Canadian Articles of Incorporation – Part 3 of 4:
Selecting and Protecting Your Corporation’s Name
Choosing a business’ name is an extremely important decision that an entrepreneur may be forced to make even before their products or customers are really established. There are multiple considerations that an entrepreneur must take when selecting their business’ official name in the Articles of Incorporation.
In addition to the requirements outlined in the provincial and federal Business Corporations Acts, businesses must consider whether other businesses have already trademarked their desired name in the jurisdiction(s) where the business may operate. You may want to check out Clausehound’s blog on this topic for further insight.
All corporate names must meet certain requirements in order to be used in the Articles of Incorporation. An entrepreneur can defer this decision by using a numbered company name provided by the jurisdiction (e.g. 123456789 Ontario Inc.). The corporation can subsequently change its name or continue to operate as a numbered company. This is a slightly cheaper option and enables an entrepreneur to establish a corporation before some of the more intricate details of the business are worked out. Additionally, a business may continue to officially operate as a numbered company but have an “operating as” name as well, such as 123456789 Ontario Inc. O/A HoundCo.
Now that we know the difference between numbered and named companies, it is crucial to understand the limitations one has when selecting an appropriate name for their business. The primary guidelines one must follow include:
(1) The name must be distinctive-
Your business must be able to be distinguished from other companies in your space. Therefore, you must select a non-generic name for your venture. If you are opening a window distribution company, your company should not be named “The Window Company” or “Windows Inc.”, but rather should be more descriptive like “John’s Window Store” or “North Toronto Windows”, etc. An easy way to develop a distinct name is to have a novel word in your business name, such as “NorTo Windows” or “ShinyClean Windows”.
(2) The name must not cause confusion with any existing name or trademark-
This step is crucial if you want to ensure that you will not have to change your brand’s established name down the road or worse off, face an injunction or legal suit for violation of this rule. The most effective way to ensure that you are not encroaching on any other corporation’s name in the same industry is to utilize a Nuans search, which is also required to be submitted alongside your Articles of Incorporation. A Nuans search compares your proposed name with a federal database of names that includes trade-marks, provincial and federal corporate names and most provincially registered business names – except those located in the Province of Quebec.
(3) The name must include a legal element-
The suffix of the business’ name must represent its legal status with either the Provincial or Federal government. This includes adding suffixes to the business’ name, such as “NorTo Windows Inc.”, “NorTo Windows Corp.”, and “Norto Windows Ltd.”. This suffix must correspond with the business’ legal status, and may not be arbitrarily selected. Certain Provinces have unique legal elements compared to the rest of the Provinces, including Alberta and Nova Scotia’s Unlimited Liability Companies (“ULC’s”).
(4) The name must not include unacceptable terms-
In selecting a name for either a Provincial or Federal corporation, the first consideration is to ensure that the name does not (i) imply that the business is something that it’s not.
An example of this would be a company that implies it is a federally regulated business when it is in fact not that, such as an insurance broker, banking institution, or university. Secondly, a business cannot (ii) imply they operate in a private sector industry that they do not, such as calling a business “NorTo Windows” when in fact the business only sells doors. Thirdly, obscene terms may not be used in the business name and the business name may not promote obscene, scandalous or immoral services.
A Bit More About Name Searching-
Using a government or private industry provided name-searching tool is the best way to select a fitting name, and results of the search must be provided alongside your Articles to either the Federal or Provincial body.
You can get pre-approval for your desired business name before submitting your Articles of Incorporation, which is useful to know ahead of time that your name will be approved, but also because your whole application will be rejected if your proposed name is not approved. A pre-approval may be completed by fax or online, and there is no fee for this service.
Drafting the Articles of Incorporation is a crucial consideration for any DIY drafter. You can use Clausehound.com‘s incorporation templates to ensure that your incorporation process is as easy and cheap as possible!
When drafting your Articles of Incorporation, you will want to consider the information in the following blogs:
1 of 4 – Introduction to Incorporating a business
2 of 4 – Which Articles of Incorporation should my company use?
3 of 4 – Selecting and protecting your company’s name
4 of 4 – What to consider when selecting Directors for my business?
Part 5 – What to consider when selecting the corporation’s share attributes?
Part 6 – What type of restrictions should be in place?
Part 7 – Other Important Information
Part 8 – What’s else should I consider before developing my business?
For access to Clausehound’s blogs related to various legal & business topics, please visit blog.clausehound.com.
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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.