As entrepreneurs, you’ve probably heard of the comparison that running a business is just like raising a baby. You have to put in a lot of time and effort to develop it and help it grow, until it becomes old enough to function with minimal supervision. 

Turns out, the comparison extends to the regulatory aspect. Just like a baby, the first thing you have to do to register your business is to think of its name.

To get the incorporation process started, the Securities and Exchange Commission (SEC) requires that you have a name for your business. Unfortunately, this doesn’t mean you can pick any name you want. There are several steps you have to take in order to ensure that your company name will be approved by the SEC, which we’ve outlined in this article.

 

Difference Between Corporate Name and Trade Name

Before we go through the step-by-step of securing your company’s name, we feel that it’s important to make the distinction between the two different names you’ll have to think for your company: its corporate name and its trade name.

The corporate name is what your company is officially called in the eyes of the SEC. If you see a company name that ends in “Inc.” or “Corp.”, it is most likely the corporate name, such as “Golden Arches Development Corp.” On the other hand, the trade name is what your company uses when it promotes and sells its offerings to the public. It’s what you’ll often see front-and-center in the company’s logo, storefront, or website, such as “McDonald’s.” 

In a sense, if your company were a baby, its corporate name is what’s written on the birth certificate, while its trade name functions as its nickname. For this article, we’ll focus on how to validate your company’s corporate name, as that is what the SEC requires for the incorporation process.

 

Which Company Names Are Allowed?

Just like other aspects of your startup, your company name also has to be approved by the SEC. All of the rules and regulations that the SEC follows in validating a company name are found in this Memorandum Circular, but we’ve outlined the most important points below:

  • It must not already be used by another company. Duplicate corporate names are not allowed.
  • It must not be similar to another existing corporate name. Similarity in this case would mean that a person can easily mistake one for the other when searching for either company.
  • It must not be used by a known international organization, or be similar to it, unless the company is a subsidiary of that organization.
  • It must not have any words that are only allowed for certain types of businesses. The word “bank”, for example, can only be used by businesses in the banking industry and under the governance of the Central Bank.

If you’re registering a company with at least five incorporators, you can use the SEC’s online Company Registration System (http://crs.sec.gov.ph/) to verify your name. Note that you will still have to validate your company name with an SEC officer even if you’ve accomplished this step.

 

Validating your name with the SEC

Once you’ve chosen your business name, you will have to go to an SEC office near you to have the name validated. You can have up to three business names validated at one time, so we suggest submitting three names to minimize your chances of having to go through the process again.

Validating your proposed business names will take around 2-3 days. If none of your proposed names get approved, you will have to go through the validation process again.

If the SEC validates your company name, you will then have to pay Php100 to reserve that name. The reservation only lasts for 30 days, so make sure you proceed to the next step of the incorporation process so you don’t have to renew your reservation. 

We hope this article was helpful. If you have any further questions, click here to chat with UNA, and check out the other articles of Unawa Explainer for more information on company incorporation.