Corporate Reorganization Lawyer in Mississauga

Why businesses reorganise

• Creditor protection. Moving surplus cash and passive assets out of the operating company, so trading risk does not reach accumulated wealth.
• Succession. An estate freeze fixing the current owner’s value in preferred shares, with future growth accruing to the next generation or to a family trust.
• Sale readiness. Purifying a corporation so the shares qualify for the lifetime capital gains exemption, which requires meeting asset-use tests over the preceding 24 months.
• Bringing in a partner or investor, which usually requires new share classes and often a holding company.
• Separating business lines so one can be sold, financed, or wound down without the other.
• Simplifying a group that has accumulated dormant entities nobody wants to pay to maintain.

The common transactions

• Section 85 rollover. Transferring property to a corporation on a tax-deferred basis in exchange for shares. The workhorse of Canadian reorganisations.
• Estate freeze. Exchanging common shares for fixed-value preferred shares, with new common shares issued to successors or a trust so future growth accrues to them.
• Holding company. Inserting a parent above the operating company, allowing surplus to be paid up as tax-free inter-corporate dividends.
• Amalgamation. Combining two or more corporations into one continuing corporation.
• Butterfly reorganisation. Dividing a corporation’s assets between shareholders on a tax-deferred basis, often how business partners separate without triggering tax.
• Share exchanges and stock dividends under sections 51 and 86, to adjust capital structure without a disposition.

How these files run

Reorganisations are driven by the tax analysis. Your accountant or tax advisor designs the steps; our role is to implement them correctly in corporate law, articles of amendment, directors’ and shareholders’ resolutions, share subscriptions and cancellations, rollover agreements, price adjustment clauses, updated registers, and trust documentation where a trust is involved.

The order of steps matters enormously, and so does documenting them contemporaneously. A reorganisation that is sound on paper but implemented out of sequence, or papered a year later, is a real problem on a CRA review and an immediate discount on a sale.