Canadian Business Law. Canadian Corporate Law.
Also refer to: Banking/Business Law | Bankruptcy and Insolvency Law | Antitrust, Competition Law | Construction Law | Contract Law | Franchise Law | Intellectual Property Law | Mergers Acquisitions Law | Starting a Business | Taxation Law |
Canadian Business Law Topics
on this page:
Some of the issues covered by Canadian Business Law / Canadian Corporate Law are:
- Alternative Dispute Resolution
- Bankruptcy and Insolvency Law
- Business Bankruptcy / Insolvency
- Business Leases
- Business Licensing and Zoning
- Business Purchase and Sale/ Lease
- Commercial Contract
- Computer Law
- Construction Law
- Directors Officers Duties
- e-Commerce Law
- Entertainment Law
- Environmental Law
- Farm Law
- Franchising / Licensing / Distribution Agreements
- Independent Legal Advice
- Intellectual Property Protection
- International Business
- International Trade & NAFTA Disputes
- Mergers and Acquisitions
- Municipal / Zoning / By-law
- Non Profit Charitable Organizations / Corporations
- Personal Property Security / Financing Security
- Provincial and Federal Corporate Law
- Publishing Contracts
- Securities Law
- Shareholder's Agreements
- Sports Law
- Tax Law
- Transportation Law
When a company is incorporated a new legal entity is created.
- Personal Liability Protection;
This is the number one reason why many people incorporate. In case of a lawsuit or judgment against your business, no one can seize your personal assets unless you have pledged these as collateral. There are other liabilities which you will not be able to avoid by incorporating. For example, if you do not remit certain taxes, you could be held liable as a director or officer of the company.
- Potential Tax Advantages;
There are more tax options available to corporations than there are to proprietorships or partnerships. You can establish various pension, profit-sharing and stock option plans which are favorable to the owners of the corporation. For example, in most cases, a corporation can deduct your life and health insurance premiums whereas you could not do this personally. You can also pay salaries to family members thereby reducing your family's overall tax burden.
- Flexibility in Personal Financial Planning;
- Greater Control in Transferring Ownership;
- Easier to Bring in Outside Investors and Other Partners;
- A Company Survives Human
Commercial Bankruptcy, Insolvency
Businesses can be petitioned into bankruptcy or placed into receivership by the financial institute or lender who has security. The lender, when he has evidence to suggest the business is in serious financial difficulty, will take this action in order to cut his losses and to realize on his security. Lender use insolvency lawyers to ensure they are acting within the law and to preserve their rights to pursue the principal personally for any shortfall.
A principal of a business often has compelling reasons for placing the business into bankruptcy or convincing the lender to place the business into receivership:
- By acting in a timely fashion the business assets may be sold for sufficient money to pay off the creditors or get as much as possible for the secured creditor and priority creditors so the principal's personal guarantees and statutory obligations are not called upon;
- The principal may simply be exhausted from the stress and pressure of fighting a losing battle trying to save the company and want someone to take over the winding up;
- The principal may want a professional to liquidate the business so the creditors are paid out in an orderly fashion in accordance with the security and priorities they enjoy.
- The principal may want a professional to liquidate the business so that the creditors will know that the funds have been paid out correctly and that a report will be made to the creditors so they know that no funds were diverted by the principal.
More businesses "go under" or fail than is necessary! Very often a business
can be "saved" if caught in time. Even if a company is insolvent
it may be possible to save the company by using a provision under the
Bankruptcy and Insolvency Act to file a Proposal, (an arrangement) with
the creditors of the company.
The way a Proposal works is that a company, through a Trustee in Bankruptcy, files the Proposal ("offer"), to the company's creditors asking them to accept less than the monies they are owed in order that the company might survive.
The trustee works with the owners of the company in drafting a Proposal that presents a "win - win" situation for both the company and the creditors. Typically, the creditors are asked to give up rights to the monies they are owed in exchange for an offer by the company to pay so many cents on the dollar (say, 25 or 50 or 75 cents) over time. Sometimes the company pays back 100% of what it owes but it is granted a period of time, say 6 months or a year, in which it makes no payments.
In a successful Proposal the company wins because it survives. The creditors win because they retain a customer and also because they get some of their money whereas in a bankruptcy they probably would get nothing.
There are two types of professional a debtor can get help and advice from; an insolvency lawyer and a trustee in bankruptcy. Every debtor who's business goes into bankruptcy, receivership, or files a proposal must deal with a trustee in bankruptcy as only trustees are licenced by the federal government to administer bankruptcies and proposals.
A debtor should seek advice from an insolvency lawyer if he has complicated issues or if a considerable amount of money is involved. Trustees are trained to recognize complicated issues that debtors have and often refer debtors to an insolvency lawyer in order to avoid a conflict.
This site included the following tax information:
- Prescribed interest rates;
- Goods and services tax/harmonized sales tax;
- Payroll deductions and employers' responsibilities;
- Corporations, individuals who are self-employed, and partnerships;
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