1. Forms of Business Organization Charles Rendina International Business Lawyer

2. Types of Entity Canadian corporations Unlimited liability companies Branch of foreign corporation Forms of partnership Co-tenancies and joint ventures Agency and distribution agreements Franchise agreements

3. Choice of entity (cont.) Affected by nature of business and taxation issues Incentive or assistance programs Wise to obtain legal and accounting advice

4. Corporations Limits liability Perpetual existence Flexibility in capital and financing raising Flexibility in management Can be provincial or federal –residency requirements Can be public or private

5. Corporations continued Residency requirements –Vary from province to province British Columbia Québec and Nova Scotia have no residency requirements for directors –CBCA at least one quarter or if fewer than for at least one must be a resident Canadian

6. Corporations continued Corporations may have separate French and English versions of their names Both federal and provincial statutes give shareholders to send an appraisal rights which may require the corporation to purchase a shareholders interests for its fair value if a corporation implements a fundamental change Most corporate legislation contain oppression remedies which allow the court broad equitable jurisdiction to protect minority shareholders

7. Unlimited liability companies Once a favorite tax planning tool for US corporations with Canadian operations Advantages have largely been removed by the latest tax treaty between the two countries.

8. Branch of a Foreign Corporation Entitled to carry on business in most commercial areas if licenses are obtained Income tax must be paid in Canada on Canadian branch profits Requires careful tax planning to avoid double taxation

9. General Partnerships Each partner liable for all the debts and liabilities of the partnership Net income determined at the partnership level then allocated to partners Unless otherwise in a partnership agreement all partners must contribute equally to the capital and share equally in profits Liability extends to the fullest extent of a partner’s personal assets in

10. General Partnerships continued Two or more natural or artificial persons carry on business with a view to earning profit Governed by provincial statutes Partnership agreements can supersede most statutory provisions Foreign partner obliged to pay Canadian income tax on their allocated share of the partnership income.

11. Limited Partnerships Protects passive individual partners from partnership liability Created by provincial statute subtle differences province to province Must be registered to exist Flow-through income

12. Limited Liability Partnerships Relatively new entity in Canada All of the partners remain personally liable for their own actions and the actions of those they directly supervise or control No protection if a partner knew of the negligence when it was committed Only available to “eligible professions” –Except in BC

13. Co-Tendencies and Joint Ventures often used in real estate Not an entity for tax purposes Can be governed by agreement –To determine rights and liabilities Take care not to form a partnership inadvertently

14. Agency and Distribution Agreements xpand into Canada without carrying on business in Canada Use an agent or distribution agreement –Agents can bind principal in contract –Distributor cannot Take care of ownership and protection of intellectual property rights and exclusivity Consider termination rights Canadian courts award damages in lieu of a notice.

15. Franchise Arrangements Regulated by the provinces “Canadianize” contracts revise or redo disclosure documents Think about choice of law clauses Need a Canadian Trademark