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Posted: May 15th, 2022
Business Law
Samuel Seller wants to form a corporation. He has a thriving business in which he buys cheap sports equipment and then re-sells it at his store at a substantial profit. He needs some extra cash right now to buy a new store and he does not want to risk his personal assets by taking out a loan. Therefore, Samuel has decided to form a corporation. Samuel would like to sell shares of his business to anybody who is willing to invest in her company, but he wants to limit the total number of shares issued to 100 shares, as he doesn't want too many people to own the company or to make ownership of his corporation overly complex. Samuel's residence is 555 Storm St., Windyville, New Windsor. His store is located in downtown Windyville, in the county of Black Rock. He would like this corporation to be formed as early as possible.
First, please draft Samuel's certificate of incorporation. You may use a form from any state you choose but make sure you use a state form and not a generic certificate. You may use a form from any state you choose, though we recommend using one from your home state.
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Second, and more importantly, please draft a short letter to Samuel advising him in terms of what other immediate issues he should consider before actually going through with the plan to form a corporation. You do not need to advise him about other business forms, but you should discuss issues such as who will manage the corporation, which documents need to be prepared and filed, applicable fees, etc.
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Please submit both documents in one file as the system will not allow you to submit two separate files for one assignment. If you are unsure how to combine files of different formats, please see the following tutorial. Thank you!
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Name
Legal Advisor
Department of Business Registration
Mr. Samuel Seller
Businessperson, 555 Storm St.
Wind Ville, New Windsor
Dear Sir,
RE: ADVISORY LETTER
I hereby understand that you want to transform your business into a corporation in an effort to purchase a new store. I congratulate you on the move you have decided to take instead of risking to lose your personal assets through taking loans. Starting and growing a business is a risk that every business owner should be willing to take for them to succeed. However, one must be careful that they are legally registered to avoid being on the wrong side of the law. in the case of partnerships such as the one you are about to take, you have to ensure that your company is registered and received a certificate of incorporation. You have to articulately fill in the articles of incorporation which directs on whom the officers are and in your case, you should have a board of directors containing very limited membership and elected by the shareholders to maintain the integrity of the company.
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Kindly ensure that you find and fill the following documents;
• Articles of Incorporation
• Corporation information sheet
You will then be able to receive a certificate of incorporation containing the following information;
• Corporate Name and Address
• The state of operation
• Type of corporation
• Names of company directors
• Type of share
Obtaining the certificate on incorporation is a reliable form of limited liability of assurance to investors where they are not personally liable to any debts that the company may have. Ensure that after filing the articles of incorporation with the state of Canada, issue stock to the affiliated shareholders who may then elect the board of directors during your annual meeting.
Be informed of the following applicable fees that you will be required to pay;
• Government fee
• CRA Business Number
• Corporation’s Name charges.
• Corporation’s Minute Book Charges
• Share Certificate
• CRA Registrations inclusive of Corporate Tax ID Set up, HST Account Set Up, Payroll Account Set Up, and Import Account.
• Other Registration; Domain Name Registration
• Corporate Supplies and Support
The figures may vary depending on membership and type of corporation; however, it is wise that you set aside enough money for the entire process. In the event you will use a third party to conduct the registration for you, it is advised that you check the credibility of the company first to make sure that they will comply with all the legal procedures to avoid getting your corporation into trouble. The third-party must sufficiently provide your corporation with all information and procedures they undertake.
Kindly be informed that after the corporation has reached its desired objectives which is raising money to buy a new store, its legal life can be terminated through the liquidation process. You will be required to appoint a liquidator who will sell the corporation’s assets followed by the company paying off creditors and shares the remaining assets among the shareholders.
You are advised to fully and diligently understand the due process before embarking into forming the corporation to avoid bankruptcy.
Regards,
Name
Legal Advisor.
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