Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to buying or selling a dental, medical, pharmacy or other health-related business, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you with your professional corporation. I should know – I’m one of them and you can contact me directly (michael@carabashlaw.com).
This is part of a series of blogs I’ll be writing about buying and selling health businesses in Ontario. In this blog, I’ll be talking about what happens in a share transfer.
The idea is simple: you are buying or selling the shares of a corporation. The business of the corporation could be a medical, dental, physiotherapy, or chiropractor practice. To transfer the shares, you’ll need a share transfer agreement. This is an agreement that governs the transfer of shares between the parties. Both parties will execute this agreement. From here, there will be a few more documents that need to be signed off on in order to effect the transfer, such as:
- resolutions and approvals authorizing the transfer (e.g. from the directors)
- issuance of new share certificates
- updated registration of the transfer in the corporate minute book and with the respective government body
- third party consents (if applicable)
Remember: you can contact me if you need a business lawyer to facilitate a share transfer (michael@carabashlaw.com).
Generally, share transfers require that the shares being transferred are owned by the seller and can be transferred. There may be restrictions on share transfers that will require authorization or consent from third parties. That’s why the Articles, By-Laws, Shareholder’ Agreements, etc. need to be reviewed by a lawyer! You’ll also need to look at the legislation that governs a PROFESSIONAL health corporation because it may have limitations on who can hold or acquire shares of a professional dental corporation or a professional medical corporation (or other professional health corporations). If you’re dealing with a professional health corporation, then you’ll need to update the Certificate of Authorization granted by, for example, the Royal College of Dental Surgeons of Ontario or the College of Physicians and Surgeons of Ontario.
From here, you just need to record the share transfer and notify all parties of the transfer.
Finally, there will be tax implications on the purchase and sale of shares. For example, the seller may be able to use their lifetime capital gains exemption to pay less (or no taxes). I’ve previously discussed this in my last blog about buying and selling a health practice. Therefore, it’s important to engage an accountant in addition to a lawyer to make sure that everything is kosher.
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