What this is - What happens when a corporation’s new name is not available in a foreign jurisdiction? A lot depends on where you filed it. Let’s look at some preliminary action to take and some notable exceptions.
What this means - Changing a company name that was just amended can be a big deal. It’s often better to choose a name for use in the state where its not available. Keep these solutions in mind when deciding to register an alternate, fictitious or trade name for your business.
In the past, we discussed qualification amendments and the various contrasts and comparisons between the states. For this feature, we are digging deeper into one of the common events that precipitates an amended qualification: a name change in the corporation’s home state. More specifically, we are asking, “What happens when a corporation’s new name is not available in a foreign jurisdiction?” Of course this doesn’t happen only when amending, this situation can come up when a company first qualifies to do business as a foreign entity.
Remember that a business entity is only regarded as domestic in the state in which it was formed. These entities are considered foreign in all other states and may need to be qualified in order to conduct business there as a foreign corporation, LLC, LP, or LLP.
The common course of action is for the corporation to use a different name when conducting business in that state. The formal expression for this name varies, but will almost always be one of the following: “alternate name,” “assumed name,” “fictitious name,” “modified name” or “trade name.” Most states require that the forced fictitious name (a term that helps distinguish this type of name from an elective assumed name) be available for use and contain a corporate indicator or abbreviation (for instance, Inc., LTD or LLC) Some states make the corporate indicator optional and, New Hampshire, New York and Vermont do not allow it.
It is likely that the fictitious name will be listed on the amended qualification filing, usually next to, or very near to, the new corporation’s name. In several jurisdictions, there are requirements for a foreign corporation to obtain consent to use its new name from the existing conflicting entity.
Determine Whether Additional Forms or Documents Are Required
There are several states in which an additional form is required to designate the fictitious name. In Hawaii and Maryland, since there is no qualification amendment form to file, the form for the fictitious name is the only filed document. Montana, New Mexico, Oklahoma, South Carolina, Vermont, Wisconsin and Wyoming do not allow the fictitious name to appear on the qualification amendment, so the additional form must be filed along with the amendment. The fictitious name appears on the amendment plus there is a separate required filing in Illinois, Iowa, Maine, New Hampshire, North Dakota, Pennsylvania, Tennessee and Texas.
Many jurisdictions also mandate that, in addition to the qualification amendment and any other state filing(s), the corporation attach a resolution from the Board of Directors which authorizes the use of the fictitious name. The specific requirements for signatures and wording of the resolution vary, so it is important to confirm what is needed for each state in which an entity is authorized to do business.
Be Aware of Notable Exceptions
Here are a few interesting and notable exceptions to the general rules for the filing of fictitious names for foreign corporations:
- Kansas requires either consent from the existing entity or a letter included at the time of filing, stating that the corporation will list its home state as a means of identification and in its advertising.
- In Massachusetts, there is a subsequent filing requirement in the city or town where the corporation’s business address is located.
- The State of Oregon only requires that the corporation add wording after the corporation name, similar to “a corporation of Delaware.”
Use This Short Checklist
To assist you in in the event that a new name is not available in a foreign jurisdiction, remember this checklist:
1) Is the fictitious name available?
2) Does it need a corporate indicator?
3) Should a resolution from the board of directors be drafted?
4) Is there an additional fictitious name form to be filed? Will it need to be renewed?
5) Are there other unique requirements in this jurisdiction?
Obtaining the answers to these questions in advance for each foreign jurisdiction will enable you to properly address the name change and avoid rejection and delays.
FAQs
What determines how a corporation is considered a foreign corporation?
In the US, a corporation is considered “foreign” if has been registered under the laws of a foreign country or another state . So, if you are incorporated in California, and want to do register a business in Iowa, then Iowa considers you a foreign corporation.
What happens if I don’t register as a foreign entity?
Possible Consequences of Doing Business in a State Without Registering:- Inability to Initiate a Lawsuit
- Significant Delays
- Monetary Penalties
- Penalties Imposed on Officers, Directors and Registered Agents
Can a corporation be domestic and foreign at the same time?
Remember that a business entity is only regarded as domestic in the state in which it was formed. These entities are considered foreign in all other states and may need to be qualified in order to conduct business there as a foreign corporation, LLC, LP, or LLP.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
