Filings
Consent Appropriation of Name (Similar Name Consents No Longer Exist)The following information was published in our Front Page News of our web site on 4-23, 24, 25-2008
WEDNESDAY'S NEWS 4-23-2008
1) The Consent to USE of Similar Name procedure has been terminated by the Corporation Bureau. Effectively immediately the Bureau will only accept CONSENT TO APPROPRIATION OF NAME for filings. As far as we know at this point, that means you will NOT be able to use ABC, LLC and ABC, LP is the classic GP/LP combination filings. There are many other problems that this may cause. For instance, it may affect the purchase of a company name from the seller and allow the buyer to trade under the name purchased unless the selling company agrees to change its name. It will most definitely mean that you will not be able to buy a consent from an unrelated company that has the name your client would like to use.
THURSDAY'S NEWS 4-23-08
Why is this information important? If you are involved in the buying and selling of companies or their names, then you should understand the new roadblocks to securing a name at the Department of State.
URGENT UPDATE:
We were just informed, late Wednesday (after COB) of the particulars regarding the change in CONSENT policy. The Bureau has decided to implement this change immediately. There will be no buffer period as requested by us. As for the practical effects of this decision, they are best explained by the following examples:
1) The following is the difference between "Appropriation" and "Similar Name" consents:
...a) ABC, Corp. gives a consent to ABC, Corp. = This is an appropriation and would be allowed if one of the conditions set forth in Section 1303(b)(1)(i)(A) are present, (More on that tomorrow). These names are exact and an appropriation would be needed to obtain use of this name.
...b) ABC, Corp. gives a consent to ABC, Inc. = This is a similar name situation because the names are not exact. This is the procedure that is no longer available.
2) The following example will no longer work: ABC, LLC is formed to be a general partner of a limited partnership being formed at the same time by the name ABC, LP. Under prior procedures the consent to use of similar name was presumed when the filings were made simultaneously since the company giving the consent (ABC, LLC) was show on the LP filing as the general partner. This will no longer work since there is no longer a consent to use of similar name. It will be necessary to name the LP or the LLC something unique. The obviously solution is ABC GP, LLC and ABC, LP.
3) At this point the following situation is unclear and the Bureau has taken this under advisement - we are awaiting further clarification from their legal section: Suppose there is a company called Tony's Pizza (a sole proprietorship run by Tony Balogna). Tony dutifully files his fictitious name registration and published the filing (required for individual fictitious names). Several years later, Tony sells his business to George "Beer" Balogna. George purchases rights to the name, forms a corporation called Tony's Pizza, Inc. Because all the signs, delivery vehicles, invoices, books etc. all say Tony's Pizza he must either have "Inc." added to everything or file another fictitious name (he doesn't want to take an assignment of the old fictitious name for liability reasons). If you read the various sections of the statute it would seem clear to us that since Tony's Pizza, Inc. is not really an "other" entity (see 1303(b)(1)), that a consent is not even required and that this situation should be allowed without a consent. It is just another form of the name that the company that already had rights to the name wants to use.
4) The following is no longer an option: Kris's Hair Port, LLC does business under the name Kris's Hair Port and has a fictitious name registered. The LLC sells Kris's to XYZ Corp. which wants to trade under the Kris's Hair Port name. XYZ will not be able to file a fictitious name (and again doesn't want to take an assignment of the old FN for liability reasons) because similar name consents are no longer permitted. Nor will the LLC be able to give a consent to XYZ to registered the name Kris's Hair Port, LLC since a corporation can not use the LLC designator in a fictitious name.
5) The following is no longer an option: Consolidated Statutes, LLC is a DE corporation. It wants to do business in PA but while trying to file its qualification, Esquire Assist, Ltd. told them that it will be rejected because there is already a company in PA by the name Consolidated Statutes Corp. It will no longer be possible for Consolidated Statues, LLC to obtain a consent from Consolidated Statues Corp. because to obtain a consent now the two names must be idential (see: Appropriation above). Esquire Assist, Ltd. advises the DE corporation they they will need to do a limited certificate of authority fiilng which involves the filing of a fictitious name registration, and thereafter trade under that fictitious name, for instance, they could select ConStat as their fictitious name (assuming ConStat is available).
Take a look at the current Consent form which will probably be changed in the near future, CLICK THE LINK BELOW.
Note: The Bureau is implementing a change in the law (see Title 15 Section 1303) that occurred some time ago. More details on this are available if needed.
FRIDAY'S NEWS 4-25-2008 CLICK HERE
OTHER ISSUES RELATING TO CONSENTS:
A consent MUST be filed with some other form, it can NOT be filed by itself.
Clients often ask us, when completing the consent for an appropriation of name (as opposed to a consent for use of a similar name which as of April 24, 2008 is no longer available) what will happen if the company giving the consent fails to go out of business or wind up their affairs or change their name as they are claiming they will do by executing the consent.
The answer is provided in 15-1304(b) where it states "and the... association... does not change its name, cease to do business, be wound up or withdraw as it proposed to do in its consent or change its name ...any court having jurisdiction may enjoin the... corporation from continuing to use its name... that is not distinguishable... upon application of: (1) the Attorney General... (2) any person adversely affected.
What is the difference between "ceasing to do business" and "being wound up?" We'll deal with that in another FAQ.
To download the form CLICK HERE THIS FORM IS IN THE PROCESS OF BEING REDRAFTED TO AN APPROPRIATION OF NAME CONSENT FORM ONLY.
To view our full FAQ on the above NAME AVAILABILITY issues... Click Here .