7.M&A

Q9 (Continued Use of Seller's Name)

In purchasing a business, what are the risks of continuing to use the name of the service of the seller?

If the acquiror will use the seller's corporate name, the acquiror will be responsible for the settlement of the liabilities of the seller, unless the acquiror without delay registers in the commercial register or otherwise provides notice that it will not assume such liabilities (Company Act Article 22).  Based on the precedent of the application of this rule to the name of membership golf clubs, there is a risk that the acquiror will be responsible for the settlement of liabilities if it continues to use not just the corporate name but also the trade name or service name of the seller.

(Posted: January 27, 2012)