SW Legal studies in Business

Name of Suspended Corporation May Be Taken By Another Corporation
Description Appeals court affirmed the decision of the Secretary of State to grant the name of a suspended corporation to a new corporation that requested the name of the suspended corporation. Suspension for failure to follow state law means loss of privileges, including possible loss of name.
Topic Business Organization
Key Words Corporations; Corporate Name; Suspension
C A S E   S U M M A R Y
Facts Lone Star Security was incorporated in 1993 in California. In 1996, the Secretary of State suspended the corporation for failure to file annual statements and to file tax returns. In 1999, the owners of the corporation filed their annual statements and tax returns and paid all penalties. At that time, the owners were informed that because the corporation had been suspended, it was not a legal entity until it was reinstated by the Secretary and that while it had been suspended, the Secretary had granted the name Lone Star Security to another party that requested it. The owners sued the Secretary to restore the name Lone Star Security to them and to revoke the use of the name by the other party. The trial court held that the Secretary had acted properly. The owners of the original Lone Star Security appealed.
Decision Affirmed. The name of a suspended corporation may be reserved and adopted by another corporation at the discretion of the Secretary of State. Consent of the suspended corporation is not required since it is suspended. It failed to follow the requirements of state law to maintain its corporate status and so lost its right, power or privilege to hold a corporate name and prevent another from adopting that name. The suspended corporation had been sent notices that it had not complied with state law, there was no requirement that the Secretary inform the corporate officers of all possibilities that can result from suspension.
Citation Boyer v. Jones, 2001 WL 316068 (Ct. App., Calif., 2001)

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