How do I add a partner to an incorporated company?

When a business is operated as a corporation, the arrival of a new "partner" generally corresponds to the entry of a new shareholder.

This person can primarily become a shareholder in two ways:

• by subscribing to new shares issued by the company;
• by acquiring shares held by an existing shareholder.

These two operations are different. In a new share issue, the company issues shares to the new shareholder in exchange for the agreed contribution. In a share transfer, an existing shareholder transfers all or part of their shares to the new shareholder.

Before proceeding, it is particularly important to:

• determine the stake that the new shareholder will hold;
• determine the category or series of shares concerned and the rights attached to it;
• check the company's articles of association and any restrictions applicable to the issuance or transfer of shares;
• examine the shareholders' agreement, if one exists;
• check for pre-emption rights, rights of first refusal or other rights that may apply;
• determine the price or consideration for the transaction;
• assess the legal, tax and financial consequences of the transaction;
• obtain the required corporate authorizations;
• prepare the resolutions and other necessary documents;
• update the securities register and other relevant corporate registers, including the shareholder register and the transfer register, where applicable;
• update the minutes book and make the required declarations to governmental or regulatory authorities, where applicable;
• to update, when required by applicable rules, information relating to persons exercising control over the company.

The arrival of a new shareholder can alter voting rights, the economic distribution among shareholders, and, in certain circumstances, control of the company. It is therefore important to verify whether the transaction also entails changes to the information the company must retain or report to the relevant authorities.

It may also be appropriate to prepare or amend a shareholders' agreement to establish the rights and obligations of shareholders and to provide for certain future situations, including the transfer of shares, the departure of a shareholder, or the settlement of certain disputes.

In summary , adding a "partner" to an incorporated business generally means bringing in a new shareholder. First, it's necessary to determine whether they will subscribe to new shares or purchase existing ones, then to verify applicable rights and restrictions, obtain required authorizations, update relevant records and information, and prepare the necessary corporate documentation.