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Name of the Company

Definition, Explanation Information Sources

Definition, Explanation

When it comes to naming their own company, business starters like to let their creative nature take its course. But imagination should regard some limits. “Baptizing” the company must not be done without complying with a set of legal regulations. A decisive point is whether or not the company is supposed to be trade-registered.

Trade-register: Do or don’t?

The trade register at the local district court informs business associates as well as the public about the conditions of the registered companies. E.g. it provides information of who is entitled to represent a company, or who is liable for binding matters. For companies, however, that are not registered that way, there is no such public source of information. Different naming regulations try to compensate for that.

Who must trade-register at all? The registering obligation always applies to traders and incorporated companies (e.g. GmbH, OHG, KG). Traders are all businessmen who run an independent mercantile trade. An exception are small traders, below certain thresholds of turnover, and trades with very simple-structured, clear and transparent business relations. These can, but need not to trade-register.

Not allowed to register are:

  • Freiberufliche (something like freelancers)
  • Do you have good contacts to merchants / producers and do you get advantageous conditions?
  • Companies constituted under civil law (BGB-Gesellschaft)
  • Do you access a source of large-amount special items or insolvency wares
  • Partnership companies (obliged to register in partnership register)

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Central issue: acquisition of goods

To be a successful business, one has to sell attractive goods at interesting conditions. To make interesting offers, first, goods have to be acquired from cheap sources which can be:

  • Own production
  • Merchant partners
  • Producers and merchants for rest items, retour- and B-stocks
  • Companies or insolvency managers in charge of liquidations or receivership
  • Private households for household dissolvings
  • Fairs
  • Imports from abroad

Note: Only companies that are trade-registered have a firm. This is a commercial-legal term for a commercial business. For companies that are not registered it is just the “company name”. Names for companies not registered:

Kleingewerbetreibende (small traders) that are not trade-registered must appear with their first and sur-name in business communication (including letters, invoices, offers etc.). At least one of the first names has to be spelled out.

Besides this official company name, it is allowed to add specifications of branch or activity (e.g. Johanna Smith, Web Design). Also fancy names or establishment names are possible, like “Sauce Boat” or “Fashion Corner”. These fancy names, however, must not be used without the personal name, except in advertisements. The logo can be in the letterheads, but it should not be in close connection with the name and activity specification, instead it should be offset from that. If you run a store, a restaurant or other public location (travel agency, real estate agency), you must display your spelled-out first name and surname at the entrance.

The extra specification in the name must not be misleading: It must not look like your company was actually trade-registered if it is not. E.g. It would look like that if you used the specification e.K. (registered merchant) in the name. Also, including the township name could suggest that your store was the only of its branch in that town.

Furthermore, you are not allowed to use the specification of another company that is in the same branch. If you do you risk actions for injunction or even damage claims. Even a similar name can have those legal consequences. So, before naming your company, you should ask the IHK and search on the web or the yellow pages, to avoid name plagiarism. If you wish to exclude the last risk, a research by a specialized notary can be advisable, which is expensive though.

Examples of company names.

  • Peter Mohr, Zeitungen
  • Zweirad-Kurier, Anna Kirch
  • Vierbeiner und Co. – Hundeschule Hannes Klein

All regulations on how tradesmen have to appear in business communication can be found in the Gewerbeordnung, § 15 b (GewO).

Freiberufler

Largely the same naming regulations apply to Freiberufler, or Freiberufliche (German legally regulated freelancing). However, they do not need to appear with their first name, the surname suffices. Additional specifications and fancy names are also allowed, with the above conditions.

To avoid misunderstandings about Freiberufliche and trade activities, Freiberufler should make sure when they add specifications to their company name that these really comply with the naming regulations for Freiberufliche activities. Otherwise, the revenue might re-classify the activity as a trade. Although that is not mainly a matter of the name but of the right activity, at least time-consuming discussions with the revenue can be prevented this way.

Examples for Freiberufliche company names:

  • Karl Müller, Steuerberater
  • Meier, ABC-Print + TV
  • Topentwurf, Dipl.-Ing. Michael Schulz, Architekt

Naming hints for Freiberufliche activities are in § 18 EStG. For the legal form of Partnergesellschaft (PartG) that is reserved for Freiberufliche, the naming regulations are the same asfor the GbR (see below). The PartG, however, is the only legal form that allows additions “und Partner”, “Partnerschaft” or “Partners” in the name.

Gesellschaft bürgerlichen Rechts, GbR (also BGB-Gesellschaft, civil law association)

Also GbRs appear with the full first and surname of their partners. Along with the name, as well, there can be used branch specifications, optionally. Also establishment- or store- names, even fancy names can be used. All other regulations are the same as above.

Companies that are trade-registered

Since the trade register already provides important information about your company, you can name your company quite freely: It can be a person’s name, or anything real or fancy. As a firm, respective name, you can choose Müller & Schulz OHG, Sportausrüstung e.K., or Aurora Kfm. Also combinations are allowed. As a sole proprietor, though, you must add e.K or e.Kfm.

The paragraphs 18 and 30 of HGB, Handelsgesetzbuch (German Commercial Code), play an important role for building a firm:

The firm must not be named with additions the are suited to delude others in the respective fields of communication regarding the company’s business status. Acc. to § 30 HGB, furthermore, the firm must differ from all firms already existing in the same community or township and trade-registered or mutual-company-registered (Genossenschaftsregister).

Examples of names, resp. firms:

  • Object firm: Medico Gesellschaft für Medizintechnik mbH
  • Name firm: Maria Meister e.K., Kaiser und Bauer OHG
  • Fancy firm: Sisyphos AG

It must always be mentioned the legal form, to show liability circumstances.

Example:

e.K” for registered merchant, GmbH, OHG, KG or AG, also GmbH & Co.KG.

Protect company names

Companies that are trade-registered are name-protected to an extent within their trade district. Since – as explained above – every new firm must differ from any firm already existing and trade-registered in the same township, a newcomer cannot use the same name to trade-register. The name-check usually is done by the IHK, on request of the register court.

Also, the name of any company (trade-registered or not) is protected by and from the beginning of actual use of the name. This protection, however, is restricted to the region within which the company is known and within which it can be reckoned to be going to advertise.

For more intensive protection of your company’s name, it can be considered to purchase an entry in the German trademark register in Munich which, however, is expensive. One advantage is that the trademark is protected not only within the region of its use but within the territory of registry. It is useful if the company is planning to expand.

Original author: Dr. Ulrich Temme, Notar, Düsseldorf

Information Sources



Last update: 01/09/2010
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Copyright: Angela Bauer