At one stage of my career I did a great deal of work for a franchisor of bakeries. If the truth be known, my client was not exceptionally good at the franchisee selection process. The franchisee qualification process consisted of providing evidence of a bank account and a heartbeat.
Once upon a time, one of my litigation partners had a field day suing a very senior partner of a reputable law firm in the Toronto area. I will call that defendant “Max.”
The crux of the matter was that our client, who I will call Sue (appropriately, because that is what she ended up doing to Max) was involved in the sale of some shares of a corporation to the other shareholder. When Sue did not get paid, she came to see if we could do anything about it. When my partner asked Sue whether she was represented by counsel in the sale transaction, she identified Max as being her lawyer.
Spouses often both own shares in a corporation that operates a family business, sometimes because they are both active participants in the business, and sometimes as part of an income splitting or creditor protection plan.
I recently celebrated the 17th anniversary of one of the most significant events of my life.
Back on March 21, 2005, I came to what was, at the time, a stunning realization. I had accidentally fallen in love with a woman with whom I had been working very closely for six years. Luckily for me and all the other potential Defendants in this situation, she came to the same troubling realization about me at the exact same time.
Few lawyers would disagree with the statement that “law school does not teach you what you have to know to be able to practice law.” I imagine that the general public would find that to be surprising. It is called “law school” after all.
I have many thoughts about family business succession. Here are a few of them:
Many of you will be familiar with the old saying (sometimes attributed to John Adams and other times to Winston Churchill) to the effect that “if you are not a socialist at age 20, you have no heart, but if you are still a socialist at age 30, you have no brain.”
Let’s say that you represent a 40% shareholder in a corporation. You are reviewing a shareholder’s agreement which says that in certain circumstances (death, disability, termination of employment) your client is required to sell his or her shares at fair market value. So far, so good.
Over my many years practicing business law I formed some strong opinions. Here are two of them which relate to shareholders agreements:
Death: My favourite topic in a shareholders agreement.
What I like about the death provision is that it is usually not controversial, especially if the shareholders do not have an inkling about who is likely to die first.