now browsing by month
Disclaimer: This article on your Ontario corporation is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Deciding to incorporate is a big step. (In fact, we have an entire article designed to help you weigh the pros and cons of incorporating.) However, incorporating is just the beginning. If you do decide to incorporate, there are several areas that you will need to manage and maintain.
This article covers some of the basics of managing your Ontario corporation. As your business grows, you must pay close attention to corporate governance and compliance issues. Properly set up your corporation and meet all your obligations by consulting with a professional.
Beeksma Law is a full-service law firm helping business owners in Ontario with all aspects of their corporations. Contact us today to find out how we can help you.
So let’s dive in and consider more about what you may need to consider with your corporation.
Directors vs. Officers vs. Shareholders
The board of directors is responsible for managing the corporation and making decisions on behalf of the shareholders. The board may delegate authority to officers who carry out the corporation’s day-to-day operations under the directors’ guidance. Shareholders are the corporation’s owners and have a say in how it is run through their voting rights.
The directors, officers and shareholders can be the same person or multiple people in each role. It all depends on the size and structure of the corporation.
Professional Corporations and Liability
One specific class of corporations is “Professional Corporations.” The Ontario Business Corporations Act limits professional corporations to professions governed by an Act named in Schedule 1 of the Regulated Health Professions Act, 1991, one of the following Acts or a prescribed Act:
- Chartered Professional Accountants of Ontario Act, 2017.
- Law Society Act.
- Social Work and Social Service Work Act, 1998.
- Veterinarians Act. 2000
The Act further requires that professional corporations have shareholders who are all members in good standing of the governing professional body and are authorized by that body to provide those professional services. Additionally, these corporations must have “Professional Corporation” or “Corporation Professionnelle” in their corporate name.
Generally, the rule is that the shareholders of an Ontario corporation are not liable for the debts of the corporation. This limited liability protection is one of the main reasons to incorporate your business. A corporate order is needed to “pierce the corporate veil” or hold shareholders liable. Professional corporations, however, do not always offer the same level of liability protection to their shareholders as general business corporations.
For example, if the professional committed an illegal act, was negligent or provided services outside of the scope of those authorized by their professional body, the professional could be liable for damages, even if they were acting on behalf of the corporation.
Class Shares, Voting Rights and Control of the Corporation
Another reason to incorporate is to allow investors to invest in your company by buying shares while still maintaining control of the company.
You can accomplish this in various ways. Usually, you would have different classes of shares with different rights attached to each class. Some shares may have voting rights, while others may not.
It’s worth noting that setting up a corporation with different classes of shares can be complex. Therefore, you should seek professional advice to ensure that the class structure meets your business needs and complies with the law.
Dividends vs. salaries
You may wonder what the difference is between a dividend and taking a salary. Basically, a salary is a corporate expense, while a dividend is paid out of the corporation’s profits and is not tax deductible.
If you’re wondering which is right for you, the answer is that it depends. There are pros and cons to each depending on your situation.
The benefits of paying yourself a salary include receiving Employment Insurance and Canada Pension Plan benefits. Also, you can deduct the expense from the corporation’s income for tax purposes. Having a regular income will help you in such areas as applying for a mortgage and will allow you to build RRSP contribution room.
On the other hand, the benefits of declaring dividends are that you will not have to pay Employment Insurance or Canada Pension Plan premiums on the money, and you can time those payments to lower your personal tax bill. Additionally, whether or not you have to pay employer health tax will depend on how much the corporation pays in wages. Declaring dividends may help you avoid crossing that threshold.
Overall, you are best to speak with your accountant to ensure that you are making the best decision for your particular situation.
Maintaining Your Corporate Records
Another area that requires your attention is keeping your minute book up to date. We have an entire article on that topic, but in short, you should keep the following documents in your minute book:
- share certificates;
- a copy of the articles of incorporation (and any amendments);
- any shareholder agreements and amendments;
- minutes of shareholders’ and directors’ meetings; and
- any resolutions passed by the shareholders or directors
Since they are the legal basis for your corporation’s decisions, keeping your corporate records up to date is vital.
Manage your Corporation With Confidence
Taking your business to the next level can be exciting – but also overwhelming. As business owners ourselves, we know that making the decision to incorporate is just the first step.
There are a lot of moving parts to starting and maintaining an Ontario corporation, but you don’t have to go it alone. At Beeksma Law, we can help you every step of the way, from incorporating your business to maintaining your corporate records. We specifically love empowering small business owners to be able to confidently manage their own corporations.
Get in touch with us today to find out how we can help you.
Disclaimer: This article on estate litigation is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
The death of a loved one is hard enough, but for those embroiled in estate litigation, the process can be protracted, expensive, and emotionally draining.
It stands to reason that when considering what happens when you pass away, you will want to avoid the possibility of your loved ones going to court to settle any disputes. The good news is that there are things that you can do to lessen the likelihood of that happening.
This article will consider five things that you can do today to help your beneficiaries avoid estate litigation. Of course, there is always the risk of estate litigation, but creating a plan with the right group of professionals can go a long way towards estate peace.
The True Cost of Estate Litigation
Estate litigation can quickly become costly in terms of time and money.
However, the cost of estate litigation can be much more. In many cases, the death of a loved one and subsequent estate litigation has resulted in irreparable damage to the relationships between beneficiaries.
Avoiding Estate Litigation
What are some things you can do to help your estate avoid litigation? Let’s take a look at five key tips.
1. Have an estate plan
The first and most important thing you can do to help your beneficiaries avoid estate litigation is to have a well-drafted estate plan. Your estate plan should be tailored to your unique circumstances and take into account your goals for your estate. You should work with an experienced estate lawyer to create an estate plan that considers your unique circumstances.
Many think their net worth is too small to warrant an estate plan. Do not fall into this trap! Even a small estate can become the subject of a large argument – something that you certainly want to avoid.
Also, estate planning is not just about distributing your assets after you die. An estate plan can also help you manage your affairs if you become incapacitated. An estate plan can give peace of mind to both you and your beneficiaries.
2. Review your plan regularly
Your life will change. Maybe you will have children, buy a new home or cottage, or change jobs. As your life changes, so should your estate plan. Review your estate plan regularly with your estate lawyer to ensure that it still meets your goals and objectives.
3. Communicate with your beneficiaries
Your estate plan should be designed to meet your goals and objectives. However, it is also important to communicate your estate plan to your beneficiaries. Let them know what you have done and why you have made the decisions that you have. This will help to avoid estate litigation down the road.
4. Choose your executor(s) wisely
Your executor(s) will be responsible for carrying out your estate plan. Therefore, choose someone you trust implicitly and who can handle the responsibilities of being an executor.
If you choose to have co-executors, consider their relationship. If they currently do not get along, they will likely not work well together when facing the weighty responsibility of caring for your estate.
5. Work with a team of professionals
Estate planning is not something that you should do on your own. In fact, you should work with a team of professionals, including an estate lawyer, financial advisor, and accountant. This team of professionals can help you create a comprehensive estate plan that meets your goals and objectives.
An estate lawyer can help see potential difficulties that may arise and help you to avoid them. There may be provisions that you had never even considered but will protect your beneficiaries and estate. This is especially true if your estate lawyer has a practice that includes both the transactional and litigation aspects of estate law.
Working with a team of professionals will help to give you peace of mind knowing that your estate is in good
Proactive Estate Planning With Beeksma Law
Too often, estate litigation is the result of confusion and a lack of communication. By having a well-drafted estate plan, communicating with your beneficiaries, and choosing your executor wisely, you can help to avoid estate litigation.
However, estate litigation can still arise. If it does, working with a team of professionals can help to resolve the matter quickly and efficiently.
At Beeksma Law, we have a comprehensive estate practice that focuses on building strong estate plans and dealing with any estate litigation matters. This is important – our estate litigation background informs how we approach your estate plan. We have seen how disagreements can arise and use that practical knowledge to help you avoid estate litigation.
At Beeksma Law, we work closely with our clients to ensure that their estate plan meets their goals and objectives. We also regularly review estate plans to ensure that they are still up-to-date and meet our client’s needs.
The best gift you can give your family is a well-drafted estate plan. To start on your estate planning, reach out to our friendly and knowledgeable team today. We would be happy to help you achieve peace of mind.
Disclaimer: This article on contract disputes is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
If you have been in business for a while, you know this unsettling truth – contract disputes often happen. If you’re currently facing a contract dispute, it’s important to know your options to make the best decision for your situation.
Contract disputes can be a huge headache for businesses. When two or more parties enter into a contract, and one party fails to live up to their end of the bargain, it can lead to all sorts of problems.
This blog post will discuss what you should do if you are in a contract dispute. We will also cover the differences between mediation, arbitration, and litigation so that you can make an informed decision about how to proceed.
Our litigation experience informs how we approach drafting contracts. At Beeksma Law, we believe that a well-written contract is the best way to avoid contract disputes. Whether you are looking to have a contract drafted or reviewed or want advice on dealing with a dispute, we can help. Contact us today.
Avoiding Contract Disputes Before They Arise
The best way to deal with contract disputes is to avoid them altogether. This means having a well-written contract, having difficult conversations before beginning your business arrangement and being clear about your objectives and expectations.
Contract disputes can be a huge headache for businesses. Not only will you have to spend time and money resolving the issue, but contract disputes can also damage relationships and be a major distraction from running your business.
Think About The Big Picture
Simply put, contract disputes happen when one party to a contract fails to live up to their obligations. This can be for a number of reasons, from misunderstanding the contract terms to not being able to fulfill the contract for some reason. Whatever the cause, contract disputes can have a major impact on businesses.
Before taking any action, it’s important that you take a step back. Contract disputes can quickly become emotionally charged, especially if a lot of money is at stake. It’s important to consider the big picture and the best outcome for your business.
Consider Your Options
When addressing a contract dispute, you will generally have four options: negotiation, mediation, arbitration, or litigation. Let’s take a look at each of these in more detail.
Of course, you will first want to review your contract. In many cases, the contract will outline how to deal with a dispute. For example, the contract might require that you first attempt mediation before moving on to arbitration or litigation. If your contract is silent on the matter, you will have more flexibility in deciding how to proceed.
Before moving on to formal dispute resolution processes, it’s always worth attempting to negotiate a resolution with the other party. This can be done informally, or you can even hire a contract lawyer to help resolve the situation.
If you can come to an agreement through negotiation, it will save you time and money. Moreover, it can help preserve your relationship with the other party and put the matter to rest quickly.
Mediation is a process where the parties to a contract dispute meet with a neutral third party, known as a mediator. The mediator’s job is to help the parties reach an agreement that is acceptable to both sides.
One of the main advantages of mediation is that it can be much faster and less expensive than arbitration or litigation. However, mediation is not binding, meaning either party can walk away from the mediation without reaching an agreement.
Additionally, mediation allows you to get to the underlying problem. While litigation will focus on the issue at hand, mediation can help you identify the root cause of the contract dispute and find a way to prevent it from happening again in the future.
Arbitration is similar to mediation in that it is a process where the parties to a contract dispute meet with a neutral third party, known as an arbitrator. However, unlike mediation, arbitration is binding. This means both parties must comply with the arbitrator’s decision.
Arbitration can be a good option if you want a faster and less expensive alternative to litigation, but you still want the contract dispute to be resolved definitively.
If mediation and arbitration fail, or if either party is unwilling to participate in those processes, the only option is litigation. This involves filing a lawsuit in court and letting a judge or jury decide the outcome of the contract dispute.
Litigation can be time-consuming and expensive and carries quite a bit of risk. Even with a strong case, there’s no guarantee that you will win in court.
What to Do When Agreements Become Disagreements
Contract disputes happen, even when both parties have the best of intentions. If you find yourself in a contract dispute, be sure to take the time to understand your options and what is best for your business.
While you may want to resolve the issue yourself, the longer you wait, the more likely it is to escalate. It’s important to get professional help as soon as possible to increase your chances of reaching a resolution that is acceptable to both sides.
Speaking to a lawyer allows you to understand your legal rights and obligations and the other party’s. Additionally, taking action early on can prevent can save relationships, time, and money down the road.
At Beeksma Law, we pride ourselves on seeing the entire picture. We understand that contract disputes can have a significant impact on businesses. Our contract lawyers will work with you to find the best solution for your specific case and help you protect your interests. Contact us today to schedule a consultation.
Disclaimer: This article on what to include in your shareholder agreement is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
After incorporating your business, You may think that the hard part is done. You may not want to spend money on unnecessary legal fees. However, one important document you should not overlook is a shareholder agreement.
This article will explain what a shareholder agreement is and why it is important to protect your shareholders’ interests. We will also discuss the different provisions you should consider in your agreement.
You have worked too hard in your business to not protect your interests. At Beeksma Law, we are active within the entrepreneur community (we are entrepreneurs, too!) and understand your needs. Book a call with us today to discuss your corporation’s needs. We would be happy to help you!
What is a shareholder agreement?
A shareholder agreement is a contract between a company’s shareholders. It sets forth their rights and obligations with respect to their ownership interests in the company. The agreement may also include also provisions, which we will outline below, governing the management and operation of the company.
A shareholder agreement must be in writing and signed by all shareholders in order to be valid. You must keep the signed copy and any amendments in your corporate minute book. (To learn more about what should be in your minute book, please see this article.)
Do I need a shareholder agreement?
While not legally required, we recommend a shareholder agreement if your company has more than one shareholder. A shareholder agreement can help avoid disputes between shareholders by setting clear rules and procedures for the management and operation of the company.
It is also important to have a shareholder agreement in place so that all shareholders know their rights and obligations concerning their ownership interests in the company.
You do not need a shareholder agreement if you are the sole shareholder or if you have a not-for-profit corporation.
Why do I need a shareholder agreement?
Many people do not think that they need a shareholder agreement. We can compare it to a marriage. At the beginning of a relationship, everything is perfect, and you are in a honeymoon period. However, arguments can arise over time, and your relationship can change.
Similarly, while everything may be running smoothly in your business at the moment, it is important to have a shareholder agreement in place to prepare you for any potential disputes that may arise down the road.
Think of a shareholder agreement as a form of insurance for your business. It will protect your interests and help keep the peace between shareholders if disagreements occur.
Shareholder agreements protect both majority and minority shareholders. Let’s outline how shareholders protect each group.
How Shareholder Agreements Protect Minority Shareholders
If you are a minority shareholder (meaning you own less than 50% of the shares), you may worry that majority shareholders may take advantage of you or push you out. A shareholder agreement can help protect your interests by including provisions that give you certain rights and protections, such as preventing some decisions unless there is a unanimous agreement.
For example, you may include a clause that all shareholders must approve any decision to issue more shares. This will prevent the majority shareholders from issuing more shares and diluting your ownership stake in the company.
Another example is a drag-along clause, which gives minority shareholders the right to sell their shares if the majority shareholder decides to sell their stake in the company. This ensures that you will not be left holding shares in a company that you do not want to be a part of.
How Shareholder Agreements Protect Majority Shareholders
The majority shareholder owns more than 50% of the company’s shares and is protected by a shareholder agreement. For example, when a majority shareholder wants to sell their shares and leave the company, they may include a clause in the shareholder agreement that requires the other shareholders to sell their shares as well (known as a tag-along clause).
How Shareholder Agreements Protect All Shareholders
Regardless of whether you are a minority or majority shareholder, there are some provisions that will protect all shareholders.
One common provision is the right of first refusal. This means that if a shareholder wants to sell their shares, they must first offer them to the other shareholders before selling them to a third party. This gives the other shareholders an opportunity to maintain their ownership stake in the company and avoid doing business with a stranger.
Your lawyer will also recommend a provision that determines how to resolve disputes. As we noted in this article, litigation can be expensive and time-consuming. Including a provision in your shareholder agreement that requires shareholders to mediate or arbitrate their disputes can help prevent the situation from escalating and costing the company time and money.
Finally, consider what will happen if a shareholder passes away. Those shares will become part of the deceased shareholder’s estate, unless otherwise stipulated in the shareholder agreement.
There are many different types of shareholder agreements, and the provisions you include will depend on your company’s needs. It is important that you seek legal advice to ensure that your agreement is tailored to your specific business and protects all shareholders involved.
Beeksma Law and Your Corporation
At Beeksma Law, we love supporting small businesses and corporations as they grow. We are active within many business communities and know how much you have put into making your business a success.
That is why we want to help you protect your business. We want to ensure you have the right shareholder agreement in place. Contact us today to schedule a consultation. We can determine what provisions to include and draft an agreement that meets your company’s needs.
We look forward to hearing from you!