In the dynamic landscape of Philippine commerce, businesses often undergo structural transformations. Whether it is a strategic rebranding or a total transfer of interest, changing a business name or its ownership is not merely a marketing or internal decision—it is a formal legal process. Failure to comply with the regulatory requirements of the Securities and Exchange Commission (SEC), the Department of Trade and Industry (DTI), and the Bureau of Internal Revenue (BIR) can result in hefty penalties or the loss of legal personality.
I. Changing the Business Name
The process for changing a business name depends heavily on the legal structure of the entity (Sole Proprietorship vs. Corporation/Partnership).
1. Sole Proprietorships (DTI)
For individuals operating under a trade name, the name is registered with the DTI.
- Cancellation and Re-registration: Technically, you cannot simply "edit" a DTI business name. The owner must file for the voluntary cancellation of the existing Business Name (BN) registration.
- New Application: Once cancelled, the owner must apply for a new BN registration.
- Affidavit of Change: A formal affidavit explaining the reason for the change is often required to ensure there is no intent to defraud existing creditors.
2. Corporations and Partnerships (SEC)
For these entities, the business name is part of the Articles of Incorporation or Articles of Partnership.
- Board Resolution/Partners' Agreement: The change must be approved by a majority of the Board of Directors and at least two-thirds of the outstanding capital stock (for corporations).
- Amended Articles: The entity must file Amended Articles of Incorporation/Partnership with the SEC.
- Name Verification: The new name must be reserved and verified via the SEC’s online system to ensure it is not "identically or deceptively" similar to existing registered names.
- Issuance of Certificate: The change only becomes legally effective once the SEC issues a Certificate of Filing of Amended Articles.
II. Changing Business Ownership
Ownership transfer is more complex as it involves the conveyance of assets, liabilities, and tax obligations.
1. Sole Proprietorship to a New Owner
In the Philippines, a sole proprietorship has no legal personality separate from its owner. Therefore, you cannot "transfer" a sole proprietorship name to someone else directly.
- Step 1: The original owner must close/cancel the business at the DTI, LGU (Business Permit), and BIR levels.
- Step 2: The new owner must register the business as a new entity under their own name.
- Deed of Sale: A Deed of Sale of Business Assets is executed to transfer the physical and intangible assets (equipment, inventory, brand) from the old owner to the new one.
2. Transfer of Shares in a Corporation
Ownership in a corporation is changed by transferring shares of stock.
- Deed of Assignment/Sale of Shares: A formal contract where the seller transfers shares to the buyer.
- Capital Gains Tax (CGT) and Documentary Stamp Tax (DST): These taxes must be paid to the BIR within specific deadlines (usually 30 days for CGT and the 5th of the following month for DST).
- Certificate Authorizing Registration (CAR): This is the most crucial document. The BIR issues the CAR after taxes are paid, proving the transfer is legal. Without a CAR, the Corporate Secretary cannot record the transfer in the Stock and Transfer Book.
- GIS Update: The change should be reflected in the next General Information Sheet (GIS) filed with the SEC.
III. The "Domino Effect": Mandatory Post-Change Updates
Changing a name or owner triggers a mandatory update across various government agencies. This is often where businesses face the most friction.
| Agency | Action Required |
|---|---|
| Bureau of Internal Revenue (BIR) | Update Registration (Form 1905). You must surrender old Receipts/Invoices and apply for an Authority to Print (ATP) new ones with the updated info. |
| Local Government Unit (LGU) | Update the Mayor’s/Business Permit. This usually requires the new SEC/DTI papers and a revised lease contract if the location changed. |
| Social Agencies (SSS, PhilHealth, Pag-IBIG) | File employer data change forms to ensure employee contributions are correctly mapped to the updated entity. |
| Contractual Obligations | Notify banks, suppliers, and landlords. Most contracts have a "Successors and Assigns" clause, but formal written notice is standard practice. |
IV. Key Legal Considerations
- Successor Liability: In ownership transfers, particularly in "Bulk Sales" (transferring all or substantially all assets), the buyer may be held liable for the seller’s existing debts unless the Bulk Sales Law requirements (notifying creditors) are met.
- Labor Continuity: In a change of ownership, the "Employer-Employee" relationship is generally terminated unless the new owner agrees to absorb the employees with their original years of service. If not absorbed, the old owner must pay separation pay.
- The "Doing Business As" (DBA) Rule: A corporation can use a "Trade Name" different from its registered corporate name, but this must be specifically declared in its SEC Articles.
Note: Navigating these changes requires meticulous record-keeping. Always ensure that the Secretary’s Certificate or Affidavits clearly state the business purpose for the change to avoid scrutiny regarding tax evasion or avoidance of liabilities.