THE ART AND SCIENCE OF NAMING A COMPANY
Companies incorporated under the Canada Business Corporations Act can choose to use a corporate name or will have a numbered name assigned to them. There are advantages in incorporating under a name, additional effort and expense notwithstanding. Corporate communication and advertising today depends on a corporate name, which is a very valuable asset. It tells people who the company is and will represent the goodwill that the company has built up in customers and suppliers. An extra degree of protection of the company’s rights to that name is provided by an approved federal corporate name. More importantly, federal incorporation allows the company to operate using its corporate name right across Canada, which is necessary if it is decided to expand the business operations to other provinces or territories.
What’s in a Name
The company’s name should meet certain requirements for it’s approval by Corporations Canada:
- It has to be a distinctive name.
- There should not be any confusion with an existing name or trade-mark.
- The name has to include a legal element.
- The name should not include unacceptable terms.
The proposed name should be distinguishable from the names of other businesses that carry on the same activities. The name would not be distinctive if it merely describes those activities. For instance, “Furniture Makers Inc.” is not distinctive because it describes the activities of all furniture makers, steel, glass or otherwise. Distinctiveness could be achieved in a number ways. One of the most common method is to include an element that makes it distinctive. For instance, “Land Developers Incorporated”, is too general, but “Morning Side Land Developers Incorporated” is distinctive. Likewise, made-up words provide a name with distinctiveness. It could be a combination of two dictionary words, such as “Infotainment” or something completely new, such as “Fractels”. Because of their uniqueness, unusual names are highly distinctive and are given more protection than others.
Conflict with other names or trade-marks
Conflicts with other names, potential or clear and present, should be smoothened out as soon as possible. The company should steer away from an existing corporate name or trade-mark. The owner of that name or trade-mark could launch a court action to compel the company to stop using the name and perhaps even to pay damages if there is just a whiff of similarity. The realisation that the company’s business name may be confused with another is a fearful and intimidating prospect. More so, when considerable time and effort have been spent in coming up with a name or the company has been operating under the proposed name for some time before incorporating. By identifying potentially confusing names or trade-marks in a federal database of names and ensuring that there is nothing ambiguous in the company name, confusion can be avoided.
Corporations Canada with a view to avoid possible confusion looks at all circumstances, including a comparison of the goods, services and operating area of the company’s proposed business with those of existing businesses. While name approval from Corporations Canada does not guarantee that there is no violation of the rights of another firm or individual, it significantly reduces the company’s risks.
A way out is to submit a NUANS Name Search System report as part of the application to use the company’s corporate name. A NUANS search compares your proposed name with a federal database of names that includes trade-marks, provincial and federal corporate names and most provincially registered business names (except corporate and business names in Quebec).
A corporate name gets a legal component when a term such as Limited, Incorporated or Corporation, or contractions of these such as Ltd., Inc. or Corp. is added to the end of the name.
There are three groups of unacceptable terms. Firstly, those terms implying connections, which do not exist. The corporate name to be used cannot suggest that the company is a branch of the government or that it offers services or products governed by financial legislation, like trusts, loans, insurance and banking.
Secondly, terms falsely describing the company’s business are not acceptable. The company, for example, should not include terms suggesting that it is selling carding machines when it is really selling only the card or the combing element.
Lastly, obscenity is totally unacceptable and terms suggesting that the company provides obscene, scandalous or immoral services are not allowed.
The heart of the application for a company name is in the NUANS report. There are many types of NUANS reports and the one that is needed for federal incorporation is a Canada-biased report. A Canada-biased report means that the proposed name was searched against all the names found in the database. It was not a search of names registered in a particular province.
There are two ways of getting a NUANS report. It can be obtained by ordering a federal NUANS report online. It can also be requested from a private company known as a search house. The search house is an independent, private sector business providing advice on the availability of corporate name selected.
It should be noted that the NUANS report is valid for 90 days. If no application for incorporation is submitted within that period, a fresh report has to be obtained.