Category: Business Law

Whether you are a first-time entrepreneur or an experienced business owner pursuing a new venture, deciding to start a business can be overwhelming. While there are several different components, one fundamental consideration is determining what type of business structure to set up.

It is essential to have a solid understanding of the different types of business structures available, along with their benefits and drawbacks, as the business structure plays a crucial role in how the business will operate and grow. Additionally, the type of business structure chosen can significantly impact personal liability, tax consequences, and legal obligations.

Key Considerations for Determining the Best Business Structure

Business owners must make multiple integral decisions every day, and this obligation starts even before the business is up and running. Deciding on a business structure is not a “one size fits all” approach and requires business owners to have a clear vision and goal concerning the company. It is vital to have an understanding of:

• who will be involved and have control over the business;
• who will raise and provide business capital;
• who will receive profits and own business assets; and
• who will be responsible for debts, taxes and liabilities.

Once a business structure has been decided upon, the business owner(s) can take steps to fulfill their responsibilities under the chosen structure, for example, by drafting shareholder and partnership agreements or entering into a commercial lease, if applicable.

Distinct Business Structures in Ontario

Each type of business structure is accompanied by its own unique characteristics, benefits, and obligations. Generally, Ontario businesses fall within one of the four primary categories of business structures:

1. Sole Proprietorship,
2. Partnership,
3. Corporation, or
4. Co-operative.

Each type of business structure is strategically determined based on the goals for the business and aligns the business for success as it grows. Therefore, it is essential to consult with an experienced business lawyer who can provide guidance on the options best suited to the needs of the business and owner(s).

Sole Proprietorship

A sole proprietorship is an informal and relatively straightforward business structure that new business owners and small businesses commonly choose. In a sole proprietorship, one individual owns and operates the business; therefore, the owner/operator and business are considered the same entity concerning legal and tax obligations. The proprietor owns the business, makes the decisions, assumes the business’s risks and liabilities, and enjoys the business’s profits and benefits.

Key advantages of a sole proprietorship include an easy setup process with low-cost requirements and fewer administrative responsibilities compared to other business structures. For example, business income is included as income on the proprietor’s personal annual income tax return, so completing a corporate tax return is not required.

A sole proprietorship’s primary disadvantage is personal liability if the company has unpaid debts or is sued by a customer. Sole proprietors are required to raise their own capital to put into the business, and business income is taxed at a personal income rate, which may place business owners in a higher tax bracket.

Partnership

A partnership is an association between two or more “persons,” including real people or other legal entities, such as not-for-profit organizations. Generally, the parties to a partnership enter into an agreement that governs the overall partnership operations and sets out mechanisms for how expenses, revenue, and responsibilities are divided in percentage form. As a best practice, consulting with legal and tax professionals when preparing the agreement is essential.

Partnerships in Ontario may be subject to the Partnerships Act, Limited Partnerships Act, Business Name Act, and common law. Three types of partnerships may be formed, namely:

1. A limited liability partnership;
2. A limited partnership; and
3. A general partnership.

Advantages of a partnership include low start-up costs with easy set-up and dissolution processes. Partnerships also provide clear information regarding each partner’s share in the company for tax purposes. With more parties involved, partnerships also allow for greater access to business capital.

The disadvantages of a partnership are similar to those of a sole proprietorship in that there is no legal distinction between the business and the partners; therefore, one partner may become responsible for the actions and liabilities of another partner. Partnerships also open up the possibility of conflict and disputes between partners when making business decisions.

Corporation

Corporations are formal business arrangements that create a separate legal entity from the business owner(s) and offer significant liability and tax benefits. Incorporation provides for ownership of shares and distinguishes between the shareholders and the company. It is also vital to prepare shareholder agreements that set out mechanisms to deal with disputes within the corporation. Incorporating a business can be done at any time as the business grows, as business owners often choose to create a corporation once the business is generating substantial revenue. Incorporation can also occur at a federal or provincial level. Depending on the level of incorporation, the business may be subject to the Canada Business Corporations Act or Ontario’s Business Corporations Act.

Since a corporation is its own legal entity, its owners benefit from limited, not absolute, liability concerning the debts and liabilities of the corporation. Further, the corporation can continue to operate despite changes or the passing of its officers and shareholders and will only cease to exist once it is formally wound down.

Due to the substantial protections of incorporation, corporations must keep detailed records and submit an annual corporate income tax return. Incorporation also comes with higher start-up costs, no personal tax credits, and significant administrative responsibilities.

Co-operatives

A co-operative describes a group of people who work together to meet a specific common need. It is an incorporation owned by its members who can use the co-operative’s products and services. Generally, co-operatives are community-based businesses that focus on building and sustaining the local economy. Democratic participation is a key difference between a co-operative and a traditional corporation, as each co-operative member is entitled to one vote regardless of their level of investment and ownership of shares amount.

In a co-operative business, members can access competitive discounts when buying in bulk, compared to prices for products and services that a single business may obtain. Co-operatives also allow for individual services and products to be marketed together with other members, and surplus revenue can be considered an expense, as opposed to taxable income, that is distributed among the members.

As is the case when more than one person is responsible for decision-making, co-operatives are not immune to internal conflict between the members, which could cause a breakdown of the co-operative. Co-operatives also require each member to do their fair share of work to ensure the business’s success, which can create problems if one member fails to fulfill their responsibilities.

The Business Lawyers at Willis Business Law Provide Tailored Advice on Business Structures

The experienced business lawyers at Willis Business Law work with companies and entrepreneurs to provide practical and efficient solutions on various business law matters, including guiding clients on the choice of a business structure, developing sound workplace policies, and ensuring workplace health and safety compliance. Our lawyers work closely with clients to understand their goals in order to position their businesses for long-term success.

Located in the heart of Windsor’s financial district, Willis Business Law is proud to represent clients in the public and private sectors throughout Windsor-Essex County and the surrounding regions. To learn more about how we can assist you with your business set-up, call us at 519-945-5470 or contact us online.

Corporate decisions can have ripple effects throughout its hierarchy and substantially impact a corporation’s shareholders. For example, a corporation may choose to pursue a plan of action – such as selling its assets or amalgamating with another corporation – despite the objections of its minority shareholders. Ontario law empowers these shareholders to take legal action against the corporation based on their “dissent rights”.

When establishing a business’ structure and creating its corporate governance documents, a company must proactively address the rights and remedies available to its shareholders. Incorporating these key elements of the corporation-shareholder relationship into a forward-thinking shareholder agreement can help avoid costly disagreements in the future.

What are Shareholder Dissent Rights?

Section 185 of the Ontario Business Corporations Act (the “Act”) sets out the rights of dissenting shareholders. Shareholders’ dissent rights may be pursued when a corporation takes an action notwithstanding its shareholders’ objection. Sometimes called an appraisal remedy, dissent rights empower shareholders to demand a buyback of their shares at a fair market value.

When Do Shareholders Have Dissent Rights?

Shareholders have dissent rights in specific situations, such as those in the Business Corporations Act. For example, dissent rights may arise in circumstances where a corporation resolves to:

• Amend its articles or adds, removes, changes restrictions on the issue, transfer, or ownership of shares in a class or series of the shares of the corporation;
• Amend its articles to add, remove, or change any restriction upon the corporation’s business or powers;
• Amalgamate with another corporation;
• Be governed by the laws of another jurisdiction;
• Be governed by the Co-operative Corporations Act;
• Be governed by the Not-for-Profit Corporations Act; or
• Sell, lease, or exchange all or substantially all its property.

In the above situations, the shareholders who are entitled to vote on the resolution in question are the parties who may have dissent rights.

Why Do Dissent Rights Matter to a Corporation?

Dissent rights serve essential roles to the corporation and shareholders who enforce them. As a clear, enforceable remedy, a corporation can be assured that this generally prevents a shareholder from taking alternative action or commencing legal proceedings against the corporation.

With this knowledge, a corporation can encourage shareholders to invoke their dissent rights if they disagree with the proposed transaction to ensure a timely and efficient resolution of a dispute.

The Importance of Dissent Rights to a Shareholder

Knowing what dissent rights are and how and when to enforce them can be a powerful tool for a shareholder. With the understanding that there is a mechanism in place to allow a shareholder to exit a corporation on generally amicable terms, should the corporation seek to move in a direction which the shareholder does not agree with or does not wish to be a part of, a shareholder can have peace of mind concerning the decisions of the corporation.

How Does a Shareholder Exercise Dissent Rights?

In Ontario, a corporation must notify its shareholders of a proposed resolution that may trigger dissent rights before a shareholders meeting. The notice must contain sufficient information to allow shareholders to decide whether or not they wish to dissent from the resolution.

The below steps provide a general overview of the dissenting process. Dissenting shareholders should know that several intricate steps and strict timelines must be followed.

The Corporation Notifies Shareholders of the Resolution

Section 185(6) of the Business Corporations Act states that a shareholder shall send a written objection (Notice of Dissent) to the corporation at or before a shareholders’ meeting in which a proposed transaction is to be voted on. This requirement is subject to the corporation providing the shareholder notice of the meeting.

The Corporation to Notify Dissenting Shareholder of Resolution Adoption

If a corporation has passed and adopted the resolution, the corporation must notify any shareholder who objected to the transaction. The Confirmation Notice shall include the rights of the dissenting shareholder and the procedural steps to exercise such rights under sections 185(8) and 185(9) of the Business Corporations Act.

The Shareholders Submit a Demand for Payment

Once a dissenting shareholder has received a Confirmation Notice, they are subject to a strict timeline during which they must submit a Demand for Payment to the corporation seeking a fair value payment for their shares. After a Demand for Payment has been made, the shareholder is not entitled to participate in future successes and profits enjoyed by the corporation.

It should be noted that the Business Corporations Act provides a process by which a Demand for Payment may be withdrawn.

The Corporation Provides an Offer to Pay

Within seven days of the later of either receipt of the Demand for Payment, or the adoption of the resolution, the corporation must send the dissenting shareholder a written Offer to Pay. The Offer to Pay is required to include a sum, which is considered fair market value by the board of directors, of the dissenting shareholder’s shares, in addition to an explanation of how the value was determined. The fair market value determination may require assistance from a professional appraiser or valuator.

Accepting or Declining an Offer to Pay

The Offer to Pay will remain open for a set duration. If the dissenting shareholder accepts the offer, the corporation has 10 days from the acceptance date to pay the shareholder. If the Offer to Pay is not accepted while the offer is open or payment was not made, the parties may apply to a court to obtain the fair value of the shareholder’s shares.

A dissenting shareholder should consult with a tax professional to be fully apprised of the tax considerations arising from payment for their shares.

Consequences of Dissenting

Once a shareholder exercises their dissent rights, they lose all their rights as a shareholder, other than their right to be paid fair market value for their shares.

During the dissent process, the corporation may continue to conduct its usual business, including adopting resolutions and holding shareholder meetings. If a shareholder does not submit a Demand for Payment following their Notice of Dissent, they may continue to hold their shareholder rights and be included in the corporation’s ongoing business.

Contact Willis Business Law in Windsor-Essex County for Proactive, Comprehensive Shareholder Agreements

The knowledgeable business and corporate lawyers at Willis Business Law provide comprehensive, forward-thinking advice on the creation of business structures, including the drafting and review of shareholder agreements. By thoroughly assessing each client’s needs and preparing corollary agreements that anticipate possible risks and areas of future dispute, the firm helps clients avoid conflict and position their business venture for success.

Located in the heart of Windsor’s financial district and overlooking the beautiful Detroit Riverfront, Willis Business Law provides top-tier business law solutions to clients throughout Windsor-Essex County and the surrounding areas. To schedule a consultation with a skilled business lawyer, please call 519-945-5470 or reach out online.

Last year was a historic year for Windsor in many aspects. Of significant note was the automotive industry’s success from the impactful decisions made by several leading automobile companies.

The job market in Windsor has also seen incredible success, with 2023 bringing bright ambitions and substantial investments announced for many local communities. With the excitement of ongoing developments, the City of Windsor has much to look forward to in the coming years.

Windsor’s Automotive Sector Changing the Course of the Economy for Years to Come

The year 2022 brought exciting announcements for Windsor’s economy, the automotive industry, and the labour landscape. The City of Windsor is earmarked to be the recipient of approximately $8 billion in automotive industry investments from some of the industry’s leading companies.

The former director for the Centre for Automotive Research and Education recently highlighted that the decisions made by automotive industry leaders such as Ford, General Motors and LG are anticipated to have “profound consequences” on Windsor and the surrounding areas for years to come. Many have expressed their excitement regarding the substantial changes that are set to take place in Windsor’s automotive industry in the coming months as investments continue to roll in.

While the investments are intended to bring major changes to the local economy, these announcements also highlight Canada’s growing automotive industry by bringing anticipation for the industry’s future.

Windsor Will Be Home to Canada’s First Electric Vehicle Battery Manufacturing Plant

A joint venture between Stellantis and LG Energy Solutions to create Canada’s first major electric vehicle battery manufacturing plant brings the city a $5 billion investment and approximately 2,500 new job vacancies. It is expected that once additional investments in the plant supply chain begin forming, thousands of additional spin-off job vacancies will follow. Accompanying this large employment vacancy comes fresh considerations on how labour and employment law can protect hopeful employees.

The CEO of LG Energy has credited Canada’s renewable energy resources as a contributing factor in selecting Windsor for the site location. The addition of the plant is expected to bring numerous benefits to the city and surrounding communities. With the ground already broken and construction progressing, the city’s current focus is to secure significant portions of the supply chain, which will service the battery plant and various other LG facilities.

Battery Plant Expected to Maximize Operations by 2025

It is anticipated that the plant will be operational in 2024, with anticipated output maximized in 2025. When the plant is fully functional, it is expected to have the capacity to fulfill a substantial portion of Stellantis’ North American vehicle production requirements and manufacture battery cells and modules geared toward the next generation of electric vehicles.

The manufacturing plant is set to supply batteries across North America. It will be Canada’s first “gigafactory” (large-scale facilities that produce electric vehicle batteries), with its size equating to approximately 112 National Hockey League rinks.

The Mayor of Windsor has extended appreciation to community residents who “understand the importance of the investment” and have cooperated with the city in tolerating various nuisances, such as pile-driving and gravel trucks driving down residential streets to get to the site.

Local Educational Institutions Increasing Technical Education to Build Talent Pipeline

Post-secondary institutions in Windsor anticipate that the new battery plant will significantly impact their programming, research and development, and infrastructure opportunities. St. Clair College and the University of Windsor are expected to play a vital role in providing adequately trained talent to fill the upcoming job vacancies resulting from the new plant.

The institutions have indicated that they have been working to understand what the industry will require so that they can develop new programs to properly equip upcoming graduates with the skills and knowledge to succeed in the new automotive era.

The Director of External Affairs and Government Relations for LG Energy Solutions has stated that the company will work closely with post-secondary institutions to educate, retrain and retain local talent.

Willis Business Law in Windsor-Essex County Advises Clients on a Variety of Business and Employment Matters

With the addition of thousands of new job vacancies, state-of-the-art infrastructure, and anticipated economic growth, the residents of the City of Windsor has much to look forward to in the coming years. With these significant events comes the potential for new business developments and employment opportunities, which the trusted lawyers at Willis Business Law are ready to assist with.

Located in Windsor’s financial district, Willis Business Law is proud to assist clients throughout Windsor-Essex County regarding matters related to labour and employment law, corporate governance and mediation services. Contact us online or call us at 519-945-5470 to schedule a consultation or learn how we can assist you.

Canada’s agricultural sector is a major contributor to Canada’s economy. The industry contributes about 7.4 percent, or $139.3 billion, to Canada’s gross domestic product (GDP). In 2020, roughly 2.1 million people were employed in the agricultural industry which provided 1 in 9 Canadians with a job.

In Windsor-Essex County, the agricultural sector is a key industry providing tens of thousands of jobs. The region possesses roughly 80 percent of Ontario’s greenhouse vegetable acreage. As home to more than 4,500 acres of greenhouse operations, Windsor-Essex County is known as the second-largest vegetable greenhouse cluster in the world.

The agricultural industry is an integrated supply chain

There are different ways companies can be involved in the agricultural industry. Businesses involved in primary agriculture may operate through a combination of farms, nurseries, or greenhouses. Food and beverage processors take raw food materials or substances and turn them into new finished products, ready for use or consumption. Additionally, semi-finished products created by food and beverage processing can be used in further manufacturing. Finally, food retailers, wholesalers, and foodservice providers are responsible for getting the finished products to consumers.

The Ministry of Agriculture, Food and Rural Affairs is responsible for farming in Ontario

Canada’s agricultural industry has evolved over time. Over the last 50 years, the average farm size has doubled, in part due to technological advances. Due to Canada’s size, the primary agricultural industry in Canada is highly diversified nationwide. However, most of the industry is centred in the Prairies, Quebec, and Southern Ontario.

The Ontario Ministry of Agriculture, Food and Rural Affairs is tasked with supporting the growth in Ontario’s agri-food industry. The government ministry also provides business support to farms, ensures sustainability through research and innovation, and is working on expanding agriculture in the North.

What to know before starting a farm in Ontario

For those interested in starting a farm in Ontario, there are a few things to know.

Farm Business Registration (Agricorp)

First, some farm operations require a farm business registration number. Whether this is required depends on the gross farm income. If a farm business makes more than $7,000 in farm income, it must be registered with Agricorp. On registration, farmers will be part of the Farm Business Registration Program developed by the Ontario Ministry of Agriculture, Food and Rural Affairs. To join, businesses pay a fee and select the farm organization they wish to join. The potential organizations to join are the Ontario Federation of Agriculture, Christian Farmers Federation of Ontario, and the National Farmer’s Union-Ontario. The yearly registration deadline is March 1.

There are benefits to registering your farm with Agricorp. One such benefit is that those who take part in the Farm Business Registration Program pay only 25 percent of property tax on agricultural land. Without registration, farmers would pay tax on 100 percent of their rural property value, which is determined by the Municipal Property Assessment Corporation.

Resources & Due Diligence

Of course, starting and operating a farm go beyond simply registration. Hopeful farmers will want to ensure they access the proper education to ensure their farm business will thrive. It is also important to secure the proper funding to commence this new business venture. The province offers some funding programs and services for farmers. Farmers should also consider obtaining a soil analysis of their farmlands and ensuring that local zoning rules and bylaws don’t interfere with their business plans.

Agricultural employees are protected by the Employment Standards Act

Potential farm businesses must take care when setting the terms of their relationship with their workers. Agricultural employees in Ontario, including temporary foreign workers, are protected by the Employment Standards Act.

Workers are classified under four categories:

1. Farm employees;
2. Harvesters;
3. Near farmers; and
4. Landscape gardeners.

Each category carries its own legal requirements, and it is possible for an employee’s work to fall into more than one of these categories.

Farm employees

Farm employees are workers employed on a farm who work in primary production of agriculture. This work includes feeding and caring for certain livestock, planting crops, cultivating, and pruning. However, the Employment Standards Act does not necessarily apply to all farm employees. Specifically, the law does not apply to those working for an employer who services multiple farms or temporary help agencies who possess contracts with more than one farm.

Farm employees are not entitled to the following:

• Minimum wage;
• Daily and weekly limits on hours of work;
• Daily, weekly, or bi-weekly rest periods;
• Off-time between shifts;
• Eating periods;
• The three hour rule (if an employee who regularly works more than three hours a day is required to attend work but works less than three hours, despite being able to work longer, must be paid for at least three hours);
• Overtime pay;
• Public holiday pay; or
• Vacation with pay.

Harvesters

Harvesters are employees who bring in or harvest crops of fruit, vegetables, or tobacco for the purposes of marketing or storage. Harvesters are usually entitled to minimum wage, but there are some exceptions. For instance, harvesters who work on a piece work basis or who are offered room and board by their employer may not need to be paid minimum wage.

Harvesters are not entitled to the following under the Employment Standards Act:

• Daily and weekly limits on hours of work;
• Daily, weekly or bi-weekly rest periods;
• Off-time between shifts;
• Eating periods; or
• Overtime pay.

If a harvester has worked for an employer for 13 consecutive weeks, they are entitled to public holidays and public holiday pay, as well as vacation pay.

Near farmers

Near farmers’ work involves growing flowers, trees, or shrubs for retail or wholesale; the growing, transport and laying of sod; the breeding and boarding of horses on a farm; and the keeping of fur-bearing mammals. Generally, these jobs are exempt from various entitlements in the Employment Standards Act. Exemptions include:

• Daily and weekly limits on hours of work;
• Daily, weekly, and bi-weekly rest periods;
• Off-time between shifts;
• Eating periods;
• Overtime pay; or public holiday pay.

Landscape gardeners

Landscape gardening employees include park gardeners and greenskeepers on golf courses. This work involves raking, watering, weeding, planting, trimming and maintaining plants and trees, preparing land for planting, installing rock gardens, park gardening, and keeping gold courses greens. Landscape gardeners are not entitled to daily or weekly limits on hours of work, overtime pay, or public holiday pay.

Legal protections for foreign national workers

For those hiring foreign nationals (either those in Ontario for future immigration or under a foreign temporary employee program), it is important to be aware of the Employment Protection for Foreign Nationals Act which provides protection for those who are otherwise not covered by the Employment Standards Act.

Contact the Lawyers at Willis Business Law for Guidance Operating in Ontario’s Agricultural Industry

There are many considerations that those who operate in the agricultural industry must be aware of before and during the operation of their business. The skilled business lawyers at Willis Business Law are committed to helping their agricultural clients succeed through the best operational and employment-related practices.

Willis Business Law is a firm dedicated to community – the community within its office and the Windsor-Essex community at large. Located in the heart of Windsor’s financial district, the firm also represents clients with commercial real estate, corporate governance, privacy issues and more. To schedule a consultation with a lawyer, please call 519-945-5470 or contact the firm online.