Texas Corporate Changes

New Name Availability Rules

On June 9, 2017, House Bill 2856 was passed. This bill, entitled “Relating to names of domestic and foreign entities for transacting business in this state,” changed the language of the existing Administrative Code such that the name standards for an entity transacting business in the state changed from “identical and deceptively similar names prohibited” to “distinguishable names required.”

While it seems like a small change, the ramifications of this are huge. Texas has long been notorious for its stringent name rules, and this statutory change will make wider range of names available without conflicting with currently registered entities. The new rules published in the May 25, 2018, issue of the Texas Register indicate that a difference in one key word suffices to make a name distinguishable. Additionally, if the words are the same but in a different order, the name is considered to be distinguishable. Words that are the same but are in different languages do not conflict. If the words sound the same but have different connotations, the names are also considered distinguishable. A change in or removal/addition of a preposition is also sufficient to make two names distinguishable.

The guidelines relating to name consent have also changed. If two names are the same except for the entity ending and the companies are different types of entities, consent is now allowed. With consent, names that are the same except for a common abbreviation of a word or are the same except for the use of the singular, plural, or possessive are allowed. In names that already include a city, the addition or omission of a state to the name will be permitted if consent is granted. When two or more related filings are submitted to the Secretary of State’s office for filing together, consent will be implied.

The full text of the new rules can be found at 0525adop.pdf and go into effect on June 1, 2018.