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Corporate finance law is an intricate legal practice critical to every business enterprise’s growth and ongoing success—one that requires experienced attention paid to a broad and continually evolving set of laws and regulations. Given the pressure and visibility often at stake, corporate executives need rock-solid confidence in their professional advisors [bankers, lawyers and accountants].

Corporate finance lawyers advise business clients on compliance reporting, exchange regulation and corporate governance matters, and guide them through successful transactions—from public offering, private placement or mergers, acquisitions and divestitures, to tender offer or going-private transactions.

Corporate Financing Law Fundamentals

Corporate financing law is directed at facilitating a business enterprise's success with investments, funding, exit strategies and related financial matters. All business enterprises, from small businesses to large multinational corporations, are consistently assessing the viability of alternative investments and alternative means by which they may obtain financial funding. The business enterprise must also determine the appropriate exit strategy through which it will direct the repayment of its financing.

Financial decision-making involves a choice amongst several competing courses of action and entails six steps: [1] defining objectives; [2] identifying possible courses of action; [3] assembly data relevant to the decision; [4] assessing the date and reaching a decision; [5] implementing the decision; and [6] monitoring the effects of the decision.

Laws set forth the specific rules that establish the commercial financing marketplace. These rules govern the marketplace, the dealings of the business enterprise with the market participants and intra-firm activities. Corporate financing law assists the business enterprise in identifying potential courses of action and the legal means through which its commercial objectives can be achieved. The four fundamental legal objectives of the business enterprise in the context of corporate finance are: [1] the management of cash flow; [2] the management of risk; [3] the management of agency relationships; and [4] the management of information.

Return and risk are the most fundamental concepts in the financial decision-making process. Investors have two principle goals: to maximize return and reduce the variance of return. Risk and return tend to be related. If there is no risk, the expected return is the risk-free rate. As risk increases, an increasingly large risk premium over the risk-free rate is anticipated. Much of corporate finance is concerned with striking the appropriate balance between risk and return. Returns are based on cash flow, time-weighted, and reflect all side costs and benefits.

Corporate finance law helps the business enterprise to determine and regulate cash flows in advance. The key objectives of corporate finance law are: [1] identification of cash flow related issues; [2] quantification of cash flow; and [3] choice and reduction of uncertainty. Following its identification of the effects of the legal rules on income and costs, the business enterprise can manage its cash flow by using a wide range of legal tools and practices.

The business enterprise will always be expose to some risk. Corporate finance law helps the business enterprise to determine its risk exposure, in particular as it relates to the business' cash flow. The starting point is the identification of risk, in particular legal risks and contributory legal risks. Once these risks have been identified and quantified, the business enterprise can determine its acceptable risk level and strategies through which it intends to reduce uncertainties. The preferred risk level can be achieved by avoiding risk, transferring risk, mitigating risk or keeping risk.

The legal framework for corporate financing should contribute to the maximization of the value of the business enterprise in the long term and the minimization of risks that threatens the business enterprise's survival in a changing and uncertain environment. The business enterprise should ensure the legal framework helps to allocate the business enterprise's resources and risks inherent in its activities in an efficient manner.

General legal tools in corporate finance law include: [1] incorporation and the choice of legal form of the business enterprise; [2] contracts; [3] the regulation of internal processes through internal rule-making ranging from articles of incorporation to compliance programs, internal guidelines, other policies and other corporate decisions; [4] management tools; and [5] information management tools. Other special legal tools are dependent upon the transaction and not necessarily appropriate in all business scenarios [i.e. securities regulations, intellectual property rights]. 

Intelligent tax planning is an integral component to business success.

Intelligent tax planning is an essential element to successful business transactions and ongoing corporate operations. Given the increasing complexity of tax laws, it is essential that you have knowledgeable legal counsel to direct you through the many onerous personal and corporate taxes challenges that your business encounters.

Preparation from a tax lawyer's perspective begins with the initial strategic planning and the assessment of your current business tax situation in contrast to alternative tax scenarios. With this tax knowledge, we are capable of developing an appropriate strategic approach to your tax situation. Working with your accountants on the completion of the requisite tax forms, while drafting supporting tax documentation, is essential to positioning your business to optimize tax minimization strategies while countering the prospects of adverse tax litigation. Our goal is to structure your business and its operations to maximize tax efficiencies while minimizing risk.

Examples of tax law work include: section 85 tax rollovers, estate freezes, butterfly reorganizations, tax programs (i.e., scientific research and experimental development tax credit, Canadian controlled private corporation - small business deduction).


Tax laws are constantly changing. While we do attempt to remain consistent with the current application and interpretation of Canadian tax laws, Parliament and Revenue Canada are constantly tinkering with Canada's tax laws. Some changes are made retroactive, others become law on the date they are signed by the governor general, and others won't be effective until the following year or even further into the future. Also, court decisions, which interpret the Income Tax Act (Canada), a release throughout the year in may change what is written therein. Furthermore, Revenue Canada may alter its interpretation and application of specific sections in the Income Tax Act (Canada). As such, you should never rely solely upon the contents of this or any other web site, but should look for professional advice from accountants and lawyers experienced and knowledgeable in the tax field.

Christopher R. Neufeld

Neufeld Legal Professional Corporation

1600, 144 - 4th Avenue SW, Calgary, Alberta



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