. Coles Pty Ltd, a
corporation registered with the Australian Securities and Investment
Commission (ASIC).

The current regulations, as I have pointed out before, are not being
interpreted correctly.  It is assumed that a "business name" is equivalent to
a "business".  This is not the case.  If I go to my local coffee shop, I can
talk to the owner and say I want to take over his business name viz "Sahara
Cafe".  That does not mean I am buying his business.

If he agrees, we can both sign a form, obtainable from the Dept of Fair
Trading, which will recognise the transfer of the "business name", Sahara
Cafe, from him to me.  The form asks for the name and address of the former
registrant and the name and address of the new registrant (or registrants as
the case may be).

Meanwhile, the coffee shop itself, and all of its assets, liabilities, stock,
fixtures and fittings remain under the control of the former registrant.
Naturally he will probably chose another name for his coffee shop, say, "Cafe
Marrakesh".

Of course, I do have to be careful in the sense that a creditor of the former
owner may very well perform a search of "Sahara Cafe" and assume that I have
also taken over the business.

However, should that creditor issue me with a summons, my defence is easy.  I
just need to ask what was the date of the debt in relation to the date of the
"business name" transfer.

The fact is that people are chosing to transfer "business names" as a
mechanism to circumvent the restriction on treansferring domain names.  This
is very difficult to prohibit without introducing the sort of legislation used
by the tax system which requires a declaration of a change of beneficial
owner.

Please note that what I have said above does not apply to "corporations" which
are, in fact, legal entities for which "due diligence" is required.


Best regards
Patrick Corliss
_________________________________________________________
I'm on the Board of auDA (the .au country code) as well as TLDA (the Top
Level Domain Association).   Please note that anything I write is my own
personal opinion and does not necessarily reflect the views of any body
with which I am associated.  Please also note IANAL (I Am Not A Lawyer).
Received on Fri Oct 03 2003 - 00:00:00 UTC

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