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Section 85 of the Income Tax Act (ITA) provides a powerful mechanism for deferring tax liabilities associated with the transfer of assets to a Canadian corporation. Commonly used in corporate reorganizations, succession planning, and incorporations, Section 85 rollovers enable taxpayers—whether individuals, corporations, or trusts—to transfer eligible assets to a corporation on a tax-deferred basis. This article outlines the key concepts, legal framework, and practical applications of Section 85 rollovers, emphasizing their strategic value in planning transactions. Purpose of Section 85 Rollovers The...

Restrictive covenants, such as non-competition and non-solicitation clauses, are commonly used in employment, partnership, and shareholder agreements to protect a business’s proprietary interests. While these clauses serve similar protective purposes, they differ significantly in scope, enforceability, and legal treatment under Ontario law. Business owners, HR professionals, and legal counsel should understand these distinctions to ensure their agreements are enforceable and legally compliant. What is a Non-Competition Clause? A non-competition clause restricts a former employee, contractor,...

When a small business requires an injection of capital, whether to expand operations, invest in new equipment, or manage cash flow, the need for funding is often clear. The more complex question is how to raise that capital. Business owners typically face two primary financing options: equity financing or debt financing. Each comes with its own legal and financial implications, particularly regarding ownership, control, and risk. Equity Financing Equity financing involves raising funds by offering investors a stake in the business in exchange for capital. This means that investors become...

A well-organized corporate minute book is a cornerstone of sound corporate governance and legal compliance in Canada. It contains key documents that reflect the corporation’s legal structure, share ownership, decision-making processes and regulatory filings. Whether you are a small business or a growing corporation, maintaining a complete and up-to-date minute book is not only good practice, it is required by law. It’s the Law Under both the Business Corporations Act (Ontario) (OBCA) and the Canada Business Corporations Act (CBCA), corporations are legally required to maintain a corporate...

Understand how your company’s share structure affects control, returns, and business flexibility. When incorporating a private corporation in Ontario—or anywhere in Canada—one of the most important decisions you’ll make is how to structure your company’s shares. While it might be tempting to issue a single class of shares and move on, the truth is: your share structure has a long-term impact on ownership, control, tax planning, and the ability to attract investors or partners. In this article, we’ll break down the different types of shares commonly issued by private corporations—common...

If you run a corporation in Ontario or federally under the Canada Business Corporations Act (CBCA), understanding the difference between a director vs shareholder resolution Ontario Canada requirements is more than just legal trivia—it’s fundamental to running your business properly. These two types of resolutions serve as tools to document and authorize major decisions. Each plays a distinct role in corporate governance. Knowing when and how to use them can help you avoid costly errors, stay compliant, and maintain a clean minute book. In this article, we’ll explain what each type of resolution...

If you’ve incorporated your business—whether under the Ontario Business Corporations Act (OBCA) or the Canada Business Corporations Act (CBCA)—you’ve taken an important step toward building a professional and credible company. But incorporation is only the beginning. To remain compliant and ready for opportunities, you also need to stay on top of your post-incorporation obligations — and one of the most critical among them is maintaining your corporate minute book. Surprisingly, many small business owners and startups overlook this legal requirement until a lender, investor, auditor,...

A shareholders’ agreement is an essential document that establishes clear rights, responsibilities, and protections for shareholders, ensuring stability and alignment beyond the scope of corporate bylaws and articles of incorporation. A well-constructed shareholders’ agreement can enhance stability, transparency, and dispute resolution, providing clarity for the company’s operation and growth. Here are ten key principles to guide the creation and implementation of an effective shareholders’ agreement. 1. The Purpose and Scope Begin by clearly stating the shareholders’ agreement’s...

What’s the Difference Between Asset Sale and Share Sale Transactions? When buying or selling a business, one of the most critical decisions is choosing between two main transaction structures: an asset sale or a share (or stock) sale. Both methods have distinct legal, tax, and practical implications that can affect the outcome for buyers and sellers. Understanding the differences and the advantages and disadvantages of each approach is essential for a successful transaction. What is an Asset Sale Transaction? An asset sale involves the buyer selecting and purchasing specific assets of a business....