Alerts

Legislation Affects Entity Formation and Operation

Understanding each jurisdiction’s legislation as it relates to entity names is paramount for effective formation and operation of any business entity.

Florida passed amendments to its Fictitious Name Act, effective July 1, 2017. The act requires anyone doing business in Florida under a name other than the person’s legal name to register the fictitious name with the Division of Corporations of the Department of State. The amendments clarify the fictitious name registration process, by illuminating the documentation and information needed when registering a fictitious name, the time period for which a registration is valid, and the process for cancellation of the registration. Further, the legislation adds an exemption from registration for limited liability companies that already conduct business in a name that is licensed or registered and negates the need for a sworn statement when registering a fictitious name. Notably, limited partnerships, limited liability partnerships, limited liability limited partnerships, and limited liability companies should be careful when using certain words, abbreviations, and designations, as they may be prohibited unless the entity actually qualifies as that particular type of entity. Failure to comply with provisions under the Fictitious Name Act now constitutes a noncriminal violation, as opposed to the former classification of a misdemeanor. Finally, renewal of registration may be barred under certain conditions under the amendments.

Texas also passed legislation related to names of domestic and foreign entities, effective June 1, 2018. This legislation allows an entity or person to file a certified copy of a final judgment to establish the right to use the name in Texas. Names will need to be “distinguishable from” other names, instead of avoiding being “deceptively similar to” other names under the current version of the legislation. The “distinguishable from” standard will be expanded in its application to fictitious names under which foreign entities are registered. Formerly, names were only checked against names of existing filing entities, registered foreign filing entities, reserved names, and other registered names.