Winding Down A Business

There are 2 prominent initiatives driving consideration of winding down a corporation:

1. First, retirement/capitalization on investment; sale to third party; or
2. While still operating, a desire to reduce complexity and possibly to merge holding companies with operating companies to result in fewer tax filings and simplification of administration.

These types of initiatives frequently arise from family maturation, change in business plans or maybe even declining business.

But regardless, many enterprises have complex structures of “tiered” corporations frequently determined by estate planning or for the purpose of segregating potential liability. The relevance of these related corporations should be seriously considered before the desire to simplify prevails over better business structure planning.

It’s natural to think of simply “shutting down”. Simple as that may seem, that will not stop government filing requirements, costs to complete tax returns and continual notices from various levels of government, sometimes rather costly as the result of the failure to file.

So we’ve counseled clients to consider amalgamations between and among holding companies and operating entities to result in just one corporation and therefore just one set of filings. Continuing a corporate existence to take advantage of corporate tax rates/income splitting and banking relationships should be considered. It is not infrequent that corporate structures have been established in a multitude of jurisdictions necessitating the bringing of a corporation from one jurisdiction (say, for example, the federal jurisdiction) into the jurisdiction of another company (say, an Ontario company).

One must also assess the effect of an amalgamation relating to liabilities. Remember that whatever were the assets and liabilities of each pre-amalgamation corporation automatically become the assets and liabilities of the post-amalgamated corporation.

There are admittedly certain savings and tax benefits, but at the same time before simply proceeding, serious consideration should also be given to the liability component of the effect of amalgamation.
We’d be pleased to assist you in your consideration.

Business Names, Trademarks and Domain Names

Welsh Law Business NamesThis is a very thorny and grey area in the age of electronic technology. Unfortunately there are those who stand on the sidelines awaiting the expiry of a domain name registration or a business name and snap up the opportunity with the intention of selling back to the originator their own intellectual property.

This is an area as well where business persons should definitely seek out the assistance of an intellectual property lawyer to protect what is probably their most valuable asset: Their Brand.

Not infrequently, but very discouragingly, business persons have found that their trade-mark registration was of little assistance upon learning of the registration of a domain name with the identical characteristics. Similarly, aggressive domain name registrants in foreign countries watch carefully for the expiry of a registration of a corporation in Canada and claim they have clients seeking domain name registrations in a foreign country with identical characteristics. The foreign country domain name registrars seek the opportunity to be the registrant of the Canadian company’s domain name.

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Partnership and Shareholder Agreements – Going to the Quick

Peter Welsh Law Partnership and Shareholder AgreementsIn nearly 40 years of practice, we have found the absence of partnership agreements or shareholder’s agreements has been the foundation of some unnecessary and usually vitriolic litigation.  Sometimes the litigation results in the demise of the entity, but in every case, the costs are more than significant, far dwarfing the costs of preparing an agreement in the first place.

We have repeatedly found, as well, a simple outline to introduce what is required which can be of significant assistance as business persons start up their relationship. 

We’ve reduced these key points to the following:

  • The 3 G’s

  • The 4 M’s

  • The 5 (or more) D’s

What does this mean?

It is simply this:  the 3 G’s mean “Getting in/Getting along/Getting out.”
The 4 M’s mean: “Money in/More Money in/Money out and Management.”
The 5 D’s mean:  “Death/Disability/Dissolution/Disaster/Desire (to leave)” (and a whole host of other words starting with “D”.)

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Peter’s Blog

Often the use of a Corporate Lawyer comes about as a result of challenges in business situations. Peter’s blog has been created to demonstrate the range of business situations that require the introduction of a corporate lawyer early in the process to prevent the often complex problems businesses find themselves in. Short succinct examples on asset protection, estate planning, succession planning and a variety of other matters will be addressed interspersed with some fun tongue and cheek responses to the media on issues of corporate law. Enjoy!

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