A banker asked us: Ontario PPSA registrations against trade names and business styles

Q: Can you register a financing statement against an unincorporated trade name or division name or business style, or can you only register against the legal name of a corporation?

A: In order to have an effective registration under the Ontario PPSA¹, a secured party has to register a financing statement against the current proper legal name of the borrower corporation as shown in its Articles of Incorporation/Amalgamation/Amendment.² Registering only against an unincorporated trade name or a division name or a business style of a corporation will simply not be effective.

So if a borrower is named "123456 Ontario Inc." and uses the unincorporated trade name or business style of "Acme Plastics", a secured party must register against "123456 Ontario Inc." as the primary business debtor in the Financing Statement in order to have a perfected security interest against that corporation.

Sometimes creditors will also register against the trade name or business style as a second business debtor on the same financing statement, but technically it has no legal effect. It merely serves as a form of litigation avoidance so that if an unsophisticated creditor conducted an Ontario PPSA search against "Acme Plastics" but did not search against "123456 Ontario Inc.", that creditor would still see the registration on their search print-out and would take steps to address it. However, just registering against "Acme Plastics" all by itself will not be in compliance with the Act and its regulations and will not perfect the underlying security interest.