Effective January 1st, 2021, Senate Bill 522 revises California’s business entity name standards for corporations and adds a requirement for limited partnerships (LPs). Additionally, it removes consent and permission exceptions to the name standards for corporations, limited liability companies (LLCs) and LPs.
Beyond naming standard adjustments, there will be a new requirement for corporate filings with the Secretary of State.
Let’s explore these changes in more detail.
New Corporate Name Standard and Addition to Current LP Name Standard
While California’s LLC naming standards remain the same, there is a notable change to the corporate name standard and an addition to the current LP naming standards. SB 522 removes the “deceptively similar” corporate name standard and replaces it with a “distinguishable in the record” standard, akin to California’s existing name standards for LLCs and LPs. LP naming standards will require that a proposed limited partnership name, in addition to being distinguishable in the record, must not be likely to mislead the public.
Here’s a summary of California’s business name standards, for both foreign and domestic entities, as of January 1st, 2021, with SB 522 changes in bold:
Any proposed corporate name must be distinguishable in the Secretary of State’s records from any existing corporate name and must not be likely to mislead the public.
- Limited Liability Companies
Any proposed limited liability company name must be distinguishable in the Secretary of State’s records from any existing limited liability company name and must not be likely to mislead the public.
- Limited Partnerships
Any proposed limited partnership name must be distinguishable in the Secretary of State’s records from any existing limited partnership name and must not be likely to mislead the public.
Refer to California’s business entity name regulations for detailed definitions of proposed and existing names by entity type.
Elimination of Certain Naming Exceptions
SB 522 removes an exception under current law that allows a corporation to adopt the same name or one that is substantially similar to that of an existing corporation, upon consent by the existing corporation.
The bill also removes exceptions under current law which permit LLCs and LPs to seek authorization to use names that conflict with the respective name standards provided certain conditions were satisfied.
New Requirement for Corporate Filings
Aside from naming standard changes, SB 522 adds a requirement that corporate filings submitted to the Secretary of State by a domestic or foreign qualified corporation must include the corporate name and entity number, as they exist on the Secretary of State records. Failure to include this information will likely result in filing rejections.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.