This past week, the North Carolina General Assembly adopted a bill to streamline the process for filing assumed business names (more commonly known as "D.B.A.s").
Under current law, any organization that does business using a name other than the registered legal name of the entity as shown on the Secretary of State's website is required by law to register the name under which it operates (the assumed business name) by filing a Certificate of Assumed Name in each county in which it does business.
In today's world, this is an inefficient system. It requires duplicative registrations. Not all counties provide access to records via the internet. Often it is unclear in which county an assumed business name might be filed, requiring multiple searches.
For example, let's say you are trying to learn some basic information about a company, or to serve a company with a formal communication. The company calls itself "ABC Widgets" and is active throughout North Carolina. You will first check the Secretary of State's database of domestic and foreign companies authorized to business in North Carolina. If ABC Widgets does not appear, it is for one of two reasons: (i) the company is organized in another state and has simply failed to register in North Carolina before doing business here, or (ii) it may be that "ABC Widgets" is merely an assumed business name of an entity. If "ABC Widgets" is an assumed business name of the entity, you will need to know the entity's legal name in order to look up the information you need. You will check the records of the Register of Deeds of the county within North Carolina where you believe ABC Widgets to be doing business. However, ABC Widgets may not have registered an assumed name in that county, instead registering in one of North Carolina's other 99 counties. You may have to check the records of several counties in order to find a registration of an assumed name, after which you will again check the Secretary of State's database for the information you need. Clearly, the system could be improved.
The new legislation, known as the "Assumed Business Name Act," will create a central registry of all assumed business names to be administered by the Corporations Division of the Office of the Secretary of State. The bill has an effective date of October 1, 2017, but it only goes into effect if the Secretary of State’s office receives sufficient funding to implement the new system. Funding is apparently addressed in the recently adopted state budget.
The bill also improves the existing language of the assumed business name statute, getting rid of some awkward language regarding "ownership" of an assumed name.
You can read the full text of the legislation here.
This post is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this post without obtaining the advice of an attorney. If you have questions concerning this post, please contact Matt Cordell at email@example.com.
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