Frequently Asked Questions

A boutique firm is a smaller practice that focuses on a defined range of work instead of offering every legal service. Hadri Law focuses on business and tax law for founders, growing companies, and international clients doing business in Canada. You work directly with the lawyer handling your file, not a rotating team of juniors. The trade-off versus a national firm is depth in our chosen areas instead of breadth across every department, paired with multilingual service in English, French, Spanish, and Catalan.

We advise and draft in English, French, Spanish, and Catalan. That matters when a Toronto company is signing with a counterparty in Quebec, Mexico, Spain, or Latin America. It also matters when a foreign founder wants the Canadian side of a deal explained in their first language. Documents that have to be enforceable in two jurisdictions can be prepared and reviewed in both languages by the same lawyer, which avoids the back-and-forth of using a separate translator.

The free consultation is a 20 to 30 minute call to understand your situation, identify the legal questions involved, and tell you whether and how we can help. You leave the call with a clear sense of next steps and a fee estimate or hourly range for the work. The call does not create a lawyer-client relationship, and we recommend not sharing detailed confidential information until a retainer is signed.

Both are valid. A federal corporation under the Canada Business Corporations Act (CBCA) gives you a name protected across Canada and is often preferred when you plan to operate in multiple provinces. A provincial corporation under the Ontario Business Corporations Act (OBCA) is simpler if your business will mostly operate in Ontario. One difference matters for foreign founders: the CBCA still requires at least 25% of your directors to be resident Canadians (Section 105), while the OBCA removed its Canadian-resident director requirement in 2021. For founders without Canadian co-founders or directors, the OBCA is often the more practical choice.

A Professional Corporation (PC) is a corporation that a regulated professional, such as a lawyer, doctor, dentist, or accountant, can use to carry on their practice. It is governed by both the OBCA and the rules of the professional's regulator (for example, the Law Society of Ontario for lawyers). A PC offers tax planning advantages, including access to the small business deduction in many cases, but it does not shield the professional from liability for their own professional negligence. Each profession has its own rules on who can hold shares.

A Unanimous Shareholder Agreement (USA) is a contract among all shareholders of a corporation that can override default OBCA or CBCA rules and shift some powers from the directors to the shareholders. A USA typically covers how shares can be transferred, what happens on a founder's exit, dispute resolution, drag-along and tag-along rights, and what triggers a forced buy-out. If you have any co-founders, investors, or family members holding shares, the time to put one in place is before there is a disagreement, not after.

A standard online incorporation under the OBCA or CBCA can be filed and effective within one to three business days, sometimes faster. The longer step is deciding the structure: share classes, director appointments, officer roles, drafting the by-laws and shareholder resolutions, getting a NUANS name search if you want a named (rather than numbered) corporation, and registering for HST, payroll, and import/export accounts. Most clients are operational within a week once those decisions are made.

Yes, in almost every case. A written contract sets out price, scope, timing, payment terms, intellectual property ownership, liability limits, and what happens if something goes wrong. Without one, the parties default to common-law and Sale of Goods Act rules that may not match what either side actually intended. The cost of a tailored agreement is small next to the cost of litigating an oral or template-based deal that breaks down. A solid written agreement also makes the relationship easier to assign, finance, or insure.

The Personal Property Security Act (PPSA) is the Ontario statute that governs security interests in personal property: equipment, inventory, accounts receivable, intellectual property, and other non-real-estate assets. If you are lending money, leasing equipment, selling on credit, or taking a security interest in a borrower's assets, you generally need to register a financing statement on the Ontario Personal Property Security Registry. That is what makes your security interest enforceable against third parties. Filing in the wrong jurisdiction or with errors in the debtor's exact legal name is one of the most common ways secured lenders lose priority.

A partnership is a legal relationship under the Ontario Partnerships Act in which two or more persons carry on a business in common with a view to profit. Partners are jointly and severally liable for partnership debts, and a partnership is taxed by flowing income through to each partner. A joint venture is a contractual arrangement for a specific project or limited purpose, where the parties share defined costs and revenues but do not create a single ongoing business. Joint ventures usually do not create joint and several liability, and each party files its own taxes on its share of the project.

In a share sale, the buyer purchases the shares of the corporation and inherits everything: contracts, employees, tax history, and known and unknown liabilities. Sellers often prefer share sales because individuals can claim the Lifetime Capital Gains Exemption on qualifying small business corporation shares (the limit was raised to $1.25 million for dispositions after June 24, 2024, and indexation to inflation resumes in 2026). In an asset sale, the buyer picks specific assets and assumes only the liabilities it agrees to. Buyers often prefer asset sales because they get a "step-up" in the tax cost of depreciable assets and avoid most historical liabilities. Most Canadian deals are negotiated around this single tradeoff.

Due diligence is the buyer's investigation of the target before closing. A typical workstream covers corporate records (minute book, share register, by-laws), material contracts, real estate and leases, employment matters and ESA compliance, tax filings and outstanding CRA assessments, intellectual property registrations, regulatory licences, environmental matters where relevant, and litigation history. The goal is to confirm what the buyer is paying for, identify risks that justify a price reduction or specific indemnity, and surface anything that would be a deal breaker. Findings feed directly into the purchase agreement's representations, warranties, and disclosure schedules.

Some deals need pre-merger notification to the Competition Bureau under the Competition Act, but most small and mid-market transactions do not. Notification is generally required when both the size of the parties (combined Canadian assets or revenues) and the size of the transaction (Canadian assets or revenues of the target) exceed annually indexed thresholds set by the Minister of Innovation, Science and Industry. Even when notification is not required, all mergers that may substantially lessen or prevent competition can be reviewed by the Bureau for up to one year after closing. Counsel should run the threshold analysis early so it does not surprise you on the closing timeline.

There are three common routes. The first is to incorporate a Canadian subsidiary under the CBCA or OBCA, which gives you a separate Canadian legal entity. The second is to register an existing foreign corporation as an extra-provincial corporation in Ontario, which lets the foreign parent operate directly under its existing legal personality. The third is to use a Canadian branch operation, often combined with a hybrid entity for tax purposes. The right answer depends on tax treaty relief, withholding tax exposure, transfer pricing, employment structures, and how you plan to invoice Canadian customers.

Possibly. The Investment Canada Act (ICA) applies whenever a non-Canadian acquires control of a Canadian business or establishes a new Canadian business. Most transactions trigger only a notification, filed within 30 days after closing. Larger acquisitions of control of Canadian businesses by WTO investors are subject to a "net benefit" review when the enterprise value of the target exceeds an annually indexed threshold (well over $1 billion for most private-sector WTO investors in recent years). State-owned enterprises and culturally sensitive sectors face lower thresholds, and a separate national security review can apply to investments of any size.

Canada has tax treaties in force with more than 90 countries, including the United States, the United Kingdom, France, Spain, Mexico, Brazil, China, India, and most of the EU. Treaties reduce withholding tax on dividends, interest, and royalties paid out of Canada, and they prevent the same income from being taxed twice. If your home country is on the list, structuring a Canadian operation through a treaty-friendly route can materially reduce after-tax cost. The Department of Finance Canada publishes the current list of treaties and protocols.

At a minimum: the legal names and addresses of the parties; a clear description of the goods, services, or rights being exchanged; price and payment terms; the term and renewal mechanics; representations and warranties; limitations of liability and indemnities; intellectual property ownership and licences; confidentiality; termination triggers and consequences; governing law (almost always Ontario for Ontario-anchored deals) and dispute resolution forum; and signature blocks with authority. The clauses that matter most when something goes wrong are usually the ones that get the least attention during negotiation: limitation of liability, indemnities, and dispute resolution.

Sometimes, but with caution. A template is only as useful as the person reading it. US templates often miss Canadian-specific items: PIPEDA privacy obligations, HST treatment, ESA carve-outs, the Sale of Goods Act, French-language requirements for Quebec counterparties, and the right governing-law and forum clauses. A Canadian template can be a starting point, but it should be reviewed and tailored before you sign anything material. The cost of a 30 minute review is almost always less than the cost of arguing about an ambiguous clause two years later.

Under the Employment Standards Act, 2000 (ESA), an employee with at least three months of service is entitled to written notice of termination, or pay in lieu, on a sliding scale: one week for less than one year of service, two weeks for one to three years, and an additional week for each year of service after that, up to a maximum of eight weeks. Statutory severance pay is a separate amount on top of notice. It applies when the employee has at least five years of service and the employer has an Ontario payroll of at least $2.5 million. Common-law reasonable notice can be substantially higher, so most employers use a properly drafted termination clause to limit exposure.

The label in the contract is not determinative. The Canada Revenue Agency and the courts look at the substance of the relationship, including who controls when and how the work is done, who supplies the tools and equipment, whether the worker can earn a profit or bear a loss, the degree of integration into the business, and the intention of the parties. Misclassifying an employee as a contractor can expose the business to back payments for vacation pay, holiday pay, ESA notice, source deductions (CPP, EI, and tax withheld), and potential CRA penalties. The risk is real, and CRA is active in this area.

Mostly no. The Working for Workers Act, 2021 amended the ESA to prohibit Ontario employers from including non-compete agreements in employment contracts, with limited exceptions for executives and for non-competes given as part of the sale of a business. The prohibition is deemed to have come into force on October 25, 2021, and any non-compete in an ordinary employee contract entered into on or after that date is void. Properly drafted non-solicitation and confidentiality clauses are still enforceable if they are reasonable in scope, time, and geography. They remain the right tool to protect customer relationships and confidential information.

The small business deduction (SBD) gives Canadian-controlled private corporations (CCPCs) a reduced corporate income tax rate on the first $500,000 of active business income each year. In Ontario, this brings the combined federal and provincial corporate rate to roughly 12.2% on eligible income (9% federal plus 3.2% Ontario), compared to about 26.5% on general active business income. To qualify, the corporation must be a CCPC throughout the year, the income must be active business income (not investment income), and the $500,000 limit is shared among associated corporations. The SBD is also reduced when taxable capital across the associated group is between $10 million and $50 million, and is fully eliminated at $50 million.

Once your worldwide taxable revenue, including that of any associated persons, exceeds $30,000 in any single calendar quarter or over the previous four consecutive calendar quarters, you stop being a "small supplier" and must register for an HST account with the CRA, charge HST on taxable supplies, and remit the tax. You can also register voluntarily before reaching the threshold, which lets you claim input tax credits on business purchases. Ontario HST is currently 13% (5% federal plus 8% provincial). Registration also affects how you invoice and the records you must keep, so it should be planned, not stumbled into.

A CRA audit usually starts with a written request for records covering one or more tax years. You generally have a defined window to respond, and the auditor may visit your premises, interview staff, and request third-party records. If the auditor proposes adjustments, you receive a proposal letter and have 30 days to respond before a Notice of Reassessment is issued. From there, you have 90 days to file a Notice of Objection, and from there a route to the Tax Court of Canada. The earlier you bring in a tax lawyer, the more options you have to manage scope, privilege, and settlement.

Yes. Canada acceded to the Hague Apostille Convention, and the Convention came into force for Canada on January 11, 2024. Documents originating in Canada that need to be used in another Convention member state can now be authenticated by an apostille issued by Global Affairs Canada or by the designated authority in the relevant province. For Ontario-issued documents, the Official Document Services of the Ontario Ministry of Public and Business Service Delivery is the competent authority. The apostille replaces the older two-step authentication and consular legalization process for use in any Convention member state.