In the midst of a year-end review of our prices the question was posed as to whether we should be increasing fees for our business formation and incorporation services. After all, the amount of work involved has just increased significantly, due to new legislation requiring “transparency” in corporate records.
Heck no! was my strident response – we are already facing stiff competition from the internet, which makes it deceptively easy (and cheap) to incorporate- increasing the cost will simply drive more potential clients to the web, and discourage them from obtaining proper face to face advice from a lawyer. Besides, that’s not where we make our real money. The gravy for us comes from sorting out the mess after the thrifty do-it-yourselfers have made a hash of things.
Anyone with internet access and a credit card with a few hundred dollars room on it can initiate the first steps of an incorporation in BC.Unfortunately, the resulting product is woefully incomplete.The most glaring omission is that a corporation is controlled by its shareholders, yet the vital step of issuing shares to the would-be owners is not part of the online process. Almost universally, when we review the handiwork of a DIY incorporator, we discover that they have created a ‘headless horseman’- a company with no issued shares, and therefore, no owners!
The Business Corporations Act mandates that every limited company must maintain a “minute book” – a repository for all of the original incorporation documents (including the articles, which are also not generated as part of the DIY online process) and a record of its shareholders, directors, officers and debenture holders, and of the resolutions passed by its directors. Traditionally we see a DIY client for the first time on the eve of an important corporate transaction, such as a property purchase,or the establishment of a business line of credit, shortly after they have been asked to produce their corporate minute book as a mandatory pre-condition of the transaction. It is left to us to pick up the pieces, and quickly build the minute book, generating a number of missed documents in the process. Needless to say, we charge a premium for riding to the rescue at the eleventh hour.
The initial set up of a company is only half the battle however, and we frequently field panicked calls from clients who have discovered to their horror that their company has been dissolved for failure to file annual reports, with the corporate assets in danger of being forfeit to the Crown. Many DIY clients rely solely upon filing reminders sent by the Companies office- (often to stale addresses,) and some are even oblivious to the requirement to make an annual filing. Regrettably, the process to restore a dissolved company is somewhat involved, and invariably costs more than having a lawyer incorporate a company from scratch.
So blessed n be the do-it -yourselfers, they are ever so good for business!