Friday, September 8, 2017

What's in a Name (of a Texas company)?

"What's in a name? That which we call a rose
By any other name would smell as sweet."

- Spoken by Juliet in Romeo and Juliet (Act II, Scene II), by William Shakespeare

Sometimes, it seems the hardest part of forming a new company can be picking its name - as if all of the good names have already been taken! And historically, Texas law has done company organizers no favors by preventing companies from using names which are the same as, or "deceptively similar" to, names of existing companies doing business in Texas. At times, the Texas Secretary of State has taken a broad view of names which it considered deceptively similar - further narrowing the field of available names. But thanks to the 85th Texas legislature, picking a name for a Texas company is about to get a little easier.

House Bill 2856, which becomes effective June 1, 2018, will amend the Texas Business Organization Code (TBOC) to permit new filing entities (such as corporations, limited liability companies, limited partnership, etc.) and foreign entities registering to do business in Texas to use any name which is "distinguishable" from the names of all other companies formed, registered, or reserved for use in Texas.

In short, Texas companies will soon be able to have "deceptively similar" names, so long as the names are "distinguishable" from one another.

The change will make Texas law more uniform with the requirements established in other states, including the State of Delaware (see Section 102(a)(ii) of the Delaware General Corporation Law). It is hoped that this change will facilitate the formation of new business entities and expedite the registration of out-of-state business entities to transact business in Texas.

Perhaps all those newly formed or registered Texas companies will soon be humming a Jim Croce tune:

"Like the pine trees lining the winding road
I got a name, I got a name."

Then again, maybe not.

Regardless, I view this change as a positive one for Texas corporate law.

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