Corporate & Business
We have extensive experience with business start-ups, expansions, reorganizations & family succession.
Incorporations We can do these quickly and efficiently, at a reasonable cost. We have standard share structures which can save you money in the long run if your business is successful, as they should not have to be amended in order to add new classes of shares.
One of the decisions to be made at the outset is whether you wish to have the corporation incorporated with a specific name, or with just a number. If a name is desired, we can search that name to see if it will conflict with any other registrations. For certain corporations, a number alone is sufficient, or you can incorporate with a number, and file a business name registration for the corporation.
If you are incorporating with a partner, such that there will be more than one shareholder other than a spouse, it is important that a shareholder agreement be entered into in order to structure the relationship in terms of the expectations of each shareholder. If a shareholder agreement is not entered into, then the relationship is governed entirely by the Business Corporations Act, which could result in a deadlock, and ultimately cause the business to fail. We have extensive experience with drafting shareholder agreements for small and medium sized companies.
PURCHASE & SALE OF
When considering either the purchase or a sale of a business, the first issue is whether it will be an asset sale, or if the business is incorporated, a share sale. The seller typically wants to have it structured as a share sale, as this will be more tax efficient for the seller. For the buyer, an asset sale is generally favoured, as the buyer may not want to inherit liabilities from the seller’s corporation, or the buyer may want the assets being purchased to have a different tax value than what the seller has.
It is important to engage a lawyer early in the process, and preferably at the initial stage which normally is the negotiation of a non-binding letter of intent, which sets forth the basic business deal between the buyer and the seller. A letter of intent will also provide for a due diligence period, which is typically 30 to 60 days, during which the buyer after having signed a confidentiality agreement, is given the opportunity to do financial and legal due diligence, and the importance of this from the standpoint of the buyer cannot be over-stated. Depending on the results of the due diligence, the buyer may in fact walk away, or there can be a price re-negotiation. At the same time, the buyer is usually in the process of confirming the financing, and a formal asset or share purchase agreement is negotiated, in which the seller makes representations to the buyer, such as the liabilities of the entity being sold. There may also be non-competition and non-solicitation covenants included in the sale agreement, which need to be carefully drafted in order to make them enforceable.
If it is a sale of shares in a corporation, from the standpoint of the buyer, it is usually preferable for tax reasons to have the seller’s shares redeemed by the corporation. We have over twenty years of experience with the sale and financing of businesses, and will make the deal happen in the time frame that meets the buyer’s and seller’s needs.
NEAL LAW IS PROUD TO GUIDE YOU THROUGH ALL YOUR BUSINESS LEGAL NEEDS.