DOS-16-13-00006-P Distinguishability of Corporation and Other Business Entity Names

4/17/13 N.Y. St. Reg. DOS-16-13-00006-P

NEW YORK STATE REGISTER

VOLUME XXXV, ISSUE 16

April 17, 2013

RULE MAKING ACTIVITIES

DEPARTMENT OF STATE

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. DOS-16-13-00006-P

Distinguishability of Corporation and Other Business Entity Names

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Repeal of section 156.2 and addition of new section 156.2 to Title 19 NYCRR.

Statutory authority:

Executive Law, section 91

Subject:

Distinguishability of corporation and other business entity names.

Purpose:

The proposed regulations will implement the entity name distinguishability requirements.

Text of proposed rule:

Section 156.2 is repealed and a new Section 156.2 is added to read as follows:

Part 156: Names

156.2 Standards

This section furnishes general guidelines used to determine whether a proposed name is acceptable as the name of an entity in the records of the Secretary of State.

(a) Definitions

(1) The term “entity” means a domestic corporation, limited liability company, limited partnership or registered limited liability partnership or foreign corporation, limited liability company, limited partnership or New York registered foreign limited liability partnership.

(2) The term “name” means the real name of a domestic corporation, limited liability company, limited partnership or registered limited liability partnership or the real or fictitious name of a foreign corporation, limited liability company, limited partnership or New York registered foreign limited liability partnership.

(3) The term “existing entity” means a domestic corporation, limited liability company or limited partnership that has not been dissolved, annulled, or had its authority to do business cancelled or revoked, or a foreign corporation, limited liability company or limited partnership that has not surrendered its authority, terminated its existence or had its authority to do business or conduct activities annulled.

(4) “Entity indicator” means the words “corporation”, “incorporated”, “limited”, “limited liability company”, “professional service limited liability company”, “professional service corporation”, “design professional corporation”, “limited partnership”, “limited liability partnership”, “registered limited liability partnership” or any permitted abbreviation thereof used in the name of an entity. An entity indicator must be separate from other words or parts of words in the entity name to be considered an entity indicator.

(5) “Key Word” means a word other than an article of speech, preposition, conjunction, or an entity indicator.

(b) General Matters

(1) Typography. A name may consist of only letters of the English alphabet, Arabic and Roman numerals, and symbols capable of being reproduced on a standard English language keyboard.

(2) Special Characters and Punctuation.

(i) The following special characters will be allowed in the name, however they will not, by themselves, make a name distinguishable: asterisk (*), “at” sign (@), backslash (\), left brace ({), right brace ( }), “equal to” sign (=), “greater than” sign (>), “less than” sign (<),and plus sign (+).

(ii) The following special characters will be allowed in the name and will, by themselves, make a name distinguishable: dollar sign ($), percentage sign (%), number sign (#), and cent sign (¢).

(iii) The following punctuation marks will be allowed in the name, however they will not, by themselves, make a name distinguishable: apostrophe (‘), left bracket ([), right bracket (]), colon (:), comma (,), dash or hyphen (-), exclamation point (!), left parenthesis ((), right parenthesis ()), period (.), question mark (?), single quote mark ("), double quote mark (" "), semicolon (;) and slash (/).

(3) Terms indicating form. A name shall contain no more than one entity indicator. An entity indicator of one form shall not be used as part of the name of an entity of a different form. An entity indicator shall not be used as part of an assumed name.

(4) Every initial certificate and every certificate amending the name of an entity shall include an English translation of the entity’s name if the name contains a word or words in a language other than English.

(c) Distinguishable Names

In order to be accepted for filing, a proposed name of a domestic corporation, limited liability company or limited partnership or foreign corporation, limited liability company or limited partnership must be distinguishable from the name of any existing entity and from any reserved name on the records of the Secretary of State. A name is distinguishable if:

(1) Each name contains one or more different letters or numerals, or has a different sequence of letters or numerals, except that adding or deleting the letter “s” to make a word plural, singular, or possessive shall not make a name distinguishable; or

(2) One of the key words is different; or

(3) The key words are the same, but they are in a different order; or

(4) The key word or words are the same, but the spelling of at least one key word is different.

(d) Indistinguishable Names

A proposed name is not distinguishable from the name of any other existing entity or from a reserved name if the only difference between them is one or more of the following:

(1) Differences in punctuation or hyphenation, use of plural or possessive form of the same word, differences in tense, including present versus past tense, or the addition or omission of spaces between words or letters.

(2) As determined by the Department of State, the addition or omission of any article of speech, preposition or conjunction or use of a contraction of words in the name of the existing entity or reserved name.

(3) As determined by the Department of State, use of the commonly used abbreviation of a word in one name and the spelling out of a word in another name.

(4) The use of special characters instead of spelling out the names of special characters or what they stand for, or vice versa, as determined by the Department of State. The use of the special character shall be considered the equivalent of the spelling of the name of the special character.

(5) Addition or exclusion of special characters other than those listed in section 156.2-(b)(2)(ii).

(6) The expression of a number or numbers using letters instead of Arabic Numerals.

(7) The inclusion or exclusion of an entity indicator (e.g., “Corporation,” “Limited Liability Company,” etc.) or any abbreviation thereof.

(8) Addition or omission of the word or abbreviations of “Company” or “Companies.”

(9) Deviations from or derivatives of the same key word, as determined by the Department.

(10) Differences between upper and lower case letters, typeface or font.

(e) The filing of a name does not grant rights or interests in that name. The Department of State’s role is ministerial. The Secretary of State does not have the power to determine or settle competing claims to a name under other statutes or under common law.

(f) The methodology used by the Department of State to ascertain whether a proposed name is acceptable will not insure that in all instances a name which is unacceptable is rejected. It is the responsibility of the entity to determine to its satisfaction that the proposed name is in compliance with all applicable laws and rules. When a name which has been accepted for filing is later found to be unacceptable, the Department of State will notify the entity that it is required to amend the filed document in order to comply with all applicable statutory and regulatory provisions. Upon the failure of the entity to amend the filed document within thirty days of such notification, its authority to carry on, conduct or transact business or conduct activities in this state shall be suspended by the Department of State. If, at any time following the suspension of an entity’s authority to carry on, conduct or transact business or conduct activities in this state, pursuant to this paragraph, such entity shall amend its filed document so as to comply with all applicable statutory and regulatory provisions, or if the Department of State shall determine that the filed name is acceptable, the suspension shall be annulled and the entity’s authority to carry on, conduct or transact business or conduct activities in this state shall be restored and continue as if no suspension had occurred.

(g) The conditions set forth in these regulations are not exclusive, and the Secretary of State may exercise discretion in determining whether a proposed name is distinguishable from the real or fictitious name of an existing domestic or foreign authorized organization or a reserved name.

Text of proposed rule and any required statements and analyses may be obtained from:

Gary M. Trechel, Department of State, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231, [phone], email: [e-mail]`

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

This rule was not under consideration at the time this agency submitted its Regulatory Agenda for publication in the Register.

Regulatory Impact Statement

1. Statutory authority:

Executive Law § 91 authorizes the Secretary of State to adopt and promulgate rules which regulate and control the exercise of the powers of the Department of State and the performance of the duties of officers and employees of the Department.

2. Legislative objectives:

Business Corporation Law § 301 provides that the name of a domestic or foreign business corporation must be distinguishable from the names of corporations of any type or kind as such names appear on the index of names of existing domestic and authorized foreign corporations in the Department of State, Division of Corporations. In addition, the name of a domestic or authorized foreign business corporation must be distinguishable from the names of domestic and authorized foreign limited liability companies and the names of domestic and authorized foreign limited partnerships as such names appear on the Department’s index of existing domestic and authorized foreign limited liability companies and limited partnerships. Furthermore, the name of a domestic and authorized foreign business corporation must be distinguishable from any name the right to which has been reserved by a corporation, limited liability company or a limited partnership.

Similar requirements regarding the distinguishibility of names of domestic and foreign not-for-profit corporations, domestic and foreign limited liability companies, and domestic and foreign limited partnerships are provided by the Not-for-Profit Corporation Law § 301, Limited Liability Company Law § 204 and Partnership Law §§ 121-102 respectively.

3. Needs and benefits:

The proposed regulations will implement the entity name distinguishability requirements of the Business Corporation Law § 301, Not-for-Profit Corporation Law § 301, Limited Liability Company Law § 204 and Partnership Law §§ 121-102.

4. Costs:

A. The proposed regulations do not impose any additional costs on the regulated entities: business corporations, not-for-profit corporations, limited liability companies or limited partnerships.

B. The proposed regulations do not impose any additional costs on the Department of State, the State or local governments.

5. Local government mandates:

The proposed regulations do not impose any mandates on local governments.

6. Paperwork:

These proposed regulations do not impose any reporting requirements.

7. Duplication:

These proposed regulations do not duplicate any existing requirements of the state or federal governments.

8. Alternatives:

Regulations in use by other states regarding entity name distinguishability were reviewed and considered by the Department of State. These proposed regulations are consistent with the regulations utilized by many comparable states.

9. Federal standards:

The federal government does not have any minimum standards for this subject area.

10. Compliance schedule:

Regulated entities will be able to comply with the proposed regulations upon adoption.

Regulatory Flexibility Analysis

The Department of State has concluded after reviewing the nature and purpose of the proposed rule that its adoption will not impose any adverse economic impact or reporting, record keeping or other compliance requirements on small businesses or local governments. The proposed rule making would set forth the standards which will be used by the Department of State Division of Corporations in determining whether the names of business corporations, not-for-profit corporations, limited liability companies and limited partnerships, that seek to file a formation document or an application for authority with the Department of State, are distinguishable from the names of existing entities for whom a record is maintained on the Department’s index. The new regulation text would provide guidance regarding acceptability of a name to parties who propose to form one of the aforementioned types of entities or who seek to obtain authority to do business in New York for one of these types of entities already formed in another jurisdiction. Some but not all of the entities subject to the regulation will be small businesses. However, the impact of the regulation upon small businesses is unlikely to be adverse nor would it differ in any manner from the impact upon other entities subject to the regulation but not to be characterized as small businesses. Rather than impose an adverse economic impact on small businesses or any category of entity affected by the rule, the proposed regulation will provide clear guidance so as to enable each entity to more easily and efficiently choose an entity name that will be acceptable for filing.

Local governments will not be subject to the provisions of the proposed regulation and will not be impacted by its adoption.

Rural Area Flexibility Analysis

The Department of State has concluded after reviewing the nature and purpose of the proposed rule that its adoption will not impose any adverse economic impact on rural areas, nor any reporting, record keeping or other compliance requirements on public or private entities in rural areas. The proposed rule making would set forth the standards which will be used by the Department of State Division of Corporations in determining whether the names of business corporations, not-for-profit corporations, limited liability companies and limited partnerships, that seek to file a formation document or an application for authority with the Department of State, are distinguishable from the names of existing entities for whom a record is maintained on the Department’s index. The new regulatory text would provide guidance regarding acceptability of a name to parties who propose to form one of the aforementioned types of entities or who seek to obtain authority to do business in New York for one of these types of entities already formed in another jurisdiction. The regulation would not have any individualized impact in rural areas nor upon entities located in rural areas. Any potential impact of the rule will be imposed in rural areas in no greater amount than is imposed in non-rural areas.

Job Impact Statement

A Job Impact Statement is not required because it is evident from the subject matter of the rule that it will have no impact on jobs and employment opportunities.