What rules must the business name of a limited liability company meet? What difficulties might arise when registering a company with the National Court Register regarding its name?
When establishing a company (e.g., a limited liability company), every entrepreneur searches for the perfect name. The entity launching the business must define it in the articles of association, i.e., the company's articles of association. While regulations generally allow for the free choice of company name, certain difficulties may arise during registration, which we will attempt to clarify today.
Company and entrepreneur
By way of introduction, let's begin with an important aspect: the use of the word "firma" in the context of a company. Very often, the word "firma" is equated with the concept of a company or entrepreneur. For example, in business, it's common to say that we are entering into a contract with a company or that we represent a given company, but it's important to note that this is not entirely consistent with the legal meaning of the term. According to the Civil Code, the business name of a legal person is solely its name, not the entity operating under the name.
Pursuant to Article 160 of the Commercial Companies Code, the business name of a limited liability company consists of a randomly chosen name and an additional designation of the legal form, such as "limited liability company," although the abbreviation "spółka z o.o." or "sp. z o.o." may be used in business dealings. The name (company) may be in Polish or a foreign language and may be personal (i.e., contain the names or pseudonyms of natural persons), objective (indicate the subject of the business and/or the registered office), or even completely fanciful and freely invented.
How to choose the right name for a company?
When choosing a company, we must follow two universal principles:
- The name should be sufficiently distinctive from the names of other entrepreneurs operating in the same market and in the same scope of activity.
- The name must not be misleading, in particular as regards the entrepreneur, the subject of the entrepreneur’s activity, place of business, or sources of supply.
This issue should be analyzed very carefully, as it may cause difficulties when registering the company in the National Court Register, and the court may dismiss the application for registration of the company.
Issues concerning the company name (business name) are resolved primarily under the provisions of the Civil Code and the Act on Combating Unfair Competition. Article 43(3) of the Civil Code serves to protect entrepreneurs against unfair competition and against consciously or unconsciously misleading other entrepreneurs. The requirement to sufficiently distinguish the business names of individual entrepreneurs is relative in that it applies to entrepreneurs operating in the same market. Without a doubt, the definition of "same market" is problematic and highly judgmental in practice. When explaining this concept, it is crucial to consider both the geographic scope of the market in which individual entrepreneurs operate (W. Popiołek, in: K. Pietrzykowski, KC. Komentarz, vol. 1, 2013, p. 177), as well as the objective approach to the market, distinguishing different spheres of economic activity. Therefore, in conjunction with the requirement to sufficiently distinguish companies, the local, regional, or national scope of operations of individual entrepreneurs in a given market should be taken into account.
Based on the above, it is possible to identify common customers, and thus, a territory where entrepreneurs can meet. It is therefore obvious that it is possible for companies with identical sounding names to exist within a given area (e.g., a country), as long as that area does not constitute a "market" for the entrepreneurs using such names.
It is worth noting that, according to the Supreme Administrative Court's ruling of April 26, 2006, II GSK 31/06 (OSP 2008, No. 11, item 121), the exclusivity of the right to a business name is not absolute. Its boundaries are determined by the scope (territorial, objective) of the actual activity of the person using the name. Due to the lack of a formal definition and limitation of the territorial scope of this right in the register (e.g., to the territory of a town or voivodeship) and its formal link to the type of business activity of the entrepreneur (exclusivity with respect to a specific industry), the scope of the right to a business name is dynamic and must be examined on a case-by-case basis, taking into account the market in which the entrepreneur operates under the name.
Furthermore, it is worth highlighting the principles of application of Article 5 of the Act on Combating Unfair Competition. An act of unfair competition is considered to be a designation of a company that may mislead customers as to its identity, by using a company name, name, emblem, abbreviation, or other distinctive symbol previously used, legally, to designate another company. Customers may be considered likely to be misled if there is a clear risk of confusion as to the identity of both companies – due to the close similarity of the designations used, the identity of the industry, the type of product offered, or the same potential customer base.
When choosing a company name, you should remember that the mere fact that another company with the same name has been registered in the Register of Entrepreneurs should not be sufficient reason to prevent your company from using the same name. In such cases, it is important to analyze additional elements, such as the territory of operation and the company's business activity, as well as other normative elements that influence the implementation of the protective function of Article 43(3) § 1 of the Civil Code. Only if all such elements, considered together, are identical should the company name be considered inconsistent with Article 43(3) § 1 of the Civil Code.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of January 17, 2024.
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