CONSIDERATIONS BEFORE INCORPORATING A COMPANY
Business incorporation lawyer assisting entrepreneurs and start-ups incorporate the appropriate corporate entity to advance their commercial ventures.
Contact Neufeld Legal PC at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com
When you are looking to incorporate a company, what questions should you be asking, such that you make the appropriate decisions in structuring the company? Recognizing the differences that exist between companies, these are but some of the questions that you might consider asking in advance of incorporating, such that the new company is appropriately structured to meet your business objectives, and take other business / legal steps:
1. What is the intended ownership structure of the company, looking at both ownership of the company’s share equity upon incorporation and in the near-term following incorporation.
2. Who will have voting rights in the company, and more significantly who will control the voting rights of the company (which might be a specific group of shareholders)?
3. Who will be the directors of the company responsible for overseeing management? And how will those directors be determined, both at the outset and in the future?
4. Who will be the officers of the company in charge of day-to-day operations? And how will those officers be determined, both at the outset and in the future?
5. Who are the intended employees of the company? How will employees be hired and how is the company intending to grow its personnel? Similar questions should be asked about retaining contractors.
6. What professionals are being retained to support the company, from accountants to lawyers to bankers?
7. How is the business of the company to be financed? What financing arrangements are being looked at for both the company’s inception, as well as moving forward? Consideration should be given to various debt and equity financing options, together with the requirements to move them forward.
8. If the company’s business is likely to expand, what plans exist for offering further shares to investors at a later date, or other growth arrangements? Being constrained from advancing the business can be highly problematic, such that the means to move forward should be enshrined in the corporate documentation.
9. Whether any existing business will be taken over by the newly incorporated company? If so, what is the nature of that business, who operates it, who are the persons interested in it, and what is the nature and extent of their interest? And how will that business be properly assumed by the newly incorporated company? What are the tax considerations?
10. What assets and liabilities will be acquired by the newly incorporated company? How will those assets and/or liabilities to be paid for? What are the tax considerations?
11. What is the perspective as to initial business success and struggles of the newly incorporated company? What happens if gaining business traction proves more difficult than originally anticipated? What are the tax considerations?
12. Will employees eventually be allowed to participate in earnings or equity? If its only a possibility, and not a certainty, it will be important not to overstate the possibility.
13. What are the personal financial objectives of each of the participants in company that is being incorporated? Are there any specific personal financial and/or tax planning objectives that need to be considered and integrated into the business strategy?
14. Is there any prospect that the incorporation in the form and for the purposes envisioned will violate any laws (for example, legislation concerning foreign ownership or incorporation of certain types of businesses or professions, restrictive covenants, fraudulent preferences or conveyances)?
15. Whether the newly incorporated company will require specific registrations prior to undertaking business, be it related to taxes, business operations, employees, etc.?
As you can discern, there are enough considerations that should be addressed in advance of incorporating a new company, such that the company is appropriately structured, and the proper steps are undertaken such that the company might undertake business as intended.
As a corporate business lawyer, I have been dealing with the corporate law and business matters for over a quarter century, and understand the importance of asking the appropriate questions, and follow-up questions, in advance of incorporating a new company and structuring its business.
Structuring the incorporation of a company can be incredibly important to its advancement and optimizing its business, such that knowledgeable legal counsel for the specific purposes of the business tends to be highly advantageous. So if you are looking to incorporate a new corporation or deal with the corporate legalities impacting your company, contact us at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or via email at Chris@NeufeldLegal.com.
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