Reorganization, Amalgamation, Dissolution

Reorganization

What is a Corporate Reorganization?

A corporate reorganization refers to the literal ‘reorganization’ of the central tenets of the corporation. This could involve a change in directors, officers or shareholders. This occurs, for example, when a family business shifts control from parents to children, or when new management or ownership comes into play. A reorganization may also include a variety of tax planning and estate planning measures in what is known as a section 86 estate freeze or section 85 asset rollover.

Dissolution

Why Dissolve?

In circumstances where you have closed down your business, many people do not realize that the corporation continues to exist. As an example, a person who owns a fruit store but stops selling fruit, continues to exist as a person. The same is true for a corporation. You may cease the business you operate through your corporation, but your corporation will continue to exist indefinitely until it is legally dissolved. In these circumstances, it is recommended that you dissolve the corporation in order to cease the liability that the corporation carries. Furthermore, as long as the corporation is active, you may continue to be personally liable for any of its taxes owed.

Amalgamation

When is an Amalgamation Recommended?

An amalgamation is the combination of two or more corporations to form one corporation. Amalgamations are used to simplify corporate structures, reduce unnecessary and unused corporations, and streamline businesses. Most importantly, amalgamations are used to combine or shift business losses from one corporation to another. This can be an extremely beneficial tax planning tool, as unused business losses can be shifted to a profitable corporation to offset its taxable income. Amalgamations are transacted on a tax neutral basis in accordance with section 87(9) of the Income Tax Act so that there is no additional tax burden on the corporation or its shareholders.

Why Kalfa Law Firm

We have the experience to guide you through your corporate reorganization, dissolution, continuation, revival, amendment or amalgamation. With years of experience in corporate and commercial law, Kalfa Law Firm is your perfect partner for all your corporate law needs.

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