Legal Considerations for Establishing a production company: reasons for setting up a limited company, as well as guidance for name selection and formation.
First of all: congratulations! If you are reading this then chances are that you are at an exciting junction of your career in film and tv production. Before you press ‘go’, there are some important legal and practical considerations that you should consider.
Should you set up a limited company?
There are different reasons for opening a company: these are mainly linked to tax and accounting as well as ‘ringfencing’ of risk. Your accountant will be able to advise you on the first point. ‘Ringfencing’ in this case means that, if your company (rather than you personally) enters into contracts, and if there are problems with one of the contracts or projects in the future, any potential claim would be directed against your company, rather than you personally. Generally speaking, only the rights and assets of the company would therefore be at risk in that scenario.
Most producers choose to set up a separate production company per film or TV series they’re producing so that all rights to each project are bundled in the same company. They typically start developing projects through their ‘main’ production company, and once a project is ready to be taken to the next stage, they transfer the rights in that project to a new production company. Doing that would also ringfence each company for the others, as one company being in hot waters would not affect the other ones. Similarly, if you are applying for film tax credits in the UK, it’s important that the correct entity incurs the spending.
Naming Your Production Company
If you are thinking about setting up your production company then you are likely to already have thought about the wider marketing and branding aspects of your company. The company name is a crucial part of your new company’s branding and establishment.
From a legal and practical point of view, several factors must be taken into account when selecting a name:
1. Availability of the name on Companies House:
Search Companies House to check that there are no other companies with the same or similar name. There is more guidance on how to pick a name on Companies House: link.
If your chosen name consists of more than one word, I would recommend searching for each of those words as the search facility on Companies House is as agile as traditional search engines.
The risk of choosing a name that is too similar to the name of another company is that that company could try to sue you for, for example, “passing off” (basically pretending to be part of their company or group of companies which would potentially increase your branding and recognition value). If you find a similarly named company, I would therefore consider picking a different company name.
2. Registered trademark search:
You should also conduct a thorough search of a few trademark registers to ensure that your chosen company name is not in use or even trademarked by another entity. This step helps mitigate the risk of potential trademark infringement claims in the future.
You can find the UK’s trademark register here. The EU’s trademark registry can be found here. And here for the USA. There are more extensive registries but searching them will incur a cost. There is no global or international registry, because trademarks are registered on a country-by-country basis.
Whilst a registered trademark that has a similar name to your company title might mean that you should not use that name, the law on trademarks is quite complex. In the first instance, I would consider whether you could come up with a different name. If you are sure that you want that particular name, I would seek specialist legal advice from a trademark lawyer.
Similarly to your search on Companies House, the search engines of the trademark registers are not as reliable as traditional engines and if your chosen company name consists of different words, it’s advisable to search for them together as well as separately.
3. Unregistered trademark search:
In addition to the above searches, there are two more searches to carry out.
First of all, use the internet search engine of your choice to search the internet for companies with the same or similar name.
Second of all, you could also search on IMDB as you might find that a production company has already picked the same or similar name. If that’s the case, then I would consider changing your desired company name.
Domain search: For practical, branding and marketing reasons, you will of course need to check that a domain similar or the same as your production company name is available. Apart from brand consistency and SEO, if someone else has chosen a name that is the same or similar to your company’s name, then that might indicate that you would potentially be infringing someone’s unregistered trademark.
Further considerations
If you are a producer and you’re setting up your own company, then chances are that you will also be the sole company director of that company. Company directors are responsible for the running of the company. For example, you will need to ensure that you file all required statements and accounts with Companies House. You can read more about that on Companies House.
As a company director there are further legal duties that will apply to you. Primarily you will need to comply with a list of duties that are imposed on company directors by the “Companies Act 2006”
act within your powers (i.e. in accordance with the articles of association)
promote the success of the company (i.e. do what you think is best for the company)
use independent judgement when you make decisions on behalf of the company
exercise reasonable care, skill and diligence
avoid conflicts of interest (i.e. avoid situations where your personal position would be in conflict with what’s best for the company)
avoid accepting benefits from third parties (if those benefits are only offered to you because you are the company director and would therefore potentially entice you to do or not do something)
declare any personal interest in a proposed transaction (to any other directors of the company).
Setting up a limited company in the UK
Thankfully, setting up the company itself has been made easy by Companies House in the UK. If you go to their website, you will find an easy to follow step-by-step guide. At this point of the process, you can probably save yourself the legal fees and do it yourself.
Next steps – working with an entertainment lawyer.
If you have any questions about setting up a company in the UK, please don’t hesitate to get in touch. I offer an initial call for free so that I can assess whether your matter is something that I can help you with and so that you can decide whether or not you want to work with me. You can get in touch with me here to schedule your free call with me.