Buying shares in an existing Ontario corporation can give an entrepreneur an immediate ownership interest in an established business.
Instead of creating a new company, finding customers, purchasing equipment, hiring employees, negotiating supplier relationships, and building operations from the beginning, the investor may acquire an interest in a corporation that already has many of these elements in place.
That opportunity can be attractive.
It can also carry significant risk.
When someone buys shares, the corporation itself generally continues to exist. Its assets, contracts, employees, debts, tax history, litigation exposure, regulatory obligations, and other aspects of its corporate history remain with it.
The buyer may therefore be investing not only in the company’s future potential but also in a corporation with years or even decades of existing obligations.
For entrepreneurs in Timmins, Cochrane, Kirkland Lake, Iroquois Falls, Matheson, Kapuskasing, Hearst, Smooth Rock Falls, and surrounding Northern Ontario communities, careful due diligence can be one of the most important parts of a proposed share purchase.
Before investing, a prospective buyer should understand what shares are being acquired, what rights those shares provide, who the other shareholders are, what the corporation owns, what it owes, how it earns money, what contracts bind it, whether disputes exist, and what restrictions could affect the buyer after closing.
For people searching for a business lawyer Timmins, corporate lawyer Timmins, business lawyer Cochrane, business lawyer Kirkland Lake, or legal guidance when buying an Ontario business, understanding these issues before signing a final purchase agreement can help reduce uncertainty and identify potential problems while there is still time to address them.
What Does It Mean to Buy Shares in a Corporation?
A corporation is legally distinct from its shareholders.
When an investor purchases shares, the buyer is generally acquiring an ownership interest in the corporation rather than directly purchasing each individual asset used by the business.
The corporation may continue to own:
• Equipment
• Inventory
• Bank accounts
• Intellectual property
• Real estate
• Customer contracts
• Supplier agreements
• Vehicles
• Other business assets
At the same time, the corporation may continue to have:
• Loans
• Tax obligations
• Employee obligations
• Contractual liabilities
• Litigation
• Lease commitments
• Regulatory obligations
• Other liabilities
This distinction is fundamental to understanding a share transaction.
Share Purchase vs. Asset Purchase
Before buying a business, an entrepreneur should understand whether the transaction is structured as a share purchase or an asset purchase.
In an asset purchase, the buyer generally purchases specified assets and may assume specifically identified liabilities.
In a share purchase, the buyer acquires shares in the corporation itself.
The corporation continues operating with its existing history.
This difference can have major legal, financial, and tax implications.
Why Share Purchases Require Extensive Due Diligence
Suppose a corporation has operated for fifteen years.
During those years, it may have:
• Hired and terminated employees
• Entered into commercial contracts
• Borrowed money
• Filed tax returns
• Acquired equipment
• Leased premises
• Developed intellectual property
• Dealt with regulatory authorities
• Become involved in disputes
When an entrepreneur buys the shares, that corporate history does not disappear.
The buyer should therefore investigate the corporation carefully before determining whether the investment is appropriate.
Question 1: Is the Corporation Properly Organized?
Corporate due diligence should begin with the corporation itself.
The buyer should confirm basic information such as:
• Corporate name
• Jurisdiction of incorporation
• Corporate status
• Articles
• By-laws
• Directors
• Officers
• Shareholders
• Share structure
The buyer should understand exactly which legal entity is being acquired.
Review the Corporate Minute Book
An Ontario corporation is required to maintain important corporate records.
Depending on the corporation, its records may include:
• Articles
• Amendments
• By-laws
• Shareholder resolutions
• Director resolutions
• Securities records
• Director information
• Other required corporate registers and records
A corporate records review can help determine whether the company’s formal records are consistent with what the seller has represented.
Question 2: Who Actually Owns the Shares?
The buyer should verify the seller’s ownership.
This may sound obvious, but ownership should not simply be assumed.
The corporation’s securities records should be reviewed to determine:
• Who the registered shareholders are
• What classes of shares exist
• How many shares are outstanding
• Which shares the seller owns
• Whether previous transfers were properly recorded
The purchase agreement should clearly identify exactly what the buyer is acquiring.
Question 3: What Percentage of the Corporation Will the Buyer Own?
Not every share purchase involves buying the entire company.
An entrepreneur may acquire:
• 100 percent of the shares
• A controlling interest
• A minority interest
• A specific class of shares
The percentage and class can significantly affect the buyer’s rights.
An investor buying 25 percent of a company is in a very different position from a purchaser acquiring the entire corporation.
Minority Ownership Requires Additional Caution
A minority shareholder may not control ordinary corporate decision-making.
Before making the investment, the buyer should understand:
• Voting rights
• Board representation
• Information rights
• Dividend arrangements
• Restrictions on transferring shares
• Rights when additional shares are issued
• Exit mechanisms
The economics of an investment cannot be evaluated solely by looking at the percentage of shares being purchased.
Question 4: What Rights Attach to the Shares?
Corporations can have different classes of shares.
Those shares may carry different rights.
Depending on the corporation’s articles, rights may relate to:
• Voting
• Dividends
• Redemption
• Participation in remaining property
• Other corporate rights
A buyer should understand the particular class being purchased.
The word “shares” alone does not provide enough information.
Question 5: Is There a Shareholders’ Agreement?
Where a corporation has multiple shareholders, a shareholders’ agreement can be extremely important.
It may regulate matters such as:
• Management
• Voting
• Director appointments
• Share transfers
• Financing
• New shareholders
• Sale of the business
• Death or disability
• Dispute resolution
• Exit rights
A prospective investor should review any existing agreement before purchasing shares.
A Shareholders’ Agreement Can Restrict the Buyer’s Freedom
An entrepreneur may assume that shares can later be sold whenever desired.
The shareholders’ agreement may say otherwise.
Transfer provisions could require:
• Consent
• Notice
• Rights of first refusal
• Other procedures
The buyer should understand these restrictions before investing.
Question 6: How Are Important Corporate Decisions Made?
An investor should understand the governance structure.
Questions may include:
• Who appoints directors?
• Who controls the board?
• What decisions require shareholder approval?
• Are special approval thresholds required?
• Can one shareholder block major decisions?
These issues are particularly important when the buyer is acquiring less than 100 percent of the corporation.
Question 7: What Happens If the Shareholders Disagree?
Business relationships can deteriorate.
Partners who cooperate well today may disagree later about:
• Expansion
• Compensation
• Dividends
• Borrowing
• Hiring
• Sale of the business
• Strategic direction
A well-designed shareholder arrangement may contain mechanisms for dealing with disputes.
A prospective investor should understand those mechanisms before becoming a shareholder.
Question 8: What Financial Information Has Been Provided?
Financial due diligence is essential.
The buyer may want appropriate financial professionals to review:
• Financial statements
• Tax returns
• Bank statements
• Accounts receivable
• Accounts payable
• Debt
• Payroll
• Cash flow
• Capital expenditures
• Other relevant records
The objective is to understand the actual financial condition of the corporation.
Revenue Alone Does Not Determine Value
A corporation may generate substantial annual revenue while producing limited profit.
Expenses may include:
• Payroll
• Rent
• Equipment
• Insurance
• Financing
• Supplies
• Transportation
• Professional services
• Taxes
The buyer should understand both revenue and the costs required to generate it.
Question 9: Is the Company’s Profit Sustainable?
A strong recent year may not necessarily represent normal performance.
The buyer should investigate whether profits are:
• Recurring
• Seasonal
• Dependent on unusual events
• Dependent on one major customer
• Dependent on the current owner
Reviewing several years of information may provide a more complete picture than examining a single year.
Question 10: How Much Debt Does the Corporation Have?
A buyer purchasing shares should understand the corporation’s borrowing arrangements.
Debt may include:
• Bank loans
• Lines of credit
• Equipment financing
• Vehicle financing
• Shareholder loans
• Other obligations
The buyer should understand the amount, repayment terms, security, and whether the transaction affects those arrangements.
Personal Guarantees Need Attention
The seller may have personally guaranteed corporate obligations.
A buyer should determine whether lenders or landlords expect replacement guarantees after the ownership change.
The seller may also require release from existing guarantees as a condition of the transaction.
These matters should be addressed before closing.
Question 11: Are There Security Interests Against Corporate Assets?
A corporation may own valuable equipment while lenders have security interests connected to those assets.
Appropriate searches and corporate due diligence can help identify registered security interests.
The buyer should understand:
• What assets are subject to security
• Which debts the security supports
• Whether obligations will remain after closing
• Whether any security is expected to be discharged
A corporation’s balance sheet alone may not answer every question.
Question 12: Are Taxes Up to Date?
Tax history is particularly important in a share purchase because the corporation continues after the ownership change.
The buyer and appropriate tax professionals may need to review matters involving:
• Corporate income tax
• GST/HST
• Payroll remittances
• Tax filings
• Assessments or reassessments
• Other applicable tax obligations
A purchaser should not assume that filed tax returns necessarily mean there are no outstanding tax concerns.
Tax Advice Should Be Obtained Before the Structure Is Finalized
Share purchases and asset purchases can produce different tax consequences for buyers and sellers.
The preferred structure for one party may not be the preferred structure for the other.
Legal and accounting advice should therefore be coordinated early.
Question 13: Does the Corporation Have Unpaid Suppliers?
Accounts payable should be reviewed.
A buyer should understand:
• Amounts owed
• Age of balances
• Whether invoices are disputed
• Whether important suppliers have stopped extending credit
Large overdue balances can indicate cash-flow problems or strained supplier relationships.
Question 14: Are Accounts Receivable Collectible?
Accounts receivable can make a corporation appear financially stronger than it really is.
The buyer should investigate:
• Age of receivables
• Major customer balances
• Disputed invoices
• Historical collection patterns
• Bad debts
A receivable that has remained unpaid for a long period may not have the same value as a recently issued invoice.
Question 15: How Dependent Is the Corporation on One Customer?
Customer concentration can create substantial risk.
Suppose 50 percent of revenue comes from one customer.
If that customer leaves after closing, the economics of the acquisition could change immediately.
A buyer should determine:
• Largest customers
• Percentage of revenue from each
• Length of relationships
• Contract terms
• Termination rights
Diversification can be an important part of assessing risk.
Question 16: Are Customer Contracts Secure After a Change in Ownership?
Important contracts should be reviewed for change-of-control provisions.
A share purchase may not technically assign the contract to another corporation because the corporation itself remains the contracting party.
However, some agreements contain provisions that are triggered by changes in corporate ownership or control.
A buyer should determine whether:
• Consent is required
• Notice is required
• Termination rights arise
• Other restrictions apply
This can be particularly important where a few contracts represent a large portion of revenue.
Question 17: How Important Is the Seller Personally?
Some businesses depend heavily on the owner.
Customers may call the owner directly.
Suppliers may provide favourable terms because of a longstanding relationship.
Employees may stay because of personal loyalty.
If the seller leaves immediately after closing, some of that value may disappear.
The buyer should ask whether the business is genuinely transferable.
A Transition Period May Be Valuable
Depending on the transaction, the buyer may negotiate transition assistance.
The seller might help with:
• Customer introductions
• Supplier relationships
• Employee transition
• Operational knowledge
• Business systems
If transition assistance is important, the obligations should be documented clearly.
Question 18: Who Are the Key Employees?
Employees may represent a significant part of corporate value.
A buyer should identify:
• Senior managers
• Key salespeople
• Skilled workers
• Technical employees
• Employees holding important licences or qualifications
If several key employees leave after the acquisition, business performance could be affected.
Employment Obligations Require Due Diligence
The buyer should review appropriate employment information, which may include:
• Employment agreements
• Compensation
• Benefits
• Vacation entitlements
• Length of service
• Workplace policies
• Existing disputes
A share purchase generally does not create a new corporation. The existing corporate employer remains in place.
That makes the corporation’s employment history an important part of due diligence.
Question 19: Are There Employee Claims?
The buyer should investigate known or threatened employment matters.
These might involve:
• Termination claims
• Wage disputes
• Human rights matters
• Workplace complaints
• Other employment-related proceedings
Potential liabilities should be understood before the buyer becomes an owner.
Question 20: Does the Corporation Own Its Intellectual Property?
Depending on the business, intellectual property may represent substantial value.
This can include:
• Trademarks
• Trade names
• Copyright
• Software
• Designs
• Proprietary processes
• Confidential information
The buyer should verify whether the corporation actually owns what the business relies upon.
Founder-Owned Intellectual Property Can Be a Problem
A founder may have created a logo, website, software system, or other material before the corporation was established.
If ownership was never properly transferred to the corporation, the buyer may discover that an important asset does not belong to the company.
This should be investigated before closing.
Question 21: Who Owns the Website and Domain Name?
Digital assets can be critical to modern businesses.
The buyer should understand ownership and control of:
• Domain names
• Websites
• Social media accounts
• Business email
• Online customer accounts
• Digital advertising accounts
• Other digital assets
These assets should not remain informally controlled through the seller’s personal accounts after closing.
Question 22: What Software Does the Corporation Depend On?
Many companies rely on software for:
• Accounting
• Customer management
• Payroll
• Scheduling
• Inventory
• Communications
• Operations
The buyer should determine:
• What software is used
• Who owns the accounts
• Whether licences remain valid after a change of control
• Whether critical systems depend on the seller personally
Technology continuity can be essential to a successful transition.
Question 23: Are There Pending or Threatened Lawsuits?
Litigation can materially affect corporate value.
The buyer should investigate:
• Existing lawsuits
• Threatened claims
• Settlement obligations
• Regulatory proceedings
• Other material disputes
The potential cost should be considered alongside the purchase price.
Question 24: Are There Regulatory Problems?
Some businesses operate in regulated industries.
The corporation may require:
• Licences
• Permits
• Professional approvals
• Municipal authorizations
• Industry-specific compliance
The buyer should determine whether the ownership change affects any required authorization.
Question 25: Is the Business Properly Insured?
Insurance due diligence can include reviewing:
• Commercial general liability
• Property insurance
• Professional liability
• Cyber coverage
• Vehicle coverage
• Other specialized policies
The buyer should understand existing coverage and determine what insurance will be required after closing.
Claims History May Also Matter
A history of significant insurance claims may indicate operational risks.
The buyer should investigate relevant claims where appropriate.
Question 26: Does the Corporation Lease Its Premises?
A commercial lease can be one of the corporation’s most important contracts.
The buyer should review:
• Remaining term
• Rent
• Additional rent
• Renewal options
• Permitted use
• Repair obligations
• Guarantees
• Change-of-control provisions
If the business depends heavily on its location, the lease can materially affect the value of the shares.
Question 27: Does the Corporation Own Real Estate?
Some corporations own:
• Offices
• Warehouses
• Retail properties
• Industrial land
• Other real estate
If real estate is included within the corporation, the buyer should understand:
• Title
• Mortgages
• Easements
• Zoning
• Environmental issues
• Property taxes
A corporate acquisition involving significant real estate may require additional due diligence.
Environmental Risk Can Be Important in Northern Ontario Transactions
Some Northern Ontario businesses operate in sectors involving:
• Industrial property
• Fuel
• Heavy equipment
• Manufacturing
• Transportation
• Resource-related activities
Where environmental risk may exist, specialized due diligence can be important.
The existence of environmental concerns should not be evaluated solely from financial statements.
Question 28: Does the Corporation Own All of Its Equipment?
Equipment may be:
• Owned
• Financed
• Leased
• Subject to security interests
A buyer should understand which category applies to significant assets.
Equipment visible at the business premises does not necessarily belong outright to the corporation.
Equipment Condition Also Matters
Legal ownership is only one question.
The buyer should also investigate:
• Age
• Condition
• Maintenance history
• Remaining useful life
• Replacement requirements
A corporation may technically own substantial equipment while facing significant replacement costs shortly after closing.
Question 29: What Inventory Does the Corporation Hold?
Inventory-based businesses require careful analysis.
The buyer should understand:
• Inventory quantity
• Valuation
• Condition
• Obsolescence
• Saleability
Inventory recorded at a particular accounting value may not necessarily be worth that amount in the market.
Question 30: Are There Related-Party Transactions?
Private corporations may have transactions involving:
• Shareholders
• Family members
• Related companies
• Businesses owned by the seller
These arrangements should be identified.
The buyer needs to know whether important contracts, leases, loans, or services will continue after the transaction.
Question 31: Are Shareholder Loans Outstanding?
Shareholder loans can affect the corporation’s financial position.
The buyer should understand:
• Amount outstanding
• Whether the corporation owes the shareholder
• Whether the shareholder owes the corporation
• How the balance will be handled at closing
The purchase agreement should clearly address these amounts.
Question 32: Are Dividends or Bonuses Owed?
The buyer should understand whether the seller expects any pre-closing:
• Dividends
• Bonuses
• Management fees
• Other distributions
These payments can affect working capital and corporate value.
Working Capital Deserves Attention
A buyer does not simply need a corporation with assets.
The company also needs enough working capital to operate after closing.
The parties may negotiate a working-capital target or adjustment mechanism.
This can help prevent the seller from removing excessive cash or leaving the company unable to meet ordinary obligations.
Question 33: What Exactly Is Included in the Purchase Price?
The parties should understand whether the price assumes a particular level of:
• Cash
• Debt
• Working capital
• Inventory
• Other assets or liabilities
A headline purchase price can be misleading if these assumptions are unclear.
Question 34: How Will the Purchase Be Financed?
A buyer may use:
• Personal funds
• Bank financing
• Investor capital
• Seller financing
• A combination of sources
The financing structure should be coordinated with the acquisition agreement.
Seller Financing Requires Proper Documentation
The seller may agree to receive part of the purchase price over time.
If so, the parties should address:
• Principal amount
• Interest
• Repayment schedule
• Security
• Default
• Prepayment
Informal financing arrangements can create substantial post-closing disputes.
Question 35: Is Part of the Purchase Price Contingent on Future Performance?
Some transactions include an earn-out.
An earn-out can make part of the price dependent on future:
• Revenue
• Profit
• Customer retention
• Other performance measures
These arrangements should be drafted carefully.
The parties need clear rules for calculating performance and resolving disagreements.
Question 36: What Representations and Warranties Is the Seller Giving?
A share purchase agreement commonly contains representations and warranties concerning matters such as:
• Share ownership
• Corporate authority
• Financial statements
• Taxes
• Contracts
• Employees
• Litigation
• Assets
• Intellectual property
• Regulatory matters
These provisions can help allocate risk between buyer and seller.
Due Diligence Does Not Replace Contractual Protection
Even extensive due diligence may not uncover every issue.
The purchase agreement can therefore be an important additional layer of protection.
Due diligence and contractual protections should work together.
Question 37: What Indemnities Will Apply?
An indemnity may address losses arising from specified matters.
The agreement may contain provisions dealing with:
• Types of claims
• Financial thresholds
• Limits
• Time periods
• Procedures
The buyer should understand how post-closing claims will be handled.
Holdbacks May Be Considered
Depending on the transaction, part of the purchase price may be held back for a period.
A holdback can potentially address matters such as:
• Purchase price adjustments
• Specific identified risks
• Other negotiated obligations
The amount and release conditions should be clearly documented.
Question 38: What Must Happen Before Closing?
Closing may depend on several conditions.
Examples can include:
• Financing
• Third-party consents
• Regulatory approvals
• Satisfactory due diligence
• Corporate approvals
• Other transaction-specific requirements
The buyer should understand which conditions remain outstanding and the deadlines for satisfying them.
Question 39: Will Directors or Officers Change?
A buyer acquiring control may want existing directors or officers to resign at closing.
New directors and officers may then be appointed.
Corporate records and closing documents should properly reflect these changes.
Question 40: What Happens Immediately After Closing?
Buying the shares is only the beginning.
The buyer may need an immediate transition plan involving:
• Employees
• Customers
• Suppliers
• Banking
• Insurance
• Technology
• Signing authority
• Corporate governance
A transaction can be legally completed while the operational transition remains poorly organized.
Planning both stages is important.
Buying Shares in a Timmins Business
Timmins has businesses operating across many sectors, including professional services, construction, retail, trades, transportation, resource-related services, hospitality, and other industries.
An entrepreneur searching for a business lawyer Timmins, corporate lawyer Timmins, or Timmins lawyers when considering a share purchase should understand that acquiring shares means investing in the corporation as an existing legal entity.
Its history matters.
Due diligence should therefore examine far more than current revenue.
Buying Shares in a Cochrane Corporation
Entrepreneurs in Cochrane may encounter established owner-operated businesses where the founder has built customer and supplier relationships over many years.
In these transactions, a buyer should ask an important question:
Will the business remain equally valuable when the current owner leaves?
Customer concentration, key employees, supplier relationships, transition assistance, and dependence on the seller should all be investigated.
Buying Shares in a Kirkland Lake Business
A share purchase in Kirkland Lake may involve a corporation with valuable equipment, property, customer relationships, or specialized employees.
The buyer should verify both the value of these assets and the obligations attached to the corporation.
A strong asset base does not automatically mean the corporation is free from debt, litigation, tax exposure, employment obligations, or other liabilities.
Business Acquisitions in Iroquois Falls and Matheson
Entrepreneurs considering businesses in Iroquois Falls or Matheson should apply the same level of diligence.
Smaller privately held companies can sometimes rely heavily on informal arrangements.
Contracts may be undocumented.
Corporate records may not have been regularly maintained.
Customer relationships may depend personally on the owner.
These issues should be identified before closing.
Business Acquisitions in Kapuskasing and Hearst
Kapuskasing and Hearst entrepreneurs considering share investments should carefully review corporate governance, contracts, financial information, employment obligations, assets, and liabilities.
Where the buyer will become one of several shareholders, the shareholders’ agreement can be particularly important.
The buyer needs to understand not only the business but also the future relationship with the other owners.
A Practical Share Purchase Due Diligence Checklist
Before buying shares in an Ontario corporation, an entrepreneur may want to investigate:
• Articles and amendments
• By-laws
• Corporate minute book
• Securities register
• Share ownership
• Share classes
• Shareholders’ agreements
• Directors and officers
• Financial statements
• Tax filings
• Bank debt
• Security interests
• Accounts payable
• Accounts receivable
• Working capital
• Shareholder loans
• Customer concentration
• Material contracts
• Supplier arrangements
• Employees
• Employment agreements
• Litigation
• Intellectual property
• Websites and digital assets
• Software
• Licences and permits
• Insurance
• Commercial leases
• Real estate
• Environmental concerns
• Equipment
• Inventory
• Related-party arrangements
• Transition requirements
The appropriate scope depends on the size, industry, history, and complexity of the corporation.
Red Flags a Prospective Share Buyer Should Investigate
Potential warning signs can include:
• Missing corporate records
• Unclear share ownership
• Financial statements that do not reconcile with other information
• Large unexplained debts
• Significant overdue receivables
• Unpaid suppliers
• Tax disputes
• Heavy dependence on one customer
• Contracts containing problematic change-of-control provisions
• Key employees planning to leave
• Intellectual property owned personally by the seller
• Pending litigation
• Unresolved regulatory issues
• Significant equipment replacement requirements
• Informal related-party transactions
• A business that depends almost entirely on the seller
A red flag does not necessarily mean the transaction should end.
It means the issue should be understood before the buyer commits capital.
Do Not Let a Familiar Business Replace Due Diligence
An entrepreneur may have known the seller for years.
The business may have an excellent local reputation.
The buyer may even have worked for the company.
None of these circumstances eliminates the need for due diligence.
Due diligence is not necessarily an expression of distrust.
It is part of understanding the investment.
Price Is Only One Part of the Transaction
Entrepreneurs often spend most of their negotiation effort on purchase price.
Price is important, but a share acquisition also involves:
• Liability allocation
• Working capital
• Seller representations
• Indemnities
• Financing
• Transition assistance
• Shareholder rights
• Closing conditions
A lower price does not necessarily compensate for poorly understood risk.
Why Legal, Accounting, and Tax Reviews Should Be Coordinated
A share purchase crosses several professional disciplines.
A lawyer may focus on:
• Corporate structure
• Contracts
• Legal liabilities
• Governance
• Purchase documentation
An accountant or tax professional may focus on:
• Financial performance
• Tax exposure
• Earnings
• Working capital
• Transaction structure
These reviews should complement each other.
Why Early Legal Advice Can Matter
A buyer sometimes contacts legal counsel only after signing a letter of intent or agreeing to major deal terms.
By then, important structural decisions may already have been made.
Early advice can help the entrepreneur consider:
• Share purchase versus asset purchase
• Due diligence requirements
• Conditions
• Governance rights
• Liability exposure
• Purchase agreement protections
It is generally easier to negotiate important protections before the transaction becomes difficult to change.
Final Thoughts on Buying Shares in an Ontario Corporation
Buying shares in an established corporation can give an entrepreneur immediate access to an operating business, existing customers, employees, contracts, equipment, intellectual property, and established commercial relationships.
But the buyer is also investing in the corporation’s history.
That history may include debt, tax exposure, employee obligations, contractual commitments, litigation, regulatory issues, secured financing, and other liabilities that are not obvious from the company’s current sales figures.
For entrepreneurs in Timmins, Cochrane, Kirkland Lake, Iroquois Falls, Matheson, Kapuskasing, Hearst, Smooth Rock Falls, and surrounding Northern Ontario communities, thorough due diligence can help reveal what is actually behind the shares being purchased.
The buyer should understand the corporation’s records, share structure, governance, financial performance, taxes, debts, contracts, employees, intellectual property, real estate, equipment, litigation, regulatory status, and relationships with major customers and suppliers.
Where the buyer will own less than the entire corporation, additional questions become important.
What voting rights will the buyer have?
Who controls the board?
Can additional shares be issued?
How can the investor eventually sell?
What happens if shareholders disagree?
Those questions can be just as important as the company’s current profitability.
For people searching for a business lawyer Timmins, corporate lawyer Timmins, business lawyer Cochrane, business lawyer Kirkland Lake, or business law guidance elsewhere in Northern Ontario, obtaining legal advice early in a proposed acquisition can help identify issues while the transaction can still be structured around them.
Buying shares should not simply be a decision about whether a company appears successful today.
It should be a careful evaluation of the corporation the buyer will own tomorrow.
Disclaimer
RG Law and the Barristers, Solicitors, Notaries, and other staff thereof make no representation or warranty of any kind regarding the information on this website, which is provided on an “AS IS” and “AS AVAILABLE” basis. None of the information provided constitutes, nor should it be treated by readers as, legal advice and it may not be relied upon as such. For guidance specific to your situation, please consult a qualified professional or contact us at info@rglaw.ca
