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What’s in a Name? A Lot, if You’re a Corporation

Engraved portrait of William Shakespeare

In Act II, Scene II of Shakespeare’s Romeo and Juliet, Juliet wishes that she and Romeo could simply set aside their warring families, famously asking, “What’s in a name?” I thought about this question recently as I was helping a foreign client set up a corporation here in the U.S.

The foreign client is based in the U.K. It wanted to form a U.S. subsidiary with a similar name for brand-identification purposes. To avoid revealing the identity of the client, I will refer to it as “Amalgamated Widget Solutions, Ltd.” and the desired name of its U.S. subsidiary as “Amalgamated Widget Solutions, Inc.”

Because the U.S. corporation would have a warehouse and employees in Texas, we decided to form the corporation there. (See “Why [not] Incorporate in Delaware”.) Checking the Texas Secretary of State’s database, I saw that there was a Texas corporation with a name that started with “Amalgamated Widget’, but not one that started with “Amalgamated Widget Solutions”.

Had we been forming the corporation in Delaware or California, “Amalgamated Widget Solutions, Inc.” would have been an acceptable name because it is not confusingly similar to “Amalgamated Widget, Inc.” In Texas, however, there is an additional consideration.

In Texas, subject to certain exceptions, if the first two words of the new corporation’s name are the same as the first two words of an existing corporation’s name, then the owner of the existing must provide written consent to the new name, even if the new name is not confusingly similar.

We were in a rush to form the corporation, and there was no guarantee that consent would be granted if we sought it, so we chose an alternative name by using only part of the first word: “Amalgam Widget Solutions, Inc.” Not pretty, but it got the job done.

Bottom line: When forming a new corporation, pay particular attention to acceptable-name rules in the state of formation.

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Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.