revise the business law problem's answer(need professional blaw people)
Running head: ISLANDER SOFTWARE CONSULTANT (ISC) 9
Islander Software Consultant (ISC) Business law
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Islander Software Consultant (ISC) Business law
Question 1
Letter of opinion to Joan and Tony about business Venture in Canada:
Date: February, 6th /2017
Dear Sir/ Madam
Re: LEGAL REQUIREMENTS NEEDED IN OPENING A BUSINESS IN CANADA
As per the advice you requested about business venture and legal requirements needed in establishing business here in Canada i would like to comments on few areas you need to know about legality of running business here in Nova Scotia Canada. First, every successful business must have good name. This is because good and uniquely business name sell itself to the targeted customers. Secondly, the business should contain certain legality structure applicable here in Canada. The computers business should either be a partnership, corporate or society. Each decision on business form has its implication for liability, taxation and succession planning.
If the business is partnership then you both have to file different tax return but in term of loses then you both share loses as well as profits. Corporation business is categorized into two public and closely held or Private Corporation. Corporation is taxed at combined provincial flat corporate rates rather than marginal individual rates (Baikie, 2003). Albert, British Columbia and Nova Scotia province as discussed by section 4.2 (c) of corporation Acts can incorporate unlimited liability companies. This type of company shareholders liability is not limited. Each business in Canada should have business unique number according to Canada revenue agency (CRA) which assigns your businesses a tax ID. The business number can change if it’s sold or legal structures changes for instance changing from sole proprietor to corporation.
Third, the business should have sources of financial structure. Fourth, the business must be licensed under municipal. The business license depends on type of business in this case you need to take computers services license. Fifth, you have to register goods and services tax harmonized if gross income exceeds $30,000 (Baikie, 2003). After the business start you should have proper pay roll structure for staff which you may need to employed as well as having better insurance cover.
In case the business has to change to corporation various steps have to be followed. First, you would have to name the company. The name should be uniquely identified. Secondly, the corporate name has to undergo Nuans name search. The report for the Nuans should be not late than 90 days old (Ben-Ishai, 2007). Third, the pre-approval may be filed before you file the article of incorporation’s. Second step is completing an article of incorporation through establishing structure of the business. However, some individual also use this step to restructure the company. The article of incorporations is signed by approved body.
The amendments on articles cost $200 as fee for amendments. There are two procedure of filling the article either through online filling Centre or by completing the form 1. The article of incorporation follow the form that the directors fixes and sets outs in respect of the proposed corporations acts 1974 -75-76,c.33,s.5;1978-79,c.9,s1(f) (Ben-Ishai, 2007). The article of incorporation entails the name of the corporation, the province in Canada where the registered offices is to be situated in this case Nova Scotia.
A class of shares and maximum number of shares the corporation is authorized to issue is also included in the article of corporation. The article also outlines the number of directors needed in subject to paragraph 107(a) (Ben-Ishai, 2007). The article set out provision permitted by act or by law to set out in by laws of the corporations. The directors of the corporation will only be removed from office by the number of votes indicated by section 109.
The corporate should have initial registered address and board of directors. To get certificate of incorporation you have to fill appropriate forms to corporation Canada accompanied by filling fee. The incorporation certificate comes into existences on the date shown in the certificate of incorporations. The other requirements which corporate have to meet include provincial and territorial regulations. This procedure takes place in region of business. Business number and other business requirements have to be filled before the business is qualified to be Canadian Controlled Private Corporation.
The capital structure under Canadian laws on shares can either be voting on non-voting. In addition the shares can be limited and non-limited in equity. The shares can be redeemable for fixed price at options of the corporation or holder. The shares can be given special voting rights with respects to certain matters for example in the appointments of directors and acquisition or disposal of significant assets (Baikie, 2003). Therefore before you determine the types of shares in the corporation then you have to make sure the only shares which are given mandatory voting rights are the one commonly own in full by both of you. I have addressed all matters and requirements you need to put in place. I hope it will help you to structure your business.
You’re sincerely
Your: Attorney.
Sign:
Question 2:
Islander software consultant (ISC) capital can be structured by separating contribution, voting and control participations in future profits (Iacobucci, 2007). These methods make sure individual who contribute finance like Lenny cannot impact much influence on managements so long as the shares he own are structured according to article of incorporation. The capital contributed by Lenny can be assumed to be joint venture with non-voting preferred share holding.
Lenny despite of being non- voting he can also participate in distribution of profit. The prime goal of structuring Lenny capital is to make sure Joan and Tony Jones managements is not interfered. According to financial performance for ISC, Lenny share contribution is significant to the company success (Iacobucci, 2007). The article of association describes the number of share each join venture partners should hold. The owner of the company hold 50 common shares each of the 100 common issued capital so this gives them authority and voting right in managements and ownership of the company.
Lenny preferred non-voting shares can also be converted into common shares at given ratio formula. However, Joan and Tony may also decide to hold 49 common shares each. This agreement to succeed their must be changes in the article of incorporation which states that shareholders must meet to discuss and to offer their view on the situation (Baikie, 2003).49 common shares each give Joan and Tony majority chances of voting while 2 common shares remained can be given to Lenny. All stakeholders concern must be actively involved in the decisions. Joan and Tony will remain the majority shareholder while Lenny will be minority holder.
The minority shares holder also have right to vote in shareholder meeting. Therefore oppression remedy under the Ontario business corporation Acts gives relief to minority shares holders (Ben-Ishai, 2007). As Joan solicitor I recommend Lenny share capital to be structured in search a way that it fits to be non- voting preferred shares. Joan doesn’t trust Lenny management’s style even though Tony trusts him. Lenny has poor management style therefore giving him the chance to management the company it’s a risk decision. He is also a risk taker so he will not care much on success of the company. Joan proposal to sell share in public must adhere to rules stipulated in constitution of Company’s Act 1993. This Acts sets rules on buying and selling shares to the public.
The companies must first adhere to those rules before engaging public for ISC shares. Selling shares in public also will expose the financial condition of the company. Tony threat to start to incorporate his own company can be possible if they hold a meeting where they will discuss the procedure of dissolving the company (Ben-Ishai, 2007). In the meeting as common majority shareholder in the company they will share the company property half way. The software he developed was un-idea of ISC so there is no way he can start business with another company idea. Therefore what he can do is to modify the software further but using it as brand product its illegal and against corporate copyright rights.
As Lenny solicitor I will recommend his shares to be preferred with voting rights. $200,000 capital contribution is not little money because if the amount is to be converted to shares and price per nominal share is $10 meaning then he will have 20000 shares. Lenny preferred share category receive higher claim on its assets and earning than common stock. He will be able to get dividend before common shareholders receive their own dividend (Iacobucci, 2007).The voting right preferred shares can participate in shareholders voting as well as influencing management styles within the company.
Reference
Canadian Securities Institute. (1984). How to invest in Canadian securities. Toronto: Canadian Securities Institute.
Baikie, T. S. (2003). Getting and staying listed in Canada: A primer for public company executives and their professional advisors. Toronto: CCH Canadian.
Tiwari, B. S. Canadian Corporate Securities Disclosure and Sustainability Reporting.
Ben-Ishai, S. (2007). Sarbanes-Oxley five years later: A Canadian perspective. Loy. U. Chi. LJ, 39, 469.
Iacobucci, E. M. (2007). Directors and corporate control contests: Reconciling Frank Iacobucci's views from the academy and the bench. The University of Toronto Law Journal, 57(2), 251-268.
Awrey, D., & Kershaw, D. (2014). Toward a More Ethical Culture in Finance: Regulatory and Governance Strategies. Capital Failure: Rebuilding Trust in Financial Services, 38(1), 277.
