There are two different ways to acquire a business.  You can either buy the shares of the corporation from the shareholders or buy the assets of the business.  Tax, legal and business implications result from how you choose to structure the deal. Read the rest of this entry »

The new Canada Not-for-Profit Corporations Act came into force on October 17, 2011. Not-for-profit corporations incorporated under Part II of the Canada Corporations Act are required to make the transition to the new legislation by October 17, 2014.

BACKGROUND
• Virtually all existing federal not-for-profit corporations are incorporated under Part II of the Canada Corporations Act.
• This Act has not been significantly amended since 1917 and does not reflect modern standards regarding corporate operations and corporate governance.
• The current Act governs more than 19,000 diverse not-for-profit organizations, including 7,800 registered charities. All of which will be impacted by the new Act.

HIGHLIGHTS

• The Canada Not-for-Profit Corporations Act benefits not-for-profit corporations by providing:

- A clear set of procedural rules.
- Less red tape since Corporations Canada will no longer review and approve by-laws.
- More flexibility on making fundamental changes, such as amalgamations, which were not permitted under the old Act.
- A more objective standard for directors in carrying out their duties and responsibilities and a due diligence defence, which will reassure individuals who decide to sit on a board of directors.

Read the rest of this entry »

Operating your business through a corporation reduces your personal liability for actions taken by a business. If a disgruntled client wants to sue, he or she will, generally, only be able to sue the corporation and not you, personally. Your personal assets (like your house) are separate from your business assets and are therefore protected.

If you incorrectly sign contracts, you risk losing the limited liability and such an error can result in personal liability attaching to you.

A corporation is required to set out its full corporate name (not a registered Business Name) in legible characters on all contracts, invoices, negotiable instruments (including cheques) and orders for goods or services issued or made by or on its behalf.

To correctly indicate that the party signing a contract is a corporation, the signature line should be completed as follows (for example): Read the rest of this entry »

Mills & Mills LLP was proud to sponsor a hole at yesterday’s Yonge Bay Bloor Association/Toronto Midtown Business Association’s golf tournament at Wooden Sticks. It was a beautiful day for golf!

We had two foursomes play in the tournament and despite some bogeys and lost balls, fun was had by all!

Both for-profit and not-for-profit corporations need to maintain accurate and current corporate records.  Although the specific requirements for the two types of corporations in Ontario are different, the general requirements are similar.

Anytime there is a change in the corporate information (ie. change of address, resignations or elections of directors or officers, or change of directors’ or officers’ addresses), a form needs to be filed with the Ontario Ministry of Government Services to ensure that the Ministry’s database of corporations is current.

A corporation may face penalties under the Ontario Corporations Information Act for failure to notify the Ministry of these types of changes.  A corporation that is in default under this Act or has fail to pay certain fees is not capable of maintaining a proceeding in a court in Ontario in respect of the business carried on by the corporation without leave of the Court.

The municipality or geographic township within Ontario in which the registered office is located may be changed from time to time by special resolution, and the street address within such municipality or geographic township may be changed by an ordinary resolution of the directors.

It is also necessary to keep a corporation’s minute book up-to-date with annual meetings or resolutions and resolutions representing any significant corporate events (ie. new shareholder, declaration of dividends, or sale of assets). Corporate law requires that corporations have yearly meetings of both the shareholders (or members in the case of a not-for-profit corporation) and directors to approve the re-election of the directors and officers, approve the annual financial statements, appoint accountants, ratify actions taken by directors and exempt the corporation from the requirements of an audit (if applicable).

In order to prepare for annual meetings, we request information from the corporation regarding any changes and we contact the corporation’s accountant and inquire as to whether any management bonuses or dividends have been declared. The appropriate resolutions are then prepared and, if necessary, we file the applicable forms providing the Ministry with notice of changes.