When a business is growing, it typically doesn’t require many additional legal papers; it requires the right legal decision at the right time. When a shareholder joins, a large contract is negotiated, capital is raised, another company is acquired, or a founder’s role is changed, the company’s legal status could shift.
Ownership, control, liability, intellectual property, and future exit options can be impacted. A Calgary corporate lawyer can assist you in making sense of these things before they become an expensive knot to untie.
The actual question for businesses comparing the best corporate lawyer in Calgary or incorporation lawyers near me isn’t whether or not you should have a lawyer for all of your decisions, but what decisions to take to the lawyer.
7 Signs Your Business Needs a Corporate Lawyer in Calgary
Corporate legal advice is necessary not in a legal battle, but in the way a business is run. The company’s decision to make larger ones, enter new relationships, or become more difficult to deal with informally are indicators that legal arrangements should be closely considered.
1. The Business No Longer Has the Same Owners
The original agreements might not accurately reflect the current situation if there was a transfer of shares, a new shareholder has entered the company, or shareholding percentages have changed. Look at who is on the list and who can vote, and see how the shares will be transferred in the future.
2. Someone Wants to Invest or Become a Partner
Don’t agree to an ownership percentage without knowing what this person will receive in return. An investor could be given voting or other rights which have an impact on the current owners. A corporate lawyer Calgary can be of assistance in this regard, as he or she can help to clear up the legal aspects of a business deal.
3. Your “Usual” Contracts Are No Longer Small
If the payoff is significantly higher than your previous contracts, then you should pay more attention to it. Don’t just look at the price; also look at warranties, liability and indemnity, renewal terms, termination rights, and what happens if either side fails to perform.
4. Your People Are Creating Things the Business Depends On
When employees, freelancers or contractors are developing software, designs, content, systems or other valuable content, ownership should not be assumed. The relevant agreements must explicitly state the rights of the company to use and, if applicable, own that work.
5. The Way You Fund the Business Has Changed
If a company changes from being a foundation-run business to borrowing or raising money from outside sources, the company’s responsibilities shift. Prior to taking financing, know the repayment terms, security, rights of investors, and any impact on current shareholders.
6. Your Next Growth Move Changes the Business Model
If you open somewhere else, enter a new market, acquire another firm or embark on a new line of business, legal questions may arise that are different from what is involved previously. When the suggested change will impact the way the company is built or operates, company legal advice is of paramount significance.
7. Your Corporate File Tells an Older Story
When the ownership, directors, issuance of shares or other corporate information is not recorded accurately, it can be revealed during financing, a transaction, or due diligence. It is not just a management matter to keep the corporate record updated; it helps to create a corporate image as the company.
The “Think Before You Sign” Rule for Business Owners
Not all business decisions require legal review, but any decision that could impact business ownership, control, liability, obligations or future valuation of the business should be considered. This involves taking on of investors, signing on large contracts, loans, acquisition of another business or an exit by the founders.
A Calgary corporate lawyer will be able to advise you on what you are committing to, what risks you are taking and if your deal will restrict your choices in the future. The idea isn’t to have a lawyer in every event; it’s to seek counsel at the time that a legal consequence would have lasting ramifications on your business.
What Can Go Wrong When Business Partners Disagree?
A true measure of a partnership is when two partners start thinking differently. When voters vote in a 50/50 tie, it can be a tiebreaker in appointments, spending, growth, and other significant issues.
If one founder wants out, then the questions get even more practical: Do the founders have the option of selling the shares? Who can buy them? What will be the method for determining the value? A well-drafted shareholders’ agreement can lay out the ground rules for voting, transfers of shares, exit of founders, buyouts, and valuation, before a good relationship has even broken down.
How a Corporate Lawyer in Calgary Can Reduce Contract Risk?
When signing a significant business contract, consider more than just the price and the standard terms of the contract. Pay particular attention to:
- Losses/claims: Appreciate the type of losses or claims that your business might face and if liability is capped.
- Indemnity: Review if you have to reimburse the other party for a loss, claim or expense.
- Termination: Understand termination of contract and what obligations remain after termination.
- Payment requirements: Payment due dates, penalties for late payments, deposits, refunds and other financial commitments.
- Ownership of work, designs, software, content, etc: State who is responsible for copyright over the work, designs, software, content or other intellectual property generated within the agreement.
- Confidentiality: Ensure that confidential business data is safeguarded and know when it can be shared.
A Corporate Lawyer Calgary can examine these terms in the light of your business and alert you to any terms that could be unnecessarily exposing your business before you sign the contract.
Conclusion
Business growth should not leave your legal foundation playing catch-up. As ownership shifts, investment comes into play, or a founder is exiting, the choices that are made today can impact the options that are available tomorrow.
It is important to analyze these issues at the outset to uncover any gaps, establish accountability, and prevent unnecessary problems later on. When your Calgary business is moving on to the next chapter, OB Law Office can offer practical corporate legal advice specific to the decision-making and challenges at hand.
