Drafting, Reviewing & Negotiating Commercial Contracts
A business may operate as a sole proprietorship, corporation, partnership, limited partnership, or through another legal arrangement.
The appropriate structure depends on the circumstances. Liability, tax considerations, the number and role of the owners, plans for outside investment, and how the business is expected to develop may all affect the decision.
We help clients consider these issues before choosing and implementing a structure. Where tax considerations are material, we coordinate the legal work with the client's accountant or tax advisor.
Corporations, Ownership & Share Structures
Incorporation is only the first step in organizing a corporation.
Where a corporation has more than one owner, its share structure requires particular attention. Different classes of shares may carry different voting and economic rights. Two people may therefore both be shareholders without necessarily having the same rights within the corporation.
The distinction between ownership and control also matters. The rights attached to shares, the role of the directors, the corporation's governing documents, and agreements among shareholders may all affect how decisions are made.
These issues become particularly important when founders have different roles or contributions, or when a new owner or investor is brought into an existing business. The structure should reflect the arrangement the parties actually intend, rather than leave important questions about ownership and authority unresolved.
We advise on Ontario and federal incorporations, corporate organization, share structures, and changes in corporate ownership and control.
Learn More About Shareholder & Partnership Agreements
Partnerships & Joint Ventures
Not every business relationship should be carried on through a corporation.
A partnership may be appropriate where two or more people intend to carry on business together. In Ontario, however, a partnership does not depend solely on whether the parties have formally called themselves partners. The nature of their business relationship can itself have legal consequences.
A joint venture presents a different question: what legal structure should the participants use to pursue the venture? Depending on the arrangement, they may use a corporation, partnership, or contractual structure.
The legal form should reflect the relationship the parties actually intend to establish and the manner in which they expect the venture to operate.
When the Business Structure Changes
The legal structure of a business may need to change as the business changes.
A corporation may need to be reorganized when new investment is introduced, ownership is transferred, or the owners undertake succession or tax planning. The corporation's existing share structure and governing documents may need to be revised as part of that process.
The appropriate steps depend on the existing structure and the purpose of the proposed change. We advise on the corporate work required to implement those changes and coordinate with the client's tax advisors where the reorganization has tax consequences.
How We Approach Business Structuring
We begin with the proposed business arrangement rather than the incorporation documents. Who will own the business? What role will each person have? How is control intended to be exercised? Is outside investment contemplated?
The answers inform the legal structure and the documents required to implement it.
Our commercial litigation experience also affects that analysis. Disputes among business owners frequently turn on matters that were unclear from the beginning: ownership that was not properly documented, different understandings about control, or no agreed process for dealing with a change in the relationship.
Those problems cannot always be avoided. But they are easier to address when ownership, authority, and the parties' relationship are considered at the outset.
Speak With a Business Lawyer
If you are establishing a business or considering a change to an existing ownership or corporate structure, contact Englobe Law LLP to discuss the proposed arrangement.