Business Law

Blumberg Segal LLP is a full service Toronto law firm which assist businesses with all their varied legal needs. Below we discuss some of the more frequent corporate and legal issues facing businesses such as incorporation, partnerships and joint ventures, sole proprietorships, purchase and sale of a business, leases, corporate reorganizations, franchise and licence agreements, and new and emerging technology companies. Whether it is small matters like updating your minute book to complex sale of assets at Blumbergs we have a team of lawyers in Toronto ready to assist with business and corporate commercial legal needs.

If you have any legal questions with respect to your business please contact Mark Blumberg at mark@blumbergs.ca or at 416-361-1982 x. 237. Please join our Business Law e-mail newsletter Business Law e-mail newsletter for periodic updates on Ontario and Canadian business legal isssues.




Sole Proprietorships and Incorporations

One of the first issues an entrepreneur needs to consider is whether to carry on his or her business as a sole proprietorship or whether to incorporate. If an entrepreneur, for example in Toronto, decides to operate as sole proprietor then in most cases the sole proprietor has to register under the Ontario Business Names Act. Such registration does not provide limited liability and the entrepreneur is personally liable for the debts of the sole proprietorship. In some cases there are accounting and tax advantages to starting a business as a sole proprietor. Many entrepreneurs realize however that in most cases it is preferrable to obtain limited liability and that in the event of a future business problem they can have peace of mind that a business mistake will not destroy the family's assets. In addition to limited liability there are many advantages to incorporation including benefiting from the small business deduction for Canadian-controlled private corporations and the $500,000 capital gains exemption on the sale of eligible shares. Some other advantages include estate planning such as estate freezes and reduction in probate tax as well as income splitting. If you incorporate a new corporation and there will be more than one shareholder it is important to consider executing a shareholders agreement.

As well there are some issues that should be considered including which jurisdiction should the incorporation take place, an appropriate name for the corporation, organizing the corporation including issuing shares, appointing officers and directors, creating by-laws, written resolutions, setting up the minute book of the corporation and making appropriate governmental filings. As well incorporator(s) should consider whether there will be restrictions on the transfer of the shares. Certain businesses and professionals also require regulatory approval.

Incorporating either a federal or Ontario corporation is relatively simple and cost-effective and can provide numerous lasting benefits. We have helped hundreds of businesses set up their operations and if you are interested please contact us.

Partnerships

It is important if you are considering entering into a partnership to have a proper partnership agreement and to understand the full consequences of entering into such an arrangement. In Ontario the Partnership Act and Business Names Act are the main statutes governing the establishment of partnerships. There are many issues partners may have to deal with including allowing in new partners, retirement and dissolution of the partnership, allocating liabilities of the partnership, management of the partnership, financing the partnership, confidentiality and non-competition to name a few.

Purchase and Sale of a Business

The purchase or sale of a business can be one of the most challenging tasks of a business owner. Generally, the purchase or sale can be accomplished by either an asset sale or sale of shares. Each of the asset sale or share sale has certain advantages and disadvantages depending on the exact circumstances or whether you are the purchaser or vendor. It is important that one obtain legal and accounting advice prior to structuring the transaction or entering into a purchase agreement to ensure a smooth purchase or sale and avoid some nasty surprises that may face the business owner in a purchase or sale.

There are numerous issues that need to be considered in a typical sale including intellectual property, employees, appropriate due diligence, representations and warranties, assumption of liabilities, tax consequences, purchase price and method of payment, non-competition agreements, compliance with various laws such as Bulk Sales Act and Competition Act.

Reorganizations

Once a business has been set up there are many reasons why the business may need to be reorganized including accomplishing estate planning or succession planning objectives, dealing with a bankruptcy, and creditor proofing the business. As well in certain circumstances a business may continue in another jurisdiction or may amalgamate with another corporation. Sometimes it is necessary to wind up a corporation and at other times a corporation that has been cancelled needs to be revived. Other types of reorganizations include rollover of assets into a corporation, increasing or decreasing the stated capital of the corporation

Franchise and Licence Agreements

Franchises have been an increasingly popular way of carrying on business in Canada. Blumberg Segal LLP has assisted franchisors and franchisees with their legal needs. Franchisors must be particularly careful that they comply with the requirements of Ontario's franchise law, The Arthur Wishart Act (Franchise Disclosure) which came into effect in 2001.

For the franchisee entering into a franchise agreement may be one of the largest legal commitments they will make and it can have repercussions that last for years. There may be some compelling advantages to entering into a franchise agreement but their can be substantial pitfalls for those who are not very careful. It is important that the franchisee understand the legal obligations imposed by the franchise agreement and ancillary documents and in many circumstances suggest changes to the franchise documents.

Leases

If you are a prospective tenant leasing premises for your business can be one of the longest term and most costly obligations that a business takes on. It is important to minimize risk and hidden costs associated with leasing a premises from the Offer to Lease stage to the final lease. In Toronto, some landlords still insist on 75 page leases loaded with hidden traps.

Some of the issues include whether a lease will be a net or gross lease and the implications of each, the lease term, rights of renewal, treatment of fixtures and leasehold improvements, allocation of taxes, the definition of operating costs in a net lease, zoning and prohibited uses, default and remedy clauses, insurance, indemnities, guarantees, assignment and subletting, rights of relocation, and rules and regulations.


New and Emerging Technology Companies

Blumberg Segal LLP has helped many new and emerging technology companies with their unique legal needs. From dealing with incorporation, organization, shareholders agreements, licence agreements, stock option agreements, terms of service and privacy policies for web sites, employment agreements, NDAs, protection of intellectual property and many other standard matters we have helped and continue to assist a number of technology companies with their legal requirements. At Blumberg Segal we have a number of lawyers who are well versed in information technology and intellectual property issues and who are well equipped to handle the fast paced changes and requirements of new and emerging technology companies.

Furthermore you may wish to review our sections on employment law, intellectual property, litigation/dispute resolution - three very important areas affecting most businesses.



If you have any legal questions with respect to your business please contact Mark Blumberg at mark@blumbergs.ca or at 416-361-1982 x. 237