On the session of the Croatian Government that was held on 24 April 2013, the Ministry of Justice put into procedure the Amendments to the Company’s Act in a part regulating the company’s name. The amendments aim at liberalization of the regime of registration of the company’s name by removing existing restraints applying to registration of a company’s name in a foreign language. The amendments should be adopted in an urgent parliamentary procedure.
- Present regime
Under the present regime, the company’s name is a name under which the company is present and operates at the market. It shall be determined in the Deed on Incorporation. The company’s name must be fixed in Croatian language and in Latin script and may contain Arabic numbers. The company’s name may include particular foreign words if these words make the shareholder’s name or a trademark registered in the Republic of Croatia or if they have established usage in Croatian language. Furthermore a foreign word may be used as a company’s name if the Croatian language does not recognise adequate translation or if it is about the words in dead languages.
- Issues facing the choice and the usage of the company’s name
As the commercial company shall be identified and recognised at the market inter alia through the company’s name it is understandable that the decision on the company’s name is one amongst the essentials. When deciding on the company’s name, the choice of the shareholders is quite limited preliminary because of a rather conservative Company’s Act regime imposing a number of unnecessary restrictions. First of all, the company’s name shall clearly differentiate from other company names registered with the same court. In practice the application of this rule has been extended by interpretation of courts and it was not scarce that the courts refused to register the company’s name of a newly established company because similar company’s name had been registered with some other Croatian court. Additional obstacle is that there is no clear ruling when deciding on differentiation of the company’s name which gives the courts a rather broad discretion in deciding these issues.
One very practical impediment at registration of the company’s name is the fact that majority of desired company’s names are already registered or protected by the registered trademarks which inevitably narrows a choice of the shareholders when deciding on an appropriate company’s name. This obstacle has been overcome by entrepreneurs by registering the companies in foreign jurisdictions or through registration of trademarks which gave them legal basis for circumventing conservative laws and achieving the registration of the desired company’s name in a foreign language.
- Company’s name de lege ferenda
Within the terms of the new Company’s Act the designation of the company’s name shall be in Croatian language and in Latin script or in the official language of the EU member state and in Latin script whereas the Arabic numbers may be used. Other parts of the company’s name shall be in Croatian language and Latin script. The company’s name may contain certain foreign words of other languages (other than Croatian or the EU member states) if these words make the shareholder’s name or a trademark registered in the Republic of Croatia or if they have common usage in Croatian language or if the Croatian language does not recognise adequate translation or if it is about the words in dead languages. The company’s name may be registered in a court registry translated in one or more languages.
The amendments of the Company’s Act shall enter into force on the eight day as of its announcement in the Official Gazette of the Republic of Croatia.
- Final remarks
It is undisputable that the contemplated changes shall ease starting business and speed up the incorporation procedure. Yet it is to be seen how this new model will be accepted in practice and whether the commercial courts shall apply the unified practice when deciding on registration of the company’s name in a foreign language.