Business Law Vancouver

Most people come to us to incorporate, and incorporation is the easy part. What follows is a set of continuing obligations that tend to surface a year or two later, at the worst moment — when a bank, a buyer or an auditor needs the paperwork to be in order.

Incorporating in British Columbia

A British Columbia company comes into existence when its incorporation application, which includes the notice of articles, is filed with the BC Registry. The company can take a name approved through a name request or, if speed matters more than the name, use its incorporation number as a numbered company and change its name later. Before filing, the founders settle the articles, which are the company's own rules on shares, meetings and directors, and the share structure: how many classes of shares, what each carries in votes and dividends, and who holds them. A private company needs only one director, and the Business Corporations Act does not require directors to live in Canada. We work alongside your accountant, because the share structure chosen at the start affects how income can later be paid out and how the business can be sold.

Keeping the company in good standing

A BC company has to keep a records office and a minute book and keep them current: the articles and notice of articles, the register of directors, the central securities register recording every share issuance and transfer, and the minutes and resolutions of shareholders and directors. It must file an annual report with the BC Registry within two months after each anniversary of its incorporation, and a company that does not file for two years in a row can be dissolved by the Registrar, with any property it still owns passing to the government. The shareholders of a private company commonly deal with the annual general meeting by signing a consent resolution instead, and if every shareholder agrees they can waive the appointment of an auditor for the year. A minute book untouched since incorporation is a common problem we find when a business is being sold, and it usually costs far less to fix before a buyer asks than during due diligence.

The transparency register

Private BC companies also have to keep a transparency register recording each significant individual: broadly, anyone who, directly or indirectly, holds or controls 25% or more of the company's issued shares or of its votes, or who can elect, appoint or remove a majority of the directors. The register has to be updated within 30 days after the company learns of a change, and reviewed at least once a year. At present it is kept in the company's records office and is not public. Amendments passed in 2023 will, once brought into force, require companies to file it with the Registrar, shorten the update period to 15 days, and make some of the information publicly searchable.

Shareholders agreements

If more than one person owns the company, a shareholders agreement is the document you will wish you had. It sets out what happens when an owner wants out, dies, separates from a spouse, stops contributing, or simply disagrees about direction: who can buy the shares, at what price and on what terms, and whether the others can force or block a sale. Without one, the default rules in the Business Corporations Act and the articles apply, and they are rarely the rules the owners would have chosen for themselves. A shareholder who is treated oppressively, or whose interests are unfairly prejudiced, can apply to the court for a remedy, but that is a lawsuit, and a good agreement is how owners avoid needing one.

Reorganizations and amalgamations

Companies change shape as businesses grow. A share structure is reorganized to bring in a new owner, pass the business to the next generation or separate operating assets from investments, by the type of resolution the articles specify or, if they are silent, by a special resolution of the shareholders, which requires two-thirds of the votes cast unless the articles set a higher majority. Two or more companies can also amalgamate into one. A long-form amalgamation needs an amalgamation agreement approved by special resolution of each company's shareholders; a holding company and its wholly owned subsidiaries, or subsidiaries of the same holding company, can use the short form, approved by the directors alone. Many reorganizations are driven by tax, and we plan them with your accountant.

Commercial leases

A commercial lease is a negotiated contract, and the Residential Tenancy Act does not apply to it. Most of what matters is in the lease itself: the basic rent and the additional rent for taxes, insurance and common costs; the length of the term and any options to renew; who pays for improvements and repairs; whether the tenant can assign or sublet if the business is sold; and whether the owners must personally guarantee the rent. A lease for more than three years should be registered against the landlord's title, because an unregistered long lease generally does not bind a buyer of the building; a lease of three years or less binds a buyer without registration while the tenant is in actual occupation. The time to negotiate these terms is before the offer to lease is signed, because the formal lease usually follows it closely.

Franchising

Franchising in British Columbia is governed by the Franchises Act. A franchisor must give a prospective franchisee a disclosure document at least 14 days before the franchisee signs the franchise agreement or any other agreement relating to the franchise, or pays anything for it, apart from narrow exceptions such as a confidentiality agreement or a small refundable deposit. Each party also owes the other a duty of fair dealing in performing and enforcing the agreement. We review disclosure documents and franchise agreements before they are signed.

Commercial financing and PPSA registration

A business loan is usually secured against the company's assets under a general security agreement, and often backed by the owners' personal guarantees. Under the Personal Property Security Act, a lender protects its security interest by registering a financing statement in the Personal Property Registry, and priority between lenders generally goes to whoever registered first. A supplier who sells equipment or inventory on credit, or a lender who finances the purchase, can take a purchase-money security interest that ranks ahead of an earlier general lender, if it registers within the Act's deadlines and, for inventory, gives advance notice to lenders already registered. Searching the registry is the quickest way to learn what is already secured against a business before lending to it or buying its assets.

When the time comes to buy or sell the business, the company's records are the first thing the other side's lawyer asks for. Share and asset deals, due diligence and closing are covered on business purchase and sale.

When a commercial agreement turns into a dispute, or a transaction involves commercial property, the file moves between this work and our litigation and real estate teams, usually without leaving the firm.

Shares in a private company form part of an owner's estate, so the shareholders agreement and each owner's will need to work together; see wills and estate planning.