Whether you own a sole proprietorship, partnership or corporation, retaining the services of corporate lawyers in Toronto is essential to guarantee you are operating your business according to Canadian and Ontario laws. There are specific differences between each type of business operation and your Toronto corporate lawyer is able to answer questions, make recommendations and help guide you in determining the best way to set up and create your new business or modify the current ownership, like converting the operation from a partnership into a corporation.
Why Use Toronto Corporate Lawyers to Incorporate Your Business
There are numerous forms, documents, and searches required to convert a business into a corporation. Obtaining help from qualified and experienced corporate lawyers Toronto ensures your business is incorporate correctly, either provincially or federally, online for efficient and quick turnaround. Normally, after a corporate lawyer in Toronto arranges and completes name searches and drafts the articles of incorporation, the documents are electronically filed with either Industry Canada or the Ontario Corporations Branch for almost immediate results.
After you are officially incorporated, our corporate lawyers in Toronto prepare all required additional paperwork and the corporate minute book necessary when setting up a corporation. Other processes completed by your Toronto corporate lawyers include preparing registers, ledgers, by-laws, corporate resolutions, signing of corporate resolutions by shareholders, officers and directors, as well as issuing shares of stock to every shareholder. Further, our corporate law firm in Toronto files all initial notices and additional filings on behalf of the new corporation with the federal and provincial governments and supplies official copies of all paperwork and documentation.
Benefits of Incorporating a Business with Help from Corporate Lawyers Toronto
Corporations receive several benefits compared to sole proprietorship and partnership operations. One primary benefit that all corporation owners receive is limiting personal liability and protecting personal assets. The law views a corporation as its own entity or person. This means the business is solely responsible for all debts, taxes, earnings, and other income and expenses related to its daily operations. In the event of collections, bankruptcy, or other liability cases, owners’ personal assets are protected. With sole proprietorships and partnerships, the business owners can be held liable, their personal assets used to satisfy business obligations, and are personally responsible to pay all taxes.
Unlike sole proprietorships and partnerships, another benefit of incorporating is to ensure the longevity of the business. In the event an owner retires, passes away, or sells their interest in the corporation, the business continues to exist. While the costs associated with incorporating are more than filing a registration for a partnerships or proprietorship, the costs are well worth the protections and benefits offered to corporations.
A corporation is comprised of directors, officers, and shareholders (owners). Each position has specific responsibilities for managing and overseeing the operations of the business. Depending upon the size of the corporation, shareholders may also act as directors or officers. Directors are primarily responsible for the supervision and management of the corporation’s business affairs under Ontario laws. In situations where there is a small number of shareholders, or if all shareholders agree, then the shareholders also serve as the directors. In Ontario, at least 25 percent of the directors have to be Canadian citizens and must be at least 18 years of age.
Directors can be replaced by the shareholders at any time, or upon retirement, disqualification, resignation, or death. The Ontario Business Corporations Act (OBCA) contains two specific requirements for directors:
1. Act in the corporation’s best interests, honestly, and in good faith. This standard is in place to prevent directors from creating situations where there could be a conflict of interest and helps avoid putting personal interests ahead of corporate interests.
2. A minimum standard of care must be exercised at all times. Directors have to take responsibility for their actions. This standard is designed to ensure directors are performing their abilities with a reason of care while obeying and following all laws. A director’s standard of care is compared to how another reasonable person would perform when presented with a similar situation. Failing to follow this standard could leave a director personally liable for damages experienced by their lack of good faith or negligence in the operation of the corporation. Additionally, directors have a responsibility to make sure all obligations are paid, including employees’ wages, HST, and income taxes, as well as creating safe working environments for the employees. Otherwise they may be held personally liable.
Officers are appointed specific positions, roles, and job functions by the directors of the corporation. The officers’ powers to perform and carry out their duties are designated by the directors. In small corporations, officers could also be shareholders. The officers of the corporation and their responsibilities are normally defined in the corporate by-laws. Officers are held to the same standard of care as directors and must report any conflicts of interest.
Shareholders are the corporation’s owners and each one owns a certain number of shares of the business operation. Depending upon the type of corporation, shares may be openly traded where they are bought, sold, or exchanged by anyone who wants to own a portion of the business, or distributed and retained privately by the corporation. Shareholders who own voting shares of stock have the right to assign and replace directors.
Use Corporate Law Firms Toronto When Buying or Selling a Business
If you are considering buying or selling a business, it is vital to get professional advice from corporate law firms in Toronto. Your Toronto corporate lawyer is there to lend their expertise and opinion in regards to purchasing or selling a business. Once you have an initial purchase or sales offer, it is in your best interests to have the document reviewed prior to signing it.
Our Toronto corporate lawyers at Weltman, Bernstein take the time to help you make one of the most important decisions whether you are selling or buying a business. It is essential you realize exactly what the business is selling. Is it selling its assets or both its assets and liabilities? In cases where one business is fully buying out another, the sale and purchase agreement defines whether liabilities are to be paid off prior to closing or transferred upon closing along with the assets. In situations, where you are purchasing a controlling interest or a large number of shares in a corporation, you typically purchase both the business’ assets and liabilities.
No matter what type of sale or purchase transaction is selected, you need to retain the services of an experienced corporate lawyer Toronto to protect your interests. Throughout the entire process your lawyer handles all searches which need to be completed before entering into a sales or purchasing agreement. The purpose of searches is to confirm the business is able to be legally sold, is not selling assets it does not completely own, and is not bankrupt.
Further, your Toronto corporate lawyer ensures the sale is made according to the Ontario Bulk Sales Act to verify that any creditors of the business are being paid any outstanding amounts owed prior to the sale closing or giving the creditors and the buyer the opportunity to agree on transferring the debt. Not complying with the Ontario Bulk Sales Act could enable creditors with the power to cancel the sale of the business.
No matter whether you operate a business out of your home, a small business, a franchise, or a major business operation, you need to speak to one of our corporate lawyers in Toronto for professional and experienced assistance during a commercial or corporate transaction.