A. Entity Name Issues: Name Availability
The leading cause of rejection on any formation filing, regardless of the type of entity, is the failure of the entity name to meet the name standards established by law and by the administrative rules adopted by the Secretary of State.
Name provisions for a filing entity can be found in chapter 5 of the BOC. Section 5.053 sets forth the general standards for name availability, namely, that a filing entity may not have a name that is the same as, or that the Secretary of State determines to be deceptively similar or similar to a name of another existing filing entity or an entity name that is reserved or registered with the Secretary of State. Administrative rules on the availability of names of entities filed with the Secretary of State are contained in sections 79.30-79.54 of title 1, part 4 of the Texas Administrative Code (TAC), which may be viewed from the Secretary of State’s web site at www.sos.state.tx.us/tac/index.html.
Chapter 79 rules apply to all name availability determinations made for foreign and domestic corporations (for-profit, professional, and nonprofit), limited liability companies, limited partnerships, as well as professional associations formed before, as well as after, January 1, 2006. See 1 TAC sections 79.30 and 79.50 to 79.52.4
There are three categories of name similarity:5
Names that are the same; that is, a comparison of the names reveals no differences. (1 TAC section 79.36)
Names that are deceptively similar; that is, a comparison of the names reveals apparent differences but the difference is such that the names are likely to be confused. (1 TAC section 79.37) In accordance with 1 TAC section 79.39, if any of the following conditions exist a proposed name is considered to be deceptively similar to that of an existing entity:
The difference in the names consists in the use of different words or abbreviations of incorporation or organization;
The difference in the names consists in the use of different articles, prepositions, or conjunctions;
The difference in the names consists in the appearance of periods, spaces, or other spacing symbols that do not alter the names sufficiently to make them readily distinguishable; or
The difference in the name consists in the presence or absence of letters that do not alter the names sufficiently to make them readily distinguishable in oral communications.
Names that are similar and require a letter of consent; that is, a comparison of the names reveals similarities that may tend to mislead as to the identity or affiliation of the entity. (1 TAC section 79.40) In accordance with 1 TAC section 79.43, if any of the following conditions exists, a name is deemed similar and a letter of consent is required:
The proposed name is the same as or deceptively similar to another name except for a geographical designation at the end of the name;
The first two words of the proposed name are the same as or deceptively similar to another name and those words are not frequently used in combination;
The proposed name is the same as or deceptively similar to another name except for a numerical expression that implies that the proposed name is an affiliate or in a series with another entity;
The proposed name uses the same words as another name but the words are in a different order in the names;
The proposed name is the same as or deceptively similar to another name except for an Internet locator designation at the end or at the beginning of the name (e.g., www., .com, .org., net); or
The difference in names consists of words or contractions of words that are derived from the same root word and there is no other distinguishing word in the name.
Letters consenting to use of a similar name are only options when the proposed name and the entity name on file are considered similar. The Secretary of State will not file a proposed name deemed to be the same as or deceptively similar to an existing entity even if the existing entity is willing to provide a letter of consent.6
No particular form of consent is required; however, the consent must be in writing and signed by a managerial official of the consenting entity. Consents given orally cannot be accepted. The consent provided for purposes of filing should not state conditions.