Manufacturing

Overview

The manufacturing, distribution, and retail industries are composed of many different companies of various sizes. These companies are subject to numerous pressures and must innovate and adapt to meet the changing needs of their customers and rapidly evolving business environments. Whatever their size or the specific nature of their activities, an understanding of their legal environment is essential to achieving their objectives.

As a manufacturing enterprise, you are dealing with specific challenges that require an in-depth understanding of the environment in which you operate. Let’s take a shot at answering 6 of your everyday questions.

Intellectual property

What precautions should be taken to protect your intellectual property (IP)?

Set up confidentiality agreements early.
Avoid or provide a framework for joint ownership of IP.
Obtain all IP rights from your business partners.
Think of investing in protecting your IP!

Mergers and Acquisitions

Why and how do you conduct a due diligence review when acquiring or selling a business?

Why?
Makes it possible for the parties to negotiate and draft a purchase agreement containing the seller’s appropriate disclosures and outlining an adequate risk-sharing arrangement.

How?

Obtain an accurate portrait of the target company.
Measure the possible synergies between the companies.
Assess the risks of the transaction.
Identify the list of corrections to be made prior to closing.
Prepare a purchase offer that accurately reflects the situation or pull out of the negotiations.
Establish an integration plan following the closing of the transaction.

Innovation

How do you successfully integrate AI into your organization?

Prepare yourself going forward by answering the following questions:

What competencies are needed to implement AI? Do you have the required ressources internally?
Which of the company’s values must be maintained throughout this change?
Which tasks will be replaced or transformed by AI? Could these changes result in labour disputes?
What will the reactions to the changes be and how will the advent of this technology be communicated internally and externally?

Workforce

Are you hiring foreign workers? Here are a few things to think about.

Hiring
Ensure that the individual holds a valid work permit and that the job complies with the conditions set out in the permit.

Employment contract

Put the working conditions being offered in writing.
Stipulate in the contract:
- Who is responsible for covering transport and moving fees?
- Who is responsible for finding accommodations?
- A method for reimbursing your investment in incidental expenses in the event of the employee’s premature departure.

Working conditions
Notify the appropriate authorities if you alter the employment conditions of a foreign worker so that you are not out of compliance.

Tax planning

Why should you use a family trust as a tax planning tool?

Multiply the capital gains deduction
An individual holding shares of a company for more than 24 months can usually benefit from a capital gains exemption of about $850,000, once in his lifetime. Setting up a family trust makes it possible to multiply the capital gains exemption by the number of beneficiaries of the trust.

Minimize the tax payable at death
Upon the death of an owner-manager who has himself set up a family trust holding all of the shares of the company, there will not, usually, be any taxes levied in the event of the accidental death of the owner, since the trust is not subject to the deemed disposition rules that apply to all property at the time of death.

Internationalization

What are the best practices regarding internationalization?

Study the target market and all available resources to guide you through the process.
Cultivate a network of contacts and partners and conduct prompt follow-ups so as not to miss out on any opportunities.
Define the risks as well as other social, legal and economic considerations.
Surround yourself with qualified individuals to 1. negotiate the contracts and ensure legal and regulatory compliance and 2. oversee the export logistics.