How to navigate a company name change

Change can be good, but are you ready to navigate the most difficult license amendment?

From a licensing perspective, changing your company’s name will require precision and careful coordination in making virtually simultaneous amendments to the company’s formation documents, foreign qualifications, licenses, and more. Here are the top things that you need to know about changing your company’s legal name.

Restricted words

Some state secretaries of state prohibit the inclusion of certain words in a company’s name (for example, “finance” and “loan”) absent approval from the state’s financial services regulator. Take the time to research in advance whether any of the proposed words in the company’s new name will require such approval. And then, if applicable, initiate the process of obtaining such approval as soon as possible because it can sometimes be a cumbersome and lengthy process.

Prior notice and prior approval

Timing is everything. Many state financial services regulators require advance notice of a company name change. Indeed, in some cases, as much as 90 days’ advance notice is required. In others, obtaining the regulator’s formal written approval in advance is required. We recommend reviewing state law to confirm exactly how much and what kind of notice is required.

Failure to comply with prior notice and prior approval requirements can result in the imposition of penalties. And so, make sure to select an effective date for the name change that will allow enough time to comply with them. For more on this particular topic, check out our May 2020 APPROVED Checkpoint webcast titled ACN and amendments.

Amendments to formation documents

Amending the company’s formation document on file with the secretary of state of the state of incorporation/organization is a pivotal project piece. If possible, submit the amended formation document with a future effective date. This will help with obtaining prior approval of the name change where required, as discussed above. Also, be sure to request certified copies of the amended formation document, along with a certificate of good standing from the secretary of state reflecting the new name, as you will need to submit them with most foreign qualification and license amendment applications, as discussed below.

Amendments to foreign qualifications

You will need to amend all of the company’s foreign (other state) qualifications to reflect its new name. If possible, submit foreign qualification amendment forms with a future effective date. More state secretaries of state permit this than you would think. If foreign qualifications can’t be submitted with a future effective date, then submit them beginning on the effective date and pay for expedited processing where available. The goal is to have the name change effective in every state as close as possible to the date that the name change takes effect in the company’s state of incorporation/organization.

This being said, meet with your registered agent early in the process to ensure alignment on project expectations and targeted timeline. If your registered agent will be submitting foreign qualification amendment forms on your behalf, then ensure their availability on the effective date of the name change and request a daily report from them that shows the dates that each form is filed and ultimately approved.

Amendments to licenses

Formation documents and foreign qualifications reflecting the new name aren’t the only documents that state financial services regulators will require from the company to process and approve the name change. For one, the company’s surety bonds will need to be amended to reflect the new name. For paper surety bonds, request riders reflecting the new company name as of the effective date. Carefully review them for accuracy and allot time in your project plan for principal execution and submission to state financial services regulators.

Other documents that may need to be amended and submitted to state financial services regulators include, but are not limited to, the following:

Document samples
Business plans
Policies and procedures
Organizational and management charts

Employment history

For licenses maintained on NMLS, on or shortly after the effective date of the change, all individuals with an NMLS individual form on file (such as officers, directors, qualifying individuals, and mortgage loan originator licensees) will need to update their current employer information. Depending upon the number of individuals, this task may require significant time and coordination.

Formerly known as

Lastly, consider discussing with legal counsel the use of f/k/a (for example, XYZ Mortgage, Inc. f/k/a ABC Mortgage LLC) to bridge the gap between when a company name change takes effect in the state of incorporation/organization and when it is approved by the state financial services regulators. Under this approach, the company would use the f/k/a in each state until such time that it has obtained the requisite approval to hold itself out exclusively under its new name in the state.

Checkpoint: How to navigate a company name change