PMR LawPMR Law | Calgary Business Lawyers | Business Law | Transfer Price Dispute | Real Estate2024-01-25T16:19:08Zhttps://www.pmrlaw.ca/feed/atom/WordPressOn Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=467792024-01-25T16:19:08Z2024-01-25T16:19:08ZWhen it comes to selling your business in Alberta, setting the right purchase price is crucial to attracting serious buyers and closing the sale. However, it can be quite complicated, so it can help to know where to start.
Assigning value
Valuing a business is both an art and a science, and different approaches can yield varying results. Generally, though, it requires a thorough analysis of your company's financials, including:
Revenue streams: A diverse mix of reliable income sources can increase the appeal of your business.
Profit margins: Healthy margins often translate to a more attractive purchase price.
Growth potential: Buyers pay for future prospects, not just current performance.
Beyond these numbers, you must also consider less concrete data, such as market conditions in Calgary, the unique value propositions your business offers and the competitive landscape.
Calgary's market pulse
Local economic factors play a significant role in determining the right price. Therefore, valuations should reflect Calgary's business climate, industry trends and the economic forecast.Thus, when setting your price, consider the following:
Review comparable sales in Calgary to gauge market expectations.
Factor in the uniqueness of your location and customer base.
Be realistic about the current economic climate and its impact on business valuations.
These considerations can have a dramatic impact on your valuation and the sale of your business.Setting a price that is both competitive and fair could also involve hiring a professional with experience appraising businesses in this market. These parties can have the knowledge and insights into this process to help you navigate the complexities of selling a business.
Putting the pieces together
Setting the right purchase price for your business is critical in making this complicated transaction easier. By understanding Calgary's value drivers and market conditions and seeking professional advice when needed, you can position your business for a successful and profitable sale. Remember, the right price reflects not only the worth of your business but also the opportunities it presents to the new owner.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466812023-11-08T19:09:08Z2023-11-02T15:27:20Zpurchase of a foreclosed home.
There are some risks
A foreclosed home is one the lender is forcing the sale of to recover the loan balance after the current owner has missed too many payments. In other words, the owner is not choosing to sell, which means there can be some complications. For example:
The property may not be well-maintained
The current owners may damage the property
They may leave personal possessions
The lender may not be responsible for any repairs or issues, leaving it in the hands of buyers
Further, even though it is a foreclosed home, there can still be a lot of competition to buy it. And while some foreclosures are sold at a discount, that's not always the case.
Considering these potential obstacles and challenges can be crucial to avoid making costly mistakes and experiencing financial losses.
The process can be different
It is also important to recognize the differences in the buying process when it comes to a foreclosed home versus a traditional sale.
First, you can be negotiating with lenders who have a lot of money at stake. In some cases, they have been without payments for months. They also may be covering the costs of holding auctions and selling the home for less than it was originally worth. Because of this, lenders often have the motivation to get as much money from the sale as possible.
The appraisal and inspection processes can also be different. When buying a foreclosed home, prospective buyers must be prepared to cover hidden costs and seek out the information sellers would typically volunteer or disclose.
Buyers are not on their own
While there are challenges associated with buying foreclosed property, there are also plenty of reasons and opportunities to do so.
However, because of the issues we mentioned above, it can be vital to work with professionals, including lawyers and realtors. Doing so can help prospective buyers make informed choices and get the home they want.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466802023-08-08T20:22:30Z2023-08-08T20:22:30ZAs a small business owner, you probably would love to be able to predict the future. However, because we can't, you will need to explore other approaches to setting your business and yourself up for success in the coming years.
For instance, what do you want to happen to your business in the next decade? Are you hoping to grow to the international market, or are you more likely to retire?
What's on the line?
When planning for your business's future, there can be more on the line than you might realize. According to a 2023 report, about 75 percent of small- and medium-sized business owners in Canada are planning to exit their companies in the next decade.Considering the fact that these companies employ about 80 percent of all workers in the country and there could be about $2 trillion at stake, there is a lot on the line when it comes to what these business owners do with their companies.In terms of your individual business, the fate of your company can have a tremendous impact on your employees, partners, shareholders and clients. Minimizing disruption and financial losses for yourself and these parties over the next decade can be an essential priority.
Steps you can take
While we cannot know with certainty what is down the line, business owners can anticipate challenges and plan for them. Setting up mechanisms to sell your business, close its doors or transfer ownership when the time comes to do so can give you confidence and direction for the road ahead.There are myriad options to consider regarding the fate of your business upon your exit or retirement. While you may think you have all the time in the world to plan ahead, the fact is that you never know what will happen in the coming months and years. Taking the time now to put the necessary tools and protections in place can give you and all those affected by your business peace of mind.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466792023-05-04T18:45:02Z2023-05-04T18:45:02ZIf you are starting a business, one of the first and most important decisions you must make is choosing a business structure. There are many different types, including corporations.
Know the benefits
Incorporation is just one option for setting up your business. There are other types, like sole proprietorship and partnerships, but incorporating your company can be beneficial for many reasons.
You can issue stock to share ownership of your company.
You have limited liability protection, which means you are not personally responsible for the business's debts.
It can be easier to get a loan as an incorporated borrower.
Incorporation can allow owners to take advantage of tax benefits and write-offs.
These and other benefits can make incorporation an attractive option.Keep in mind, though, that there are some drawbacks that come with this type of business structure. For instance, incorporation can demand more recordkeeping and fees than other types of entities.
Submitting the application and paying the necessary fees
While this is a seemingly simple process, it can involve a great deal of documentation, structuring agreements and legal filings. Mistakes or delays with any of these steps could negatively affect the opening of your company.
Keep your corporation going
To maintain your corporation status, you will need to fulfil many tasks. Some of your duties to maintain your status include:
Holding annual shareholders' meetings
Holding periodic directors' meetings
Keeping meeting minutes documenting important decisions and actions
Maintaining accurate and detailed financial records
Filing tax returns for the corporation
Preparing and sharing financial statements
The incorporation process might seem simple on its face. However, whether you are forming a corporation or attempting to maintain its status, there are countless obligations and responsibilities that can fall on you and others. If tackling all these details and duties seems overwhelming or you are at risk of letting something fall through the cracks, know that you can get legal help. Lawyers can help guide you and manage the many tasks necessary to get your business off the ground and set up for success.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466772023-02-02T17:37:46Z2023-02-02T17:37:46ZReal estate can be a valuable investment, whether you are an individual buyer or a business entity. However, these transactions can be far more complicated than people expect. Certain pitfalls could derail your plans or lead to costly losses, so knowing what to watch out for can help.
Non-resident buyer ban
A ban prohibiting foreign investors from purchasing residential property in Canada went into effect this year. For the next two years, many non-citizen buyers will not be able to buy residential property with one to three dwelling units in parts of the country, including Calgary.Foreign-controlled Canadian entities and overseas corporations are among those included in the ban.However, many do not expect this ban to have a significant impact on residential real estate availability or pricing, as foreign home ownership makes up a tiny percentage of residential properties. Still, this ban could present difficulties if you are not a Canadian citizen or permanent resident of Canada.
The housing market
Alberta is experiencing a robust housing market right now. There is an increase in interested buyers coming to the province, and housing prices remain high, despite drops in home prices across Canada.Under these conditions, prospective buyers can make some critical errors in the buying process. Some wind up offering more than a property is worth and cannot get a loan for the full amount. Others buy property without due diligence, leaving the door open for serious issues with the home or title.
Avoiding these and other pitfalls
Knowing about these elements can help you make informed, wise decisions if you are looking to buy property in Alberta.Having legal guidance when purchasing property can be one such decision to help streamline this process. A lawyer can help you navigate any potential hiccup that might arise, whether it involves clearing a title of defects or negotiating encumbrances. Homebuying should be a positive experience, but it can still be stressful and complicated. Having insight into the process and getting help from professionals can help things move forward more smoothly so you can enjoy your new home for years to come.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466752022-11-02T17:28:07Z2022-11-02T17:27:32ZA corporation's board of directors is supposed to protect the interests of shareholders. If situations arise where that is no longer happening, removing one or more directors may be necessary. Knowing some essential elements of the removal process can help all parties involved anticipate and assess the next steps.
Grounds for removal
Shareholders can remove a director for a range of reasons. Often, the reasons stem from a director's failure or inability to oversee corporate activities or assess performance. Some examples of this might include the following:
Frequent absences from board meetings
Clashes with other board members
Confidentiality agreement violations
Participation in illegal acts involving business investments
Involvement with competing companies
Causing frequent disruptions at meetings
Being disrespectful to other directors
Serious physical or mental conditions that affect the ability to carry out duties
Failure to remain informed
Other reasons specified in agreements
Directors can also be removed per the terms of a business transaction. One high-profile example of this involves Elon Musk and Twitter.Musk recently acquired the business for $44 billion, and part of the agreement was his ability to dissolve the board of directors, which he did immediately. He now serves as the sole director for the social media platform.
The removal process
Removing a director is not an overly complicated process. Shareholders must call a special meeting for the stated purpose of removing a director. At that point, they only need a majority of shareholders to approve the removal for it to move forward.Removing directors is not necessarily complicated, nor is it uncommon. However, it is not something to take lightly. Director removal can impact the board, the individual facing removal and the company. Further, complications can arise when parties contest the removal, or there is no clear majority in favour of it.For these reasons, legal guidance can be crucial for individuals and corporations navigating director removal matters.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466712022-08-08T17:57:13Z2022-08-08T17:56:33ZInternational transactions between related businesses can be highly complex matters. If your business is a taxpayer for Canadian tax purposes, you can run into some complicated issues regarding the arm's length principle.
Misunderstanding arm's length
The arm's length principle is a rule that ensures businesses carry out transactions with related entities outside the country fairly. It ensures parties comply with tax laws and do not profit improperly from intercompany transactions. In other words, when two businesses are related, they must conduct business at an arm's length to ensure pricing for services and products is the same as what it would be when there is no relationship.
Failure to compile proper documentation
One issue you could face stems from the requirement to keep track of when you do or do not use arm's length transfer prices. Further, the rules stipulate that you must make reasonable efforts to make or obtain documentation regarding:
Property and services involved
The parties involved in the transaction
The nature of their relationship
Data and methods used to determine transfer pricing
Compiling and retaining this documentation can happen on an ongoing basis or spontaneously before the filing-due date.If you fail to provide this information to the Canada Revenue Agency (CRA), you could face penalties for failing to meet documentation requirements.
Not applying the arm's length principle
The arm's length principle does not apply in all cases involving all parties. However, if you and a related party outside of Canada make a transaction or series of transactions with terms or conditions that vary from those with unrelated parties, you could be in violation of this rule.When these violations happen, an inaccurate amount of profit can be reported in Canada and transfer pricing adjustments can be necessary.
Avoiding these issues
Transfer pricing itself is indeed a complex issue that many companies face. And without extensive legal and tax familiarity, you as a business owner can make mistakes, intentionally or not. Further, it is not unusual for related parties to struggle when it comes to dealing with each other at arm's length. However, with some understanding of what issues can arise and legal guidance, you can minimize the chances of committing an error or facing costly penalties.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466672022-05-10T20:32:43Z2022-05-10T20:32:43ZShareholders have rights and responsibilities, which can vary based on the agreements and the type of shareholders they are. They can also run into some complex disputes when it comes to filling these roles and carrying out their duties.
Common sources of shareholder disputes
Shareholders may get involved in conflicts and arguments with each other or with a company owner. Some of the more common types of shareholder disputes stem from:
Alleged breaches of a shareholder agreement
Conflicts of interest
Lack of respect for minority shareholders
Gaps in compensation and contributions
Disagreements about corporate management decisions
Improper transfers
Fraud or withholding financial information
These conflicts can disrupt business operations and threaten relationships. And there can be a tremendous financial toll to consider. As such, confronting these issues right away and seeking the most appropriate form of dispute resolution will be crucial.
Approaches to resolving conflicts
Resolving shareholder disputes can be tricky and stressful, especially considering how much can be at stake. However, there will typically be guidance in a shareholder agreement, so it is generally wise to start by examining this document.For example, a shareholder agreement may have provisions that direct parties to:
Sell shares
Clear decisions with minority shareholders
Limit share transfers
Participate in mediation or negotiation
Resolve disputes through binding arbitration
Vote on an issue
These measures can prevent or resolve conflicts before they escalate.However, there are some instances when a shareholder dispute might wind up in court. Such could be the case in conflicts involving oppression - when one group of shareholders abuses their power over another group, which are often minority shareholders.In these cases, the courts can order various types of relief to correct or modify problematic situations.
Getting help throughout this process
Matters involving shareholders can be highly nuanced and complicated. And resolving disputes can demand a great deal of negotiation and investigation. Often, legal representation is crucial for parties involved in an argument. Whether parties navigate mediation, arbitration or litigation processes to settle these issues, legal and financial guidance can help shareholders pursue a fair outcome.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466652022-02-08T19:11:11Z2022-02-08T19:11:11ZThere comes a time for many owners to start a new venture or retire, and selling their business marks the next chapter.
If you are thinking about selling your business in the not-so-distant future, one important priority is to maximize the company's value. There are myriad ways to do this.
Assess your risky ventures
Risk management strategies are essential tools for any business. And whether you are dealing with internal or external risks, it is crucial to examine them leading up to a business sale to improve selling opportunities.For instance, potential buyers can be scared off if a business involves too many risky investments and partnerships.Instead, it could be wise to consider pursuing less risky solutions. Prioritize stability in the workplace; standardize processes; resolve internal conflicts that could all disrupt operations and create costly risks; minimize high-risk customers.
Reduce expenses
Reducing business expenses can add considerable value to a business, and it can be shrewd to focus on this as you prepare your business to sell.To accomplish this, you might want to:
Examine and eliminate any extraneous expenses (e.g., carrying too much insurance)
Utilize efficiency solutions
Negotiate fixed costs
Unloading or repurposing unnecessary and unused office and production space
Pursue free solutions instead of subscription services
Maximize the capabilities and input from employees
These strategies can help businesses shed unnecessary expenses and maximize profits.
Build your reputation
Any potential buyer conducting due diligence will want to look at the business's reputation and branding in the marketplace. Legal conflicts, bad publicity or lack of presence can reduce the perceived value of a company. Improving the reputation of your business can increase the number of interested buyers and justify a higher price.To build your branding in the right direction, you might:
Resolve any outstanding legal claims
Collect testimonials from existing, satisfied clients
Secure intellectual property
Eliminate or redesign problematic products and services
Prioritize positive Customer Service interactions
These measures can make a business more appealing and, therefore, more valuable.
Get legal and financial support
Preparing a business for sale is a complicated process with countless logistical and practical details to address. Thus, securing help from legal and financial professionals can help entrepreneurs maximize profits from a business sale.]]>On Behalf of PMR Lawhttps://www.pmrlaw.ca/?p=466642021-10-28T17:17:12Z2021-10-28T17:17:12ZRecently, over 130 countries reached an agreement regarding a global corporate tax. These efforts aim to prevent corporations from shifting tax revenues and profits from countries with lower tax rates, keeping them in their home countries.
This change will affect companies operating in different countries when it goes into effect, which is likely to be in 2023, so it can be crucial to understand what this means.
Which companies will this affect?
Broadly, the global minimum tax rates will primarily impact large, multi-national corporations. Companies that collect significant profits from intangible assets would also be widely affected. If you own a small- or mid-size business here in Canada, it likely will not affect your day-to-day operations. That said, it could change what you are planning for the future.
How might this change future plans?
If you have plans to take your business international, this change could significantly impact where you expand or move. And for multi-national corporations with subsidiaries in places with low tax rates like Ireland, the change will certainly affect things like approaches to transfer pricing, sales and tax strategies.Currently, there is an incentive for corporations to assign earnings and profits on intangible goods, like intellectual property, to countries with the lowest tax rates. However, by setting the global tax rate at 15 percent, corporations would not have this incentive because their home country would add a top-up tax to bring the rate up to the minimum.Note that the minimum standard does not apply to local tax rates, which remain in the hands of individual governments.
More revenue, but at what cost?
The change could mean an added $4.5 billion to Canada's economy, but not everyone is in favour of this. Corporations will face significant financial changes, while some critics of the international deal feel Canada should focus on its own solutions.Whichever side of the issue you fall on, this is an issue that many Canadian corporations will need to come to terms within the next year.Tax strategies and requirements can be immensely complicated for businesses, especially when provincial, federal and international tax laws change. Thus, taking the time now to assess your options in light of this most recent change can be crucial.]]>