When a business owner sets up their corporation with the corporate registry in Alberta, they create an independent legal entity that exists separate from its owners. This means the corporation acts as its own person and can sell products, buy property, and be sued in the same manner as any individual could.
But registering your corporation is not enough to set your business up for success. Many people believe effective management of a business need not involve a lawyer unless one runs into trouble or gets sued, but good legal advice can help you prevent problems before they arise. When forming your new corporation, a lawyer can:
o Help you create a Unanimous Shareholder’s Agreement that brings predictability to the corporation’s affairs and addresses questions such as:
What happens if one shareholder dies?
Who carries voting shares?
Who decides what clients and contracts the business will sign?
What happens if the shareholders disagree on a fundamental business decision?
o Explain where directors and shareholders may face personal liability for the corporation’s regulatory offences, for example if the corporation engages in environmental dumping;
o Describe the importance of always representing yourself as an agent of the corporation in order to limit personal liability should the corporation be sued;
o Clarify the director’s personal liability to the Canada Revenue Agency for the corporation’s taxes;
o Assist directors and shareholders in deciding when to create complex corporate structures such as holding companies; and
o In some cases, a law firm can be the “registered office” of the corporation and store the corporation’s Minute Book and other essential documents at the firm
Registering your new corporation with the provincial Corporate Registry is only the first step to set your business on the path to success. Hiring a lawyer to help you through the exciting—and potentially unfamiliar—process of setting up a new corporation ensures that your new business can focus on the day-to-day aspects of business success, while knowing that the company has a firm legal foundation.