NEW SEC NAME GUIDELINES
By: Nica Marsha Gasapo on August 8,2019
The Securities and Exchange Commission (SEC) issued the Amended Guidelines and Procedures on the Use of Corporate and Partnership Names (Amended Guidelines) through SEC Memorandum Circular (MC) 13, Series of 2019.
The amended guidelines introduce amendments to the Consolidated Guidelines and Procedures on the Use of Corporate and Partnership Names (Consolidated Guidelines of 2017) issued by the SEC through MC 14, Series of 2017, in keeping with the amendments introduced by the Revised Corporation Code (Republic Act 11232 or the RCC).
Primarily, the amended guidelines implement the new criteria imposed by the RCC that corporate and partnership names must now be “distinguishable” from other corporate or partnership names registered with the SEC, or the Department of Trade and Industry (DTI), in case of sole proprietorship. Under the old corporation code, corporate or partnership name must not be “identical”, “misleading”, or “confusingly similar” with another corporate or partnership name.
If the name applied is similar to that of another, distinctive word or words should be added to the proposed name. Punctuation marks, spaces, symbols, and other similar characters shall not be acceptable as distinguishing words.
The amended guidelines also provide rules on the use of corporate names by one person corporations (OPCs). OPCs are required to bear the word “OPC” below or at the end of their corporate names. They are allowed the use of the name of the single stockholder as a corporate name, provided said name be accompanied by descriptive words other than the suffix “OPC”. The amended guidelines likewise permit the use of another person’s name as corporate name of an OPC, provided the consent of said person, or his estate, if deceased, was given.
Further, the amended guidelines now provide that names of international government organizations, such as “International Criminal Police Organization”, “International Monetary Fund”, and “International Labour Organization”, may not be used as part of a corporate or partnership name, unless when duly authorized or allowed by the SEC. The word “Asean” may not also be used as part of a corporate or partnership name.
Remarkably, the amended guidelines, in contrast with the Consolidated Guidelines of 2017, specifically set out that the name of a corporation or partnership that has been dissolved or whose registration has been revoked shall not be used by another corporation or partnership for a period of five years from the approval of dissolution, or five years from the date of revocation, unless allowed. The Consolidated Guidelines of 2017 simply provided that the name of a corporation or partnership that has been dissolved or whose registration has been revoked shall not be used by another corporation, except in meritorious cases as determined by the SEC en banc.
Also, the amended guidelines added a rule that a corporate or partnership name, which was previously used but become the subject of amendment, shall not be re-registered or used by another corporation or partnership within three years from the date of the approval of the adoption of the new corporate or partnership name. The amended guidelines, however, provide that an earlier period may be allowed for the registration or use of the previous corporate or partnership name so long as the corporation or partnership, which previously used the said name, gives its consent.
In order to be granted this shortened or earlier period, the SEC requires the submission of certain requirements, such as a directors/trustees’ certificate attesting to the approval by majority of the directors/trustees for the use of the former name by another corporation or partnership, or in case of a partnership, a partnership’s resolution approved by the majority of the partners.
In case of merger or consolidation, the amended guidelines provide that names of absorbed or constituent corporation may not be used unless it is the surviving corporation intending to use the said absorbed or constituent corporate name. Another corporation, may, however, use the names of the absorbed or constituent corporations so long as the consent of the surviving corporation is obtained.
The other provisions in the amended guidelines are as follows:
The name of an internationally known foreign corporation, or something similar to it, cannot be used by a domestic corporation unless it is a subsidiary and the parent corporation consented to such use;
A name written in a foreign language, even if registered in another country, if the same violates good morals, public order, or public policy, or has an offensive or indecorous meaning in another country’s official language or major dialects, shall not be registered.
The name of a geographical unit, site, or location cannot be used as a corporate or partnership name unless accompanied by a descriptive word or phrase.
If the business or trade name is different from the corporate or partnership name, it shall be indicated in the articles of incorporation or partnership.