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Business Law
For most entrepreneurs, navigating the complexities of business corporate law can seem daunting and irrelevant to your daily operations. However, by understanding just some key factors can prevent years of litigation and unnecessary tax payments. Our goal at Varity Law is to manage all the corporate law services of your business, allowing you to continue focusing on doing what you love.
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We invite you to keep on reading as we explain with some examples:
Annual Return: Mandatory Filings
Loans/Investments to the Corporation
Tim and Ray are looking to start a furniture business. He decided to incorporate, which is an excellent idea because only the money within the corporation is at risk of loss and lawsuits – his personal assets (e.g. his house and personal bank accounts) are safe (with a few exceptions).
Tim and Ray decided to incorporate themselves, but the government documents confused them. They did not realize that there’s a distinction between directors and shareholders. Namely, directors are the people who run the day-to-day operations of the business, and shareholders are the people who own the business. During incorporation, the government only asks for directors’ information, not shareholders’, in an effort to protect shareholder privacy. Because of this, they did not get their corporate minute book done, which is a set of documents that shows who are the shareholders – who own the business.
Three years later, due to many personal differences, Tim decided to leave the furniture business, and asked Ray to buy him out. However, there is no formal record showing that Tim was ever a shareholder nor how many shares he owns. Also, there’s no info on how much each share is worth after 3 years.
Unlike when the business first started, Tim and Ray are incapable of making joint decisions anymore. Thus, they had no choice but to hire a professional (expensive) appraiser to value the shares, and to eventually litigate.
All of this would have been avoided if ground rules were set at incorporation and formalized through well-prepared legal documents.
There are many crucial legal agreements to running a business, including shareholder agreement, lease agreement, employment agreement, client agreement, supplier agreements, etc.
Let’s take shareholder agreement as an example:
Four friends decided to open a café together, and they would all co-own the business as shareholders. Out of the four, two of them (Mary and Anne) would also act as Directors who would run the business on a day-to-day basis.
Mary wanted to get a bank loan to give the café a boost. Without talking to anyone else, she went to the bank and signed off on all loan documents as the company’s director. After a few years, the bank loan reached its term and the café is not doing well – it cannot repay back all the money that it borrowed.
The other shareholders were furious – they never authorized Mary to get the bank loan. But at the same time, they did not formally restrict her powers through corporate minute book or a shareholder agreement. Those important documents would set up rules for decision making and authorization.
Mary said not to worry, I’ll pull in another investor to help us, and she did. But that investor, Joe, has a bad personality and no one else wanted to work with him. Mary said she will let Joe buy her out as shareholder, which Joe agreed. The other shareholders refused to let him join – but they never formally set up share transfer restrictions in their corporate documents. In the end, it just resulted in more costly litigation.
Samantha wants to buy a cake store. She was told she could either buy its assets (e.g. its equipment) or its shares (the entire company). As she wanted to keep the business name and goodwill that the seller already built, she decided to purchase the shares.
A year after she bought the cake store, she realized that the business had many problems. It owed money to many people, including employee salaries, supplier payments, bank loans, and landlord commercial rent. All of which should have been resolved if she hired an experience lawyer to close the sale. But now, as the seller is no where to be found, she must inherit everything and pay it all back with the money she earned for the company.
As well, she only now realized what “goodwill” means. It does not necessarily mean she gets to keep all the clients, because clients are free to choose their own cake store. It just means they may come back to this store given its location and history.
For Samantha, all of this would have been avoided if she got proper legal advice, had a set of well-drafted purchase agreement and closing documents, and had extensive due diligence searches done by a business lawyer before she took over the company.
Business Structuring
You got the idea, the skills, and the team. But which business structure is right for you? Sole proprietorship, partnership, corporation, joint venture, co-ownership? What is the risks involved with each structure? What about tax advantages?
Complete our intake form and book a free consultation with a business lawyer today. We’ll list & explain the options to you based on your specific situation and help you choose the best business structure.
Navigating the complexities of business corporate law is crucial in making an informed decision about your company’s structure, as it directly impacts your liability, tax obligations, and growth potential.
Corporate Minutes
Tell us if you are familiar with this story: your business has taken off and an interested purchaser offered a good price. You are excited to sell and then the purchaser’s lawyer tell you that your corporate minute book must be updated before you can sell. Now what you do?
Well, ideally, you should have been properly and timely organizing your corporate minutes since day one (incorporation). Hiring an experienced business lawyer from the beginning would have been a great idea.
Nevertheless, come to us and we’ll see what we can do. Book a consultation with a business lawyer today.
Also, understanding the importance of planning for the future beyond your business is crucial. Consider consulting a wills and estate lawyer in Richmond Hill to ensure your personal and business assets are well protected.
Agreements
You are forming partnerships, hiring employees, working with independent contractors, managing your relations with your clients, and navigating the multifaceted landscape of business corporate law is crucial in these processes.
Somewhere down the line, you’d likely disagree with your partner at least once, argue with your employees about wages & benefits, complain about that independent contractor supplier who gave you the wrong supplies, or be asked for a refund from your clients due to miscommunications.
Isn’t it better to set expectations in the form of enforceable agreements before hand? Whichever your business situation, come for a free consultation and we’ll try to get you properly set up. And remember, perhaps having proper agreements may cost you thousands, but litigation without proper written agreements usually end up in tens of thousands. Considering the financial implications of these agreements, understanding the nuances of real estate secured lending can offer valuable insights into securing your business’s future.
Buy Business or Sell Business
You are excited to buy an established business and avoid all that start up risks yourself. Or you built up a great venture and now you want to sell for a good price.
Now then, are you aware of precisely what you are buying – corporate shares or business assets? What are risks involved in the buy/sell process? What other things need to be done (e.g. update corporate minutes, review lease agreement) before you can buy/sell?
Book a free consultation with a business lawyer in Richmond Hill today, and we’ll tell you all about it.
FAQ
How Much Does A Business Lawyer Cost?
The cost of a business lawyer can vary widely based on several factors, including the experience and location of the lawyer, the complexity of the matter, and the amount of time and resources required to resolve the issue. On average, the cost of a business lawyer can range from $150 to $350 per hour.
Is It Possible To Have A Free Consultation With A Corporate Lawyer?
Some corporate lawyers offer free consultations, while others may charge a fee. It’s best to check with the lawyer or firm beforehand to know what their policy is.
Where Can I Find A Business Lawyer In Richmond?
There are many reputable law firms in Richmond that specialize in business law. Contact Varity Law for a free consultation, they can help with business structuring, agreements, and more.
What Does A Business Lawyer Do?
A business lawyer is a legal professional who specializes in advising businesses on a variety of legal issues. They help businesses navigate complex legal matters, minimize risk, and protect their interests. A business lawyer can assist with business formation, contract drafting and review, intellectual property protection, employment law, mergers and acquisitions, litigation and dispute resolution, compliance with laws and regulations, financing and capital raising, and tax planning.
Why Do I Need A Business Lawyer?
Hiring a business lawyer can provide many benefits to a company, including expert legal advice, risk mitigation, and support in achieving business goals. A business lawyer can help a company navigate complex legal issues, minimize legal risk, and provide strategic guidance on important business decisions.
Testimonials
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"As a first time home buyer I was extremely worried about the whole closing process at first. Sabrina was well organized and very professional, she made the entire process incredibly simple. Even after closing the amount of time and level attention she has provided has been phenomenal. I highly recommend Sabrina and her team for all real estate transactions and will definitely look forward to work with her again."
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"Sabrina at Varity Law is extremely knowledgable and great to work with. She is very personable as well. When she explains legal terms, I actually understand. It also helps because she speaks mandarin. It makes bringing my parents to her a lot easier :)"
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"Sabrina is a fantastic business lawyer. Efficient, Effective and Knowledgeable. Highly recommended for your business and Real Estate needs."
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"Thank you Sabrina for an outstanding job on our first transaction together. Your professionalism and hard work was the reasons we were able to close within 2 weeks!! We are looking forward to partnering with you on many more opportunities in the future."
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"Sabrina is very patient and thorough. She handled my client's closing very well. I highly recommend Sabrina and her law office for real estate transactions, estates and wills."
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"Sabrina was very good with her work and had a wealth of knowledge which was very helpful in executing our needs. I would highly recommend her at anytime."
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