Continuing on from the more universal corporate services canvassed in Part 1 of this series, Part 2 will discuss four corporate services that DBH LLP regularly offers for more technical corporate needs. If your business is already established and you are looking to formally address your corporate governance needs, DBH LLP can help you and your corporation meet those needs in an efficient and professional way.
- Unanimous Shareholder Agreements
A Unanimous Shareholders Agreement (“USA”) is a binding contract that is typically used to delineate the relationship amongst the shareholders of a corporation. A USA can be used for a variety of tasks, such as establishing a procedure to resolve disputes between shareholders, providing a valuation method for shares, creating a buy/sell provision, who holds right of first refusal in share sales, and indicating whether (and in what amount) shareholders must carry insurance, or passing more business decision making power to shareholders from the Board of Directors. Having a set procedure in place in the form of a written USA helps avoid expensive litigation when shareholders disagree, or when life takes an unexpected turn. A divorce, relocation to another country, or an unexpected death are all examples of circumstances where without a USA, corporations can find themselves in a predicament.
Regardless of what topics a USA covers, it should always clearly provide which situations require unanimous or majority approval from either majority or minority shareholders. DBH LLP firmly recommends having a USA put into place at the same time a business incorporates, but that doesn’t always happen. Even a simple USA can prevent disagreements between controlling parties from escalating out of control. If your business does not yet have a USA in place, it is the first thing DBH LLP recommends you seriously consider.
- Strategic Restructuring
Every business is subject to the booms and busts of its market. In Alberta, the massive ups and downs can mean that even corporations with a strong portfolio and clear business goals may need some degree of strategic restructuring from time to time. Strategic restructuring is the process of reorganizing the legal, ownership, operations, or other structures of a business for the purpose of making it more profitable and better organized for its present needs. Other reasons for restructuring may include a change in ownership, such as a buy-out or a merger. A business may be responding to an adjustment in the market that has caused a crisis in the business, such as a bankruptcy, demerger, or repositioning. The business could be looking to reduce the amount of tax it pays by restructuring, or business owners may be looking at succession planning as they prepare for retirement. At its core, the goal of most strategic restructuring is to increase financial benefit and (perhaps) risk management.
If your business is looking to make a change, whether in response to a market shift or due to a shift in business plan, DBH LLP can provide you with options that will help your business move forward through change.
- Transfers of Property
Transferring property to a corporation, whether shares of “hard” assets, in exchange for shares always risks attracting the attention of the Canada Revenue Agency (“CRA”) and causing a taxable event. When done correctly, with the advice of both an accredited accountant and an experienced lawyer, transferring property to a corporation in exchange for shares can benefit both parties and result in lowered tax rates. This is one of the reasons that having an experienced DBH LLP lawyer on retainer with your corporation can make a difference to the amount you save when organising your assets. DBH professionals work with your accountant to ensure that you are not only getting the best deal possible from a legal perspective, but also from an accounting perspective.
- Tax and Estate Planning
Similar to transfers of property, there are a variety of ways property in a person’s estate can be organised to avoid costs during probate and distribution. Executor fees, the cost of probate, and sometimes even income tax owed upon death can be significantly reduced by planning the flow of property ahead of time. DBH LLP drafts hundreds of Wills each year. That’s a lot of Wills (and experience!) for a 22 year old firm. It is not uncommon for Calgarians to include a trust or corporation in their estate planning. DBH LLP has the experience to provide clients with an accurate, effective set of estate planning documents that not only account for succession of sophisticated corporate entities, but also to work with your existing accountant to make it happen. With DBH LLP, it pays to have a professional on your side who is a seasoned team player.
If any of the services discussed here have piqued your interest, our legal team at DBH LLP is ready to work with you. Questions regarding USAs, strategic restructuring, transfers of property, or corporate estate and succession planning can all be directed towards one of our legal professionals.