Expertises connexes

The first consideration when someone decides to go into business is to choose the legal business structure that best suits their needs. A few options are available:

  • sole proprietorship;
  • partnership;
  • joint stock company.

This decision is very important. Indeed, each option has advantages and disadvantages. Therefore, the careful examination of your interests and objectives with respect to the different options is an essential step in starting your business.

The sole proprietorship is the least complex way to start a business, although it does include some legal obligations. With a few exceptions, the person who chooses to create a sole proprietorship will inevitably have to register under the Act respecting the legal publicity of enterprises, CQLR c. P-44.1. In addition, the main disadvantage of the sole proprietorship is that the company’s and founder’s assets are not separate. The company creditors, in the event of a claim, can therefore seize the personal property of the entrepreneur or vice versa.

As for the partnership, it implies an agreement between two or more people to pool various contributions and to exercise a professional activity together. The partnership is subdivided into three (3) categories:

  • general partnership;
  • limited partnership;
  • joint venture.

A major feature of the general partnership is that its members will be held personally liable for obligations incurred in the service of the business, unless it is a limited liability partnership, in which case members will not be liable for any obligations resulting from another member’s negligence or fault.

As for the limited partnership, it is mainly characterized by its two categories of members: the limited partners, who provide a contribution to the common fund of the company, and the general partners, who administer the company.

Finally, the joint venture is a less optimal choice, as it cannot act under its own name, and the withdrawal of a partner risks putting an end to the partnership.

If you opt instead for a joint stock company, the first step is to choose between the Québec regime (Business Corporations Act, CQLR c. S-31.1) and the Canadian regime (Canada Business Corporations Act, RSC (1985) c. C-44). This choice may be influenced by serious considerations, such as, in particular, the power to issue shares with nominal value. An experienced business law team can explain such considerations to you. In addition, the choice of the joint stock company implies that the company will have a separate legal identity from its shareholders. As a result, they will be protected from creditors thanks to the legal phenomenon of the corporate veil. In addition, incorporation allows certain non-negligible advantages, such as the possible reduction of the tax burden.

In addition, during the incorporation of the joint stock company, the founders must draft the articles of incorporation, which notably include:

  • the name and home address of each of the founders;
  • the name of the corporation or its numerical designation;
  • a description of the capital stock, including transfer restrictions;
  • activity restrictions; and
  • the number of directors, which may be fixed or variable.

The internal regulations complement the articles of association. In this regard, our team can suggest different approaches for drafting personalized internal regulations, which may include the following elements, among others:

  • general provisions (definition, interpretation, company mission, etc.);
  • information on shareholders’ meetings and on the board of directors (eligibility, composition, conduct of meetings, resignation process, powers and duties, remuneration, etc.); and
  • information on the directors of the company (president, vice-president, secretary, and treasurer).

All in all, the choice of the legal form of your business will have consequences that will follow you throughout your entrepreneurial journey, which is why it is essential to have recourse to professional and competent lawyers who can help you see the process clearly.

Furthermore, starting a business involves various decisive steps, such as developing a business plan to match your ambitions, setting up a financing system, hiring employees, choosing a place of business, and negotiating and drafting a commercial lease. Finally, it is also a good idea to develop a clear plan of what will happen to your business at your death.

Our team of professionals will accompany you in all stages of the start-up of your business and will be able to advise you appropriately.