Trading name vs company name: what is the difference?

Corporate names: much more than just a label

In the business world, the name under which a company operates is more than just a label, it represents its identity, its essence and the way it connects with customers and partners. However, although both terms refer to a company's identity, they have distinct legal and business implications that every entrepreneur should be aware of. Understanding this difference is crucial not only to avoid legal mistakes but also to maximize commercial impact, in the following section we will then see the difference between the two terms and the roles of each one. 

Trading Name vs Company Name

The company name is the name by which the company is legally identified as a legal entity, it corresponds to the official and legal name under which the company is registered. The company name must appear in all administrative documents.

And if we already have a name for the business, then what is the trade name? Well, if a company owner wishes to operate under a name other than the legal name of the company, he can do so by using a trade name. This trade name will be the face that the public recognizes, it can be registered as a trademark, which is highly recommended but not strictly necessary.

Company name

Below we will detail more precisely the main characteristics of the corporate name in order to understand its importance and functions in greater depth.

• Uniqueness: Each company name must be unique and cannot match or be too similar to that of another company registered in Luxembourg. Before incorporating a company in Luxembourg it is necessary to check that the name to be used is available, this is done by filing a request for a certificate of name availability electronically with the Luxembourg Business Registers (LBR). Explore our Incorporation services to simplify the process and ensure compliance.
• Mandatory registration: The company name must be formally registered with the RCS which makes the company a legally recognized entity. Without this registration, the company cannot legally operate.
• Use in legal documentation: The company name must appear on all legal documents of the company, including contracts, invoices, certificates of incorporation and official correspondence.
• Type of company included: In Luxembourg the legal forms defined by the Law of August 10, 1915 on commercial companies must include in their company name the acronyms identifying their type of corporate structure (e.g., S.A., S.à r.l., SCSp). These legal forms are: Public Limited Company - Société Anonyme (S.A.). Private Limited Liability Company - Société à Responsabilité Limitée (S.à r.l.). Partnership Limited by Shares - Société en Commandite par Actions (S.C.A.) Limited Partnership. - Société en Commandite Simple (S.C.S.) General Partnership - Société en Nom Collectif (S.N.C.) Special Limited Partnership - Société en Commandite Spéciale (SCSp) Cooperative Company - Société Coopérative (S.C.)
• Other forms such as sole proprietorships or civil partnerships are not required to include specific acronyms in their name although they must respect the general rules of uniqueness and legal compliance. The inclusion of acronyms provides clarity to third parties on the legal structure and scope of liability of the partners.
• Passport, valid for at least 3 months after the expiration date of the requested visa. With at least two blank pages.
• Permitted languages: The corporate name may be in any language but must respect ethical standards and not be offensive or misleading.
• Legal restrictions: Companies operating in highly regulated industries such as finance are subject to additional restrictions on the choice of their corporate name due to the specific regulations governing their activities. For example, the use of terms such as “bank”, “insurance”, “asset management” or “investment” is strictly regulated and is only permitted if the company complies with the requirements set by the relevant regulatory authorities such as the Commission de Surveillance du Secteur Financier (CSSF). These limitations are intended to ensure that the corporate name is not misleading and accurately reflects the nature and scope of the authorized activities. For example, a company wishing to include “bank” in its corporate name must first have obtained the necessary license to operate as a banking institution. Similarly, terms such as “university” or “clinic” are also restricted in sectors such as education or health and require specific approval to avoid confusion or misuse.

• Permanent duration: The corporate name remains associated with the company as long as it exists, changing it requires modifying the bylaws and making a new registration in the RCS.

Trade name

Now that we have seen the main characteristics of the company name, we are going to do the same with the trade name so that the differences between the company name and the trade name become much clearer.

• Branding purpose: The trade name is the name under which the company operates publicly and may differ from the legal name. It is mainly used in marketing, advertising and customer relations, its main purpose is to create an attractive and memorable brand identity for the public and to facilitate connection with consumers. The trade name is the name that customers usually identify with the company's products or services and therefore has a direct impact on the perception of the business. For example, a company may have Global Tech Solutions S.à r.l. as its company name and InnovaTech as its trade name, a far more attractive name for the public and easier to remember.
• Not necessarily unique: Unlike the legal name there is no strict requirement of uniqueness for the trade name, unless it is registered as a trademark or infringes third party rights.
• It is not mandatory to register it: Unlike the legal name the trade name does not have to be compulsorily registered however it is highly recommended to register the trade name as a trademark as this offers extensive legal and protection benefits. Without a trademark registration other companies could use similar names without legal repercussions. Moreover, if another entity registers an identical or similar trademark it could claim exclusive rights even if you were already using the trade name.
• You can register as a trademark: To obtain legal protection the trade name must be registered as a trademark with the Benelux Office for Intellectual Property (BOIP), this offers protection in Belgium, the Netherlands and in Luxembourg. It is also possible to register the trade name in other jurisdictions, using for example the Madrid System for international registration. This system is administered by the World Intellectual Property Organization (WIPO) and allows a trademark to be protected in a large number of countries through a single application.
• Subject to sectoral limitations: Like the legal name, the trade name must also comply with applicable sectoral regulations, especially in regulated areas such as the financial or health sector.
• Market adaptability: Can be easily modified to adjust to changes in marketing strategies or expansion into new markets without having to change the company's legal name, which is much more cumbersome.

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Company name or trade name, which one to use?

It is already clear that the company name legally identifies the company, so it is essential to have it, but the trade name is optional. The question then arises as to whether or not it is convenient for a company to have a trade name. Well, this depends largely on the characteristics of the company and its future plans, however, we will try to shed some light on this issue by examining some of the advantages and disadvantages of having a trade name.  Want to know more about registering a company in Luxembourg? Check out our detailed guide on company registration in Luxembourg.  

Advantages:

• Flexibility in branding: a trade name allows the company to create an attractive and differentiated brand identity that can be simpler, easier to remember and suitable for the target audience compared to the legal name.
• Market adaptation: a trade name can be easily adjusted for different products, services or regions, without the need to modify the company's legal name.
• Separation of activities: a company can operate different lines of business with different trade names, which allows the company to segment the market and diversify its offer with appropriate names for each line of business. In many cases, using a single name for multiple lines of business may not be adequate.
• Facilitates international expansion: the legal name of the company may not be the best way to present itself when expanding internationally and entering countries with other cultures and languages. Choosing a global business name that adapts internationally may then be a very advantageous option.

Disadvantages: 

• Limited protection without registration: if the trade name is not registered as a trademark, it can be used by third parties, which increases the risk of legal disputes. The company could for example face lawsuits from third parties claiming it as their own, forcing it to change its public identity.
• Application procedures can be complex: registering and protecting a trade name involves additional steps beyond the registration of the legal name. This process requires verifying the availability of the name, complying with the requirements of each jurisdiction and filing specific applications in each jurisdiction where the trade name is to be registered, which can be technical and laborious.
• It is only valid in the jurisdiction where it has been filed: the use and protection of the trade name is limited to the country or region where it has been registered. To obtain protection in other territories, additional registrations are required, which increases costs and administrative complexity.
• May be difficult to choose: in areas such as finance, health or education, certain terms in the trade name may be restricted or require additional approvals.