Creating Corporate Entities and the Associated Stakeholder Agreements
When a client decides that a sole proprietorship is not appropriate for their business operations, we help them create the appropriate legal entity. We routinely incorporate BC companies for clients and set up the company’s legal structure by issuing shares to the owners, appointing directors and/or officers to manage the company’s affairs, creating company bylaws, creating the company’s share structure and properly documenting all aspects of the company’s creation.
Partnerships can be created by acting as partners. This is the simplest and most inexpensive (at the outset) way of forming a partnership. We normally recommend that clients invest in a preparing partnership agreement. This document would set out how the business is owned, how profits or losses are allocated and paid, how routine matters are handled, how more complex decisions are made, and what happens if there is a dispute among the partners that they cannot resolve through their own discussions. These matters are much more easily, and inexpensively, determined while the parties are not in dispute and not focused on running the business.
When creating a company, we normally recommend that the client also create a shareholders’ agreement. This agreement is similar in many ways to a partnership agreement as it covers many of the same issues. Beyond shareholders’ agreements, we work with clients on complex business associations such as joint ventures for specific business transactions, and the associated agreements required to create a joint venture. Having invested at the outset in a well-drafted partnership, shareholder or joint venture agreement will almost without fail result in more certainty among the owners, less stress in dealing with ongoing business matters and much less expense should there ever be a disagreement among them.