Corporate & Commercial Law in the Nelson Area

Whether you’re starting or buying a business, looking to maintain or reorganize an existing business or winding up your business, Troy Trillo has the knowledge and experience to advise you quickly and affordably.

At Trillo, Perello & Yates in Nelson, our commercial law services include:

Incorporation

Some people want to incorporate in order to take advantage of the tax benefits, while others are more concerned about the liability protection afforded a company. Regardless of your intention, we can help explain the pros and cons of the different business structures, from a legal perspective, be it sole proprietor, partnership or incorporation, and we will direct you to an accountant to ensure you understand the tax implications. If you decide to incorporate, we can help you choose and investigate a name. We can also arrange the share structure and organization, including who the shareholders, directors and officers are. We typically set all our companies up with classes A – K classes of shares, class A that only vote, classes B, C, D and E that are common shares and can participate in profits, but which may be issued at different rates (dividend sprinkling), and classes F, G, H, I, J and K preferred shares. While you may not think you need them right away, we don’t charge extra for this, and having the shares available should minimize the potential that you have to do an expensive share restructuring later.

Shareholders’ Agreements

Shareholders’ agreements may seem an expensive and unnecessarily complicated process. However, anytime you have multiple people involved in a business (other than spouses, in which case they often skip this), it is a good idea to have a shareholders’ agreement. Even just starting the discussion can bring to light differing opinions on how the business is going to be run. Some of the key components to consider include:

  • Matters requiring unanimous consent
  • Job descriptions
  • Non-compete terms
  • Rights of first refusals
  • Piggy-back and draw along rights on sale, life insurance or other terms in the event one party dies
  • Shotgun clauses (in the event all else fails)

Each shareholder should have independent legal advice. As far as the timing goes, we always recommend it be done at the time of incorporation. In our experience, if you delay, it will fall into the “to-do” pile, underneath all the more “important” matters involved in starting and running the business, and it won’t resurface until a problem has arisen, at which point it is too late. If done in advance, a shareholders’ agreement should reduce disagreements and reduce the risk of unnecessary future litigation and legal fees.

Buying and Selling a Business

Whether you are buying or selling a business, you will want to have a lawyer and an accountant involved. Whether the purchase/sale is structured as a share purchase or an asset purchase, or whether you purchase in your own name or a company, can have a significant tax implication. Accordingly, it’s always a good idea to run it by your accountant first. We can start the process off with a letter of intent, really nothing more than a gentleman’s agreement, expressing a basic mutual interest in proceeding, but which does not legally commit either party to proceeding. Once the letter of intention is signed, then we proceed with more due diligence, reviewing financials, contracts, title to properties, inspections etc., and drafting the formal contract, be that an asset or share purchase agreement. Each deal is so unique, from a purchase of a small business that might not be worth much more than your new truck, to million dollar deals, that it is difficult to give an accurate quote. We bill strictly based on time, and you can determine the level of due diligence that you need. Just because the business is small, don’t think you should skip your due diligence. If financial statements are missing or look questionable, an overlooked lease is about to expire (that the landlord isn’t intending on renewing), a seller won’t sign the customary due diligence letter for CRA, EI, WCB, or an adjustment for gift certificates is missed, it could mean the difference between continuing or walking away from your investment. We understand that even when it’s a relatively small business that it’s your hard earned money going into it and it deserves attention.

Commercial Leases

Admittedly, many people don’t have a signed commercial lease. Others have a 3-page lease from online somewhere that one of the parties hasn’t even read. Sometimes you can have a great relation with your landlord without the need of a written lease, but on those occasions when someone changes their mind, having a formal lease, clearly setting out the terms, can be the difference between your business continuing along or folding. We act primarily for landlords in preparing leases, but are also glad to review leases for tenants. Leases can vary from 3 pages to over 50, and the terms may sometimes surprise you. Some of the “simple” 3-page leases, sure seem simple, but that’s the problem, they are simple and miss important parts, such that when a dispute arises, the lawyers on both sides can find enough holes in the agreement to drive a truck through. Our precedents are based on materials published by the Continuing Legal Education Society of BC. They may be a little longer, but with that comes more detailed terms with respect to each party’s rights and responsibilities, plus proven clauses that have been carefully reviewed and interpreted, leaving less room to argue. In drafting our easements, we try to ensure they are clear and easy to read, without hiding additional charges in the fine print on page 25. We find the best way to draft and negotiate leases is to be clear, simple and fair, otherwise it just leads to mistrust and protracted negotiations modifying terms that are unduly biased. That’s not to say that there aren’t different strategies depending on whether you act for the landlord or tenants, and terms to consider include: guarantors, damage deposits, discounted rent during renovations, term (shorter for a new business, to ensure you aren’t stuck in a lease for 5 years and the business folds after 1), renewal terms (one or more), how to negotiate rent for renewal terms, triple net costs and dispute clauses.

Dissolution

There comes a time when some businesses are no longer viable and cease to operate. Some people choose to let their company lapse by not filing annual reports for 2 years. Hopefully this doesn’t happen to you accidently. However, the company is still required to file taxes during this period, even if it is a nil return. Sometimes having your accountant file these nil returns can be rather expensive, thus justifying doing a formal dissolution. It gets more complicated if there are outstanding creditors, but assuming there aren’t, the formal dissolution process is relatively simple and quick. There are also benefits to directors in reducing their exposure to liability in doing the formal dissolution.

Estimated Fees
Incorporation – fee $535, final account $1,095 including first name approval request, GST & PST and disbursements. This does not include the cost of a shareholders’ agreement.
Acting as Registered and Records Office (including filing annual reports) – fee $125, final account $198
Shareholders’ Agreements – fees starting at $850, based on hourly rate, plus GST & PST and disbursements.
Commercial Leases – fees starting at $425, based on hourly rate, plus GST & PST and disbursements, final accounts from $550 (discounts available for repeat customers).
Dissolutions – simple – final account from $375 assuming annual reports are up to date
Hourly Rate $275/hour + GST/PST

For more information on our commercial law services, give us a call.