CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Patrick Morin, Stikeman Elliott LLP
5.5 Applicable Governance Requirements Corporations
Trusts Trusts are typically governed by the trust deed, under which the trustees’ powers may be limited to merely holding title at the behest of the benefi - cial owner, or may extend to allowing the trustee to exercise full discretion over dealings with the subject lands. In all cases, the trustee holds all benefits derived from the land for the beneficial owner/beneficiary. 5.6 Annual Entity Maintenance and Accounting Compliance Annual legal costs for entity maintenance are typically less than CAD1,000. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Leases and licences are contracts that permit the occupancy and use of real estate for a period of time, without buying it outright. While leases provide for exclusive possession over a specific area for a limited period of time, licences might not grant exclusive possession, and do not con - stitute an interest in land. 6.2 Types of Commercial Leases Commercial Leases The most common categories of commercial lease include commercial/office leases, retail leases, and industrial/warehouse leases. Commercial leases may be further categorised into “net leases” and, rarely, “gross leases”. Under a net lease, all operating costs and expenses relating to the property are passed on to the tenant in addition to the payment of base rent, although responsibility for capital expens - es may remain with the landlord. Under a gross
Corporations can be incorporated either feder - ally or provincially, and are required to file articles of incorporation. A corporation’s governance framework can be shaped by its shareholders through its articles, shareholder agreements and corporate by-laws. The articles provide basic details such as the corporation’s business name, registered office, first director(s), share capital and share provisions. By-laws are used to add to, or supplant, default provisions set out in the corporation’s governing statute. Shareholder agreements may regulate how shares are sold, specify procedures by which important decisions are made, and provide protection for minority shareholders. Federal or provincial statutes stip - ulate corporate requirements such as the num - ber and residency of the directors and fiduciary duties. Public corporations are also subject to applicable securities law requirements. Partnerships While partnership legislation may impose basic governance rules, most sophisticated parties enter into partnership agreements setting out matters of governance in detail. The agreement typically addresses capital contributions, busi - ness operations, profit/loss distributions and addition or removal of partners. Co-ownerships Based on the contractual nature of a co-owner - ship, governance requirements vary depending on the agreement between the parties, which may establish rights and restrictions relating to the underlying land, determine profit-sharing and delegate management responsibilities.
142 CHAMBERS.COM
Powered by FlippingBook