Entrepreneurship & Small Business

How do properly sell off / dissolve a company?

  • Last Updated:
  • Jan 11th, 2015 1:03 am
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[OP]
Member
Apr 19, 2010
380 posts
29 upvotes

How do properly sell off / dissolve a company?

Our company is structured as a 3 way partnership.

2 of the partners want to leave and the remaining one wants the business.

How do you legally transfer the BN number, Bank account number and client contracts to that person?

Has anyone ever experienced this before?

The other 2 people want to be completely disconnected moving forward, and the remaining individuals want to retain current clients.
8 replies
Deal Addict
User avatar
Nov 9, 2003
1346 posts
199 upvotes
Grimsby
If I were any one of the three I would want a lawyer to create the paperwork to avoid issues down the road.
Newbie
User avatar
Sep 30, 2014
86 posts
17 upvotes
Toronto, ON
As Owbist Said,
I'll also suggest, Consult it with a lawyer.
Deal Addict
User avatar
Nov 17, 2004
2333 posts
647 upvotes
Out of curiosity, why is this the case? Is the company losing money?

I'm assuming that it's not profitable since one of the options you mentioned was to simply dissolve the company.
Deal Addict
Mar 8, 2009
1420 posts
109 upvotes
This is really simple. Find a lawyer that handles contract law and he'll fix it up. The two of you leaving should insist on signing documents that protect you from any liabilities in the future.
Deal Addict
Aug 28, 2007
1860 posts
256 upvotes
Calgary
The two departing shareholders sign over all their shares to the treasury for a token sum of a dollar. Create the appropriate shareholder's and director's meeting minutes for the corporation's record book; all duly signed by yourself and your departing individuals. They walk away and you're done. You, as the remaining shareholder, then have 100% equity ownership of the corporation, including all it's assets, liabilities, contracts and client list.
Deal Addict
Aug 28, 2007
1860 posts
256 upvotes
Calgary
... and I forgot to mention the other parts of your question. You also need to change the shareholdings and director list on your annual provincial or federal registry filing. And then FAX the change form as notification to CRA to fully dis-associate them from the BN. The bank account remains with the corporation and you just need to visit the branch to have the signatories on the account changed.
Deal Addict
Jan 1, 2009
1004 posts
336 upvotes
Vancouver
CBC wrote:
Nov 10th, 2014 2:41 pm
Our company is structured as a 3 way partnership.

2 of the partners want to leave and the remaining one wants the business.

How do you legally transfer the BN number, Bank account number and client contracts to that person?

Has anyone ever experienced this before?

The other 2 people want to be completely disconnected moving forward, and the remaining individuals want to retain current clients.
Under subsection 98(5) of the Income Tax Act, a partner may avoid the income inclusion on the deemed disposition of assets in the partnership as well as his interest when the partnership ceases to exist so long as he continues the business on a sole proprietor level, which is the case here. The sole proprietor arrangement can carry on the business of the former partnership within three months after the partnership ceased to exist. This rule applies automatically and no election is needed. You may contact the CRA and notify them of the change, and they will update the partnership's BN and and program accounts to refer to you as the new owner, and sole proprietor. The other partners are deemed to have disposed of their interest for proceeds equal to the FMV of the property received as consideration for their interest. They don't get away unscathed. :p
Jr. Member
Oct 4, 2013
141 posts
5 upvotes
Brampton
What about bank accounts, credit cards, any liabilities and loans. I guess that ownership of those needs to be transferred after the change?

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