Transcript
Greg Corombos: I'm Greg Corombos. Our guest in this edition of Expert Insights is Sandra Feldman, Publications Attorney for CT Corporation. A couple of weeks ago on the podcast, Tim Jensen of CT Corporation was here to explain all the different factors and steps that go into selecting a name for your business. But what needs to happen if you and any other owners of a limited liability company or a corporation decide to change the name of the business? Well, that's what we'll be discussing today in detail. And Sandra, thanks so much for being with us again.
Sandra Feldman: Well, thank you, Greg. As we know, that when business owners decide to form an LLC or a corporation, one of the important decisions they have to make is to choose that LLC or corporation's legal name. And that's the name that will go on its articles of organization or articles of incorporation. And many business owners will spend a lot of time and energy choosing that name. But sometimes a name that's perfect at the time it was chosen, turns out to be less than perfect somewhere down the line, and the company's managers or owners will decide it's time to change that name.
But you can't just start using a different name. Changing an LLC or corporation's legal name requires compliance with the governing LLC or corporation statute. And I'm going to discuss the steps involved in making the change of an LLC or corporation’s legal name effective. I'll also discuss the steps that should be taken before making the change effective, and what additional steps have to be taken after the name change does go into effect.
GC: Sounds like we've got a lot to get to. But let's start with this: how unusual is it for an LLC or corporation to change its legal name?
SF: It's not unusual at all. In fact, many companies change their legal name at least once during the company's lifetime. And those companies range from single-member LLCs to the largest publicly traded corporations. For example, Google Inc. is now Alphabet Inc. and Facebook Inc. is now Meta Platforms Inc.
GC: Well, that's certainly some very prominent examples of things that have happened very recently. But in general, why would the people who manage or own an LLC or corporation want to change the name?
SF: The reasons vary. A change in circumstances is one common reason. For example, some companies are named after their founders. So, if John Smith LLC is sold to someone not named John Smith, the new owner will probably want to change that LLC’s name. Or maybe the name reflected the product line and the product line changed. And there are also what you might call psychological reasons. Now, companies that are struggling sometimes think a new name can change their look. A company whose stock is falling may think a new name will be a signal to investors have a positive change in direction for the company. And you know, Greg, sometimes it works.
GC: Sometimes being the key word there, but it must work enough that people keep doing it. So what do you have to do to officially change the name?
SF: Making the name change effective actually involves a three-step process that I’ll talk about in a minute. But first, I need to talk about the steps that should be taken before even beginning that process.
GC: Okay, well, what are those steps?
SF: The first step is to make sure the new name you want complies with the formation state’s LLC or corporation law. And just as the old name had to meet those requirements, the new name will as well. And don't just assume nothing has changed, because states amend their LLC and corporation laws all the time. And that includes the provision’s governing names. For example, some states have a list of words or phrases that can't be used in a name. And they'll add to that list over the years.
It's also important to make sure the name is available. And that's another requirement of the statutes. And that basically means that no other business entity has formed or qualified under the name in the formation state or reserved or registered the name of the state.
GC: How can you find out, though, if the name you want is available?
SF: You can do a name search on the website of the Secretary of State, or whatever the state agency in charge of Business Entity Filings is called. And in some states, you can call the filing office and have them confirm the availability of the name you want.
GC: Alright, so once you've done that, once the availability of the name has been confirmed, can you then begin the process of making the name change effective?
SF: You can, but there's another important action you should take and that's to reserve the name.
GC: Okay, and why is reserving the name important?
SF: Because, often, there will be a gap between the time the availability of the name is confirmed, and the time the name is actually legally changed. And there are a number of reasons for that. For one, it can take some time to complete the process that makes the change effective. Or some businesses may want time to prepare in advance—marketing materials, press releases, or T shirts with a new name. And if so, it's important to reserve the name because that will prevent any other business entity from forming or qualifying under, reserving, or registering the name you want before you've had a chance to make the name change official. You can reserve the name by filing an application for reservation and the reservation period varies depending on the state, but you can reserve a name for up to four months in most states.
GC: Once the name has been reserved, Sandra, is it then time to begin the process of making the name change official?
SF: Yes, it is. And as I mentioned, making a name change effective generally involves a three-step process. And the steps are that the company's management has to agree to the name change, its owners have to approve, and a document has to be filed with the formation state’s filing office.
Now, in the case of a corporation, the approval process typically involves the Board of Directors adopting a resolution to change the name, which is then submitted to the shareholders for their approval. Now in the case of an LLC, it depends upon whether the LLC is member managed or manager managed. Either way, the members have to approve but if it's manager managed, the managers have to agree to the name change first.
I've greatly simplified the approval process. But remember, there are both statutory provisions and provisions in the governing documents regarding such issues as holding meetings and voting procedures and the vote required for approval. And all of those provisions have to be complied with to make sure the approval is valid.
GC: So there are critical steps that need to be taken in-house as well as to remain in compliance with the state and anyone else who's involved in this. So, after the name change has been approved now, what has to be done?
SF: After approval, a document has to be filed with the formation state’s filing office. This specific document depends upon the state. In some states, it's articles of amendment. In others, it's an application to change an LLC or corporation’s name and upon the effective date of that document, but legal name is changed.
GC: And once the name is officially changed, is there anything else the LLC or corporation has to do?
SF: Oh, absolutely. Your compliance obligations don't end once an LLC or corporation changes its name. And I'll give you some examples. If the LLC or corporation is qualified to do business in foreign states, a filing has to be made with those states so they can update their records to reflect the new name. And it may be an amendment to the certificate of authority, or an application to change a foreign LLC or corporation’s name. If the LLC or corporation has registered any assumed or DBA names, those registrations need to be updated. In some cases, the registration can be amended, in others the old registration has to be canceled and a new application to register the assumed name has to be filed under the new legal name.
If the company has any business licenses and permits, and pretty much everyone does, you'll need to update the records of the licensing agency. You'll also need to notify the IRS of the new name. And basically, anywhere that an LLC or corporation is on file with a government agency under the old name, you need to find out what has to be done to get the new name on record.
GC: That's a lot of compliance. So you better like your new name if you’re going to go through all that. Sandra, is there anything else that has to be done because of the name change?
SF: There is. Those were official government compliance obligations I was referring to. But don't forget to update the LLC or corporation's name anywhere else the old legal name is set forth. And this would include internal documents like bylaws, operating agreements, shareholder agreements, or ownership certificates. You should also contact the company's bank and insurers and check its contracts to see if there's a clause about what to do if the company changes its name.
GC: A lot to keep in mind but you've explained it extraordinarily well, Sandra. Any final thoughts as business owners contemplate perhaps changing their name?
SF: Yeah, there's a lot to be done when an LLC or a corporation changes its legal name. One technique that can help is to have a checklist, setting forth all the actions that have to be taken before, during and after the name has actually changed. And if it seems overwhelming, remember, CT Corporation can help with many of the steps—from checking and reserving the name, to submitting the documents that have to be filed into various government agencies.
GC: Always terrific information, Sandra. A lot to consider. But like I said, laid out very well. Thank you so much for your time today. We appreciate it.
SF: Thank you, Greg.
GC: Sandra Feldman is Publications Attorney for CT Corporation. I'm Greg Corombos reporting for Expert Insights. For more information on this topic, please call CT at 844-878-1800.
