Naming your corporation is an important step in establishing your business – it becomes a part of the business’s identity, establishes your brand, and is the first impression you make on consumers and clients. So, how do you choose a name? What factors need to be taken into consideration when deciding on a name in Canada? While name selection is a critical part of starting your business for brand purposes and website domain availability, there are also legal requirements that business owners need to be aware of. In order to register a corporation in Canada, the selected name must contain the following three elements: distinctive, descriptive, and legal extension.
Distinctiveness
The first criterion for a corporate name is a distinctive element. This means that a corporation should be distinguishable from any other business by its name. Generally, simply describing the activities, services, or goods of the corporation, is not enough to be distinctive. It is useful to use unusual or made-up words, as they are often more distinctive because of their uniqueness. Geographical names can also provide distinctiveness. This element is also important from a branding perspective, because it is the most memorable way to distinguish a corporation from its competitors.
Descriptiveness
The second element is the descriptive element. This element describes the type of good or service the corporation provides. A good corporate name should include both a descriptive and distinctive element. See the table below for examples of good and lacking names.
Legal Extension
The legal extension is the final element. In Canada, a business corporation name must include one of the following legal elements:
Limited
Ltd.
Incorporated
Inc.
Corporation
Corp.
Under provincial legislation, such as the Business Corporations Act (Alberta) or the Business Corporations Act (Ontario), there is no legal difference between each of these legal extensions. In other words, there is no advantage or disadvantage for choosing one over another. All of these extensions indicate that the liability of the shareholders is limited to the capital they contributed to purchasing the shares, or in accordance with the corporation’s share structure. Selecting the right legal extension for your business typically comes down to what sounds the best with the name overall.
Numbered Corporation
Where timing is an issue, or the business owner hasn’t landed on a name, the business owner may choose to register their business as a numbered corporation. This avoids having to conduct a NUANS (discussed further below) search and the delays associated with trying to find a unique name that is available in the jurisdiction of operation. Instead of choosing a name, the business owner can select only the legal extension, and then a unique 6-7 digit number will be automatically assigned by the government. While this is the simplest way to name a corporation, it lacks the benefits of branding and memorability that come with a named corporation. It is possible register an “operating as” or “doing business as” name with corporate registry after the corporation is incorporated. Also, a numbered corporation can always change its name after registration.
Important Notes
Beyond the three primary elements, there are also some other things to consider when naming a corporation. First, the name should not cause confusion with any existing corporate names or trademarks. Before incorporating a named company, business owners are required to run a Newly Upgraded Automated Name Search (NUANS), which will produce a NUANS report. It is essential that this report is reviewed, and that the proposed business name does not match the name of any other corporation registered under Canadian federal jurisdiction, or the provincial jurisdiction where the incorporation will take place. When the names of two separate businesses are similar enough that a person could think they are the same, this is also considered a conflict. Additionally, corporation names cannot contain prohibited terms (for example, “RCMP”) or obscene words or phrases that suggest an obscene business. The name also should not suggest governmental/institutional sponsorship or control.
Finally, it is important to consider what jurisdiction the business is being incorporated in. If incorporated federally, then the name is protected across all of Canada. If the business is incorporated provincially, however, then the name is only protected in the province/territory it is registered in. Where a corporation wishes to expand to a different jurisdiction, and their legal name is already taken, it must either assume a different legal name (after ensuring the assumed name is also not taken) or use its corporation number, called a corporate access number in Alberta, as its name.
Conclusion
While complying with the 3 required elements sounds complicated, we can help guide you on what factors you should consider in your business’s name. Outsiders Law can run your NUANS report and help ensure that the name you select meets the required criteria. If you have questions about naming your corporation, contact one of our corporate lawyers today.
Disclaimer
The information provided in this article is for educational purposes only. Nothing contained herein should be considered as legal, professional, or tax advice. Please contact us directly if you require legal assistance.
Comments