Corporations often carry on business under a name other than the corporation’s legal name. Similarly, sole proprietors and partnerships often carry on business under a name other than the sole proprietor’s name or the names of the partners. In such cases, these businesses are often unaware of their legal obligation in Ontario to register their business name pursuant to Ontario’s Business Names Act (the “Act”). For example, if you have a corporation named 123456 Ontario Inc. which carries on a catering business but you promote the business as “Tasty Catering”, you must register Tasty Catering as a business name with the Ministry of Government Services. Similarly, if Joe Smith operates a towing business called “Joe’s Towing”, Joe is required to register “Joe’s Towing” as a business name.
How do I register a business name? - The registration process is quite simple, consisting of the completion and filing of the appropriate form and payment of a registration fee (currently $60.00 or $80.00, depending on how you file). Registration is effective for five years and can be renewed for successive five year terms by paying the prescribed renewal fee. The Regulations to the Act contain a number of rules about what constitutes an acceptable business name (for example, it must not include a word or expression that is scandalous, obscene or immoral in any language and it must not include words such as “Limited” or “Inc.” which may mislead the public into believing that the business name is in fact a corporate name). Your lawyer can help you determine whether your proposed business name is acceptable.
What happens if I don’t register my business name? – Failure to comply with the Act constitutes an offence carrying a fine of up to $2,000 or, in the case of a corporation, of up to $25,000. Responsible directors and officers of corporations can also face personal liability. Failure to comply with the Act also means that you cannot maintain a court proceeding in connection with the business without leave of the court (which requires that you prove to the court that the failure to register was inadvertent, that you have since brought yourself into compliance with the Act and that there is no evidence that the public has been deceived or misled).
Can I carry on business exclusively under my registered business name? – No. Even if you register a business name, the Act still requires that you set out both the business name and the full name of the entity/person (i.e. legal corporate name, full name of sole proprietor, etc.) in all contracts, invoices, negotiable instruments (i.e. cheques, promissory notes, etc.) and orders involving goods or services. Using one of the examples above, Tasty Catering’s contracts for catering services must bear both the Tasty Catering business name as well as 123456 Ontario Inc.’s corporate name.
Does my business name registration grant me exclusive rights to my business name? – No. This is a common misconception, as clients often confuse a registered business name with a registered trade-mark. The business name registry was created for consumer protection purposes; i.e. to provide consumers with the ability to determine who they are doing business with in order to prevent the public from being misled or deceived. The purpose of the registry is not to grant rights to the business name owner. In fact, the Act does not prevent the registration of multiple identical business names. Accordingly, the registration of a business name does not provide you with exclusive rights to the business name nor does it mean that your use of the business name will not infringe anyone else’s rights. If your business name is confusing with another trade-mark or trade-name, you may be exposing yourself to a claim for trade-mark infringement and/or passing off (not to mention that you may be forced to stop using the business name). This highlights the importance of undertaking appropriate due diligence steps before adopting a business name. Such steps include conducting a trade-mark search (keeping in mind that corporation name searches such as a NUANS search do not equate to a comprehensive trade-mark search) and registering your business name as a trade-mark. Your lawyer can assist you with these steps.
What if I also carry on business in provinces other than Ontario? – You should consult with your lawyer to ensure your compliance with the business name registration requirements in all jurisdictions in which you carry on business.
Trina Fraser is a partner with BrazeauSeller.LLP. Trina's practice focuses on business and commercial law, Internet and e-commerce law, trade-mark law and commercial litigation. She negotiates and drafts a wide range of business agreements, including agreements of purchase and sale, intellectual property licenses, commercial leases, franchise agreements, non-competition and non-disclosure agreements and marketing/distribution agreements. Trina regularly advises her business clients with respect to the regulation of promotional contests. Trina is also a registered trade-mark agent.
To contact Trina Fraser call 613-237-4000 ext. 232 or e-mail email@example.com
For more information about Trina and BrazeauSeller.LLP, visit www.brazeauseller.com