Corporation, buting and seling, coporate structuring.
STEWART & SPRINGFORD
We refer to sole proprietorships or partnerships among individuals as businesses rather than corporations. The primary difference is that corporations are a distinct legal entity that includes shareholders, directors and officers. There are also many similarities. Both can incur liability, both require tax planning and both require legal advice when buying or selling.
Corporations are noted by the name ending in Inc., Co., or Ltd. Corporations are subject to the BC Business Corporations Act [SBC 2002] Chapter 57, and further by any agreement made among the shareholders.
Corporations are required to establish and maintain a corporate records book most often managed by a law firm. We look after approximately 400 corporate record books for our business clients.
Buying and Selling
Our advice is the same as the others, you want to sell shares and purchase assets. Obviously, this creates a need for more detailed negotiation. When you purchase the shares of a company, you also accept any liability, known or unknown, of that company. An example is a long-term employee who is dismissed without cause and who is without an employment contract. The company will be required to pay that employee in lieu of providing adequate notice of the termination.
Conversely, when you purchase a company, it is preferrable that you purchase only the parts of the company you need. For example, you may only require the tools, equipment, name and client list.
As your company grows, you may require advice on its corporate structure in relation to your other holdings, real estate, corporate or otherwise. This is especially true if you bring on new shareholders or in contemplation of estate planning.