Corporate Organizations and Restructuring

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(604) 681-5885

Area of Interest

Vancouver, British Columbia

Our team of professionals are the right choice to complete your corporate reorganization in British Columbia.

Whether your business enterprise consists of one corporation or a complex group of corporations, there are a variety of reasons why you should consider doing a corporate reorganization, these reasons may include adding a holding company or family trust, eliminating one or more corporations or trusts in your corporate group, changing the share structure or ownership of one or more of your companies, doing an estate freeze, or a variety of other possibilities.

Potential benefits of doing a corporate reorganization include the simplification of your corporate structure to reduce annual accounting and legal costs, effective income-splitting between family members, succession planning, rewarding employees for exceptional service, reducing the overall tax burden in the corporate and family group, providing for the sale of a part of the business or one of its major assets, creating a clear distinction between different business operations, taking maximum advantage of your lifetime capital gains exemption, and/or allowing for the application of business losses from one corporation to another.

A more detailed overview of some of these common reorganization strategies are set out below.

It is often beneficial for the principal of a business to distribute any income they receive from the business between their family members.  This can be accomplished by having other family members hold shares in the business.  Another tool to accomplish this goal includes having a family trust hold shares of the corporation, which creates more flexibility and allows for a structure which accommodates minor children, whose direct shareholdings in a company would otherwise be too complicated. Implementing income splitting corporate reorganizations often involves a change in shareholders, which you want to ensure is done in a tax appropriate manner.

As part of considering a sale of the business, or the sale of a division of the business, it may be appropriate to change the share structure and/or the shareholders of a corporation or to segregate some of the assets in a separate corporation.  The purpose of the reorganization may be to simplify the sale of the business or the part of the business and/or to minimize taxes payable on the sale.

The share structure of a closely held corporation versus a corporation that is seeking to raise funds for its operations is very different.  Closely held corporations can use different classes of shares to split income amongst various shareholders which would not be appropriate for more widely held corporations.  A corporate restructuring may be required in conjunction with the transition of a company from a closely held corporation to a more widely held corporation.  Such restructuring must be done in a tax appropriate manner, otherwise significant, unintended and adverse tax  consequences may result. This “tax appropriate manner” often involves a corporate reorganization.

As with changes to shareholders, the transfer of assets to or from a corporation must be done in a tax appropriate manner, otherwise significant, unintended and adverse tax consequences may result.  The “rollover” of assets to or from a company without requiring the immediate payment of taxes may require a corporate reorganization.
The majority of the above mentioned corporate restructurings will be completed in conjunction with instructions from the client’s tax or accounting advisors.

At Affinity, we assist clients, usually in consultation with their tax advisors and in undergoing appropriate and cost-effective corporate reorganizations. Please contact Affinity Law Group to discuss your needs with one of our experienced business lawyers.