Legal Issues With Your Business
Having your legal affairs properly covered—whether you a new business owner or have been operating a company for years—is a critical part of your success. There are many legal considerations that all businesses must be aware of to avoid unexpected expenses and legal troubles. This post outlines key considerations that any business owner will find useful, no matter what stage they’re at in their career.
Setting Up Your Business
It important to determine the appropriate legal structure and “form” of a new business. There are more legal structures than just incorporation, and there are many instances—especially in the early stages—where it is beneficial to run your business as a sole proprietor (including taxation benefits). There are also many forms of partnerships and joint ventures that can be created, and that may make sense in the business context. A lawyer trained in corporate law can help you determine the best legal structure and form for your business.
Organizational Considerations for a Corporation
If a corporation is the best structure for your business, there are important organizational considerations involved in setting up and growing your corporation. Many people believe that they can simply approach a registries agent themselves and form a corporation. This route is certainly possible, but it is not recommended. In fact, the registries agent will not assist you with:
- Setting up a minute book
- Share structure
- Share subscriptions and ensuring compliance with securities laws
- Individualized articles of incorporation and bylaws
- Board of directors composition and statutory/fiduciary duties
- Extra provincial registration
- Buy/sell agreements
The considerations above will need to be discussed with a lawyer. Many businesses incorporate themselves and only later realize that they have not addressed these critical items.
Capital Structuring and Compliance with Regulations when Raising Money from Investors
It is important that your capital structure is aligned—in terms of the number and type of shares issued, and the method by which you raise the money. Your lawyer will help you determine the optimal structure to avoid negative consequences later on. There are myriad securities rules and regulations that govern the issuance of shares to investors, whether as a start-up or ongoing concerns, and most business people are not aware of these legal considerations. It is critical that you comply with the national and provincial rules and regulations, including potential prospectus exemptions, risk acknowledgement forms and having appropriate share subscriptions in place. If any of these words are new to you, seek legal advice immediately.
Importance of a Unanimous Shareholder Agreement
A Unanimous Shareholder Agreement (USA) should be a critical component of your business if your corporation contains numerous shareholders. A USA is not a “standard” agreement, and there are many contextual factors unique to each business. Without a USA, the Business Corporations Act of Alberta will govern—but many people do not know what the act entails. A USA enables you to trump the Act in many areas and control the direction of the business. The agreement should set out:
- Who are the directors/How are they elected?
- What types of decisions can shareholders and directors make?
- What happens if someone becomes disabled, dies, or is no longer an employee?
- How capital is raised?
- What if there is a dispute? How do the shareholders move on?
- What happens if a third party wants to buy the shares?
- How is the business valued?
It is important to see a lawyer that is experienced in corporate law to assist you with properly drafting a USA that will align with your business needs.
Adding Employees to the Company
A lawyer will have help you draft employment agreements, independent contractor agreements, or consulting agreements that are unique to your business and adhere to the many employment standards and regulations.
Your business will generate sources of revenue, each of which should generally include a different contract. A lawyer can help you prepare a User Agreement, Licencing Agreement, Service Agreement, Master Contract or many other types of agreement that must drafted correctly to protect your hard-earned money and business interests.
Protect Your Intellectual Property
Your business will have intellectual property even if you don’t have other assets. A lawyer should help you adequately protect this intellectual property through tools such as trade names, trademarks, copyrights and other forms of intellectual property. You should protect your intellectual property by having employees, vendors and contractors sign non-disclosure agreements.
Corporate Law that Works for You
Through a lean overhead platform and unique delivery services, Law Contractor provides affordable legal services that focus on you. We are located in St. Albert, Alberta, and we are pleased to service clients in the Edmonton area. We are presently serving clients in the areas of Corporate & Commercial law, Real Estate law (Commercial and Residential), Wills & Estate law and Civil Litigation. We also provide in-house legal services on-site for a flat-monthly fee. The majority of our services are flat-fee, so you know the commitment up-front. Law Contractor also provides mobile legal services that come to you, which are available upon request for a nominal fee.
Law Contractor has substantial experience and expertise in the areas of Corporate & Commercial law. We are able to provide individuals and businesses with a wide range of services, including:
- Business contracts
- Corporate agreements
- Contract review
- Professional corporations
- Trade name registration
- Acting as corporate registered office
- Share issuances and rollovers
- Maintaining corporate minute books
- Minute book reconstruction
- Shareholders agreements (i.e. Unanimous Shareholder Agreements)
- Partnership and joint venture agreements
- Corporate rollovers and business restructuring
- Buying a business
- Selling a business
- Asset purchase/sale agreements
- Share purchase/sale agreements
Law Contractor provides the above services with a personal touch and strive to work with your business to enable its success and growth. Its lawyers have a business background, a genuine interest in your business and make every effort to understand the needs and requirements of your business.