What the Family's Own Files Said About Who Owned What

The situation

This was not the family's first attempt to sell. Chantal, Josee, and Kaveh had tried twice before, once through a broker who gave up after several months, and once directly with a different US buyer who walked away without ever fully explaining why. Both times, the deal had stalled somewhere in the diligence process, and both times, the family had assumed the problem was cold feet on the buyer's side, or a valuation gap, or simply bad timing. Nobody in the family had seriously considered that the problem might be sitting in their own filing cabinet.

The business itself, a marine and transport equipment supplier based in Marathon, had grown steadily over roughly fifteen years under family ownership. Chantal worked as a landscaper on the side even while helping run parts of the business; Josee worked as a transit operator and had a smaller, more passive role in the company's direction; Kaveh, a cousin who had joined the ownership group early on, had taken the most active day-to-day role of the three. None of them had backgrounds in corporate finance, and the company's paperwork, built up over the years through a series of informal family agreements and the occasional lawyer's involvement at moments of change, reflected that.

When a third buyer, a US company looking to expand its Canadian supply base, expressed serious interest, the family came to our office determined to get it right this time. They described their ownership arrangement clearly and confidently: each of the three held what they believed was an equal one-third share, an understanding they said had been in place since Kaveh joined the business, confirmed, they said, by a conversation at the time that all three remembered the same way.

The buyer's proposed structure was a plan of arrangement, a court-supervised process used to combine two companies or transfer ownership in a way that needs to satisfy both Canadian corporate law and, because the buyer intended to issue its own shares as part of the payment, US securities requirements on the American side of the transaction. It is a more formal process than a simple share purchase, precisely because it has to work under two different countries' rules at once, and it depends entirely on the ownership picture being accurate and airtight before anyone files anything.

What the documents showed

Diligence for a plan of arrangement starts with confirming exactly who owns what, since the arrangement has to be approved by the shareholders who actually hold the shares, and both the Canadian court process and the US securities filings depend on that ownership picture being accurate down to the individual share. Our office requested the company's full minute book, share registers, and any shareholder agreements on file, standard first steps for a transaction of this kind, expecting the exercise to confirm what the family had already told us rather than contradict it.

What the minute book actually showed did not match the family's account. Rather than an equal three-way split, the records showed a share issuance from several years earlier that had given Kaveh a meaningfully larger stake than either Chantal or Josee, issued in connection with a cash contribution Kaveh had made to the business at a point when it needed capital to cover a slow season and had few other options for raising it. The resolution authorizing that issuance was properly signed and dated, sitting in the minute book exactly where it should have been all along, apparently never revisited or discussed again by any of the three once the immediate cash need had passed and the business had moved on to steadier years.

Chantal and Josee's recollection that all three held equal shares was not dishonest, and nothing about the discovery suggested anyone had tried to mislead anyone else. It reflected how the three of them had actually operated the business day to day for years, splitting decisions and, informally, profits close to evenly regardless of what the paper technically said. But a plan of arrangement is not built on how a family has informally operated a business over time. It is built on the legal share register, and a regulator on either side of the border reviewing this transaction would look at that register, not at family memory or long-standing practice, to determine whose approval was required to complete the sale. Who was actually entitled to the proceeds was a related but separate question: a person can be the registered holder of shares while someone else holds the beneficial interest, and a trust or family arrangement can change who is truly owed the money. For this family, though, no such separate arrangement existed, so settling what the register said was also, in the end, the way to settle what each of them was owed.

This was very likely the reason the two earlier sale attempts had stalled without a clear explanation. A previous buyer's diligence team, or a previous broker's own review, may well have uncovered the same discrepancy and simply walked away rather than raise an uncomfortable family issue directly, or the family's own inconsistent description of ownership across different conversations, repeated to different advisors over time, may have been enough on its own to quietly unsettle a buyer's confidence without anyone ever naming the actual underlying cause.

What we did

1. Pulled the complete corporate record before relying on anyone's account of ownership. Rather than proceeding on the family's confident description of an equal three-way split, we requested and reviewed the full minute book, all share certificates, and every resolution on file from the company's founding onward, which is what surfaced the earlier issuance to Kaveh that none of the three had focused on or discussed in years.
2. Verified the issuance was legally valid before treating it as the controlling fact. We confirmed the resolution authorizing Kaveh's larger share issuance had been properly passed, signed, and documented at the time, checking it against the company's broader corporate records and the cash contribution it corresponded to, so the family understood clearly this was not a clerical error but a real, binding transaction from years earlier.
3. Walked the family through what the records meant, together, before any structuring began. This was a difficult conversation, since it meant telling three family members that their long-shared understanding of the business had been inaccurate for years. We handled it directly but carefully, framing the finding as something the paperwork itself settled rather than something anyone needed to argue about among themselves.
4. Helped the family agree on how to proceed once the true ownership picture was clear. Rather than letting the discrepancy reopen old tension or stall the deal a third time, we facilitated a conversation where Chantal, Josee, and Kaveh worked out, with the accurate numbers in front of them, how the sale proceeds should actually be allocated, informed by the legal ownership but also by how the three had genuinely built the business together over the years.
5. Structured the plan of arrangement around the confirmed ownership figures. With accurate share numbers finally settled and agreed to by all three family members, we built the arrangement documentation, the shareholder approval materials, and the disclosure package around figures that would hold up under scrutiny from both a Canadian court and US securities reviewers, rather than figures that might be challenged later in the process.
6. Coordinated with US securities counsel to align disclosure on both sides of the border. Because the buyer was issuing its own shares as partial consideration, the transaction needed disclosure that satisfied US securities requirements as well as the Canadian arrangement process, so we worked closely with counsel on the American side to make sure the ownership figures and the underlying history were presented consistently in both countries' filings from the outset.
7. Brought the arrangement through Canadian court approval with a clean, consistent record. Because the ownership question had already been fully resolved and documented before filing, the court approval process moved through in an orderly way, without any of the ownership uncertainty that had likely undermined the two earlier sale attempts before they ever reached this stage, and without a judge needing to ask the family to explain a discrepancy that, by then, had already been sorted out on paper.

The outcome

The plan of arrangement closed on the structure the buyer had originally proposed, with the family's true ownership proportions, confirmed by the minute book rather than by memory, forming the basis for how the sale proceeds were ultimately divided among the three of them. Kaveh received a larger share of the proceeds than an equal three-way split would have produced, reflecting the earlier capital contribution the family had, in effect, forgotten about over the years, while Chantal and Josee received proportionally less than they had originally expected going into the process, a real and material adjustment for both of them.

That adjustment was not painless, and it would be dishonest to describe it otherwise. Chantal and Josee had genuinely believed, for years, that the three of them held the business equally, and confronting records that said otherwise required some hard, occasionally tense conversations within the family before everyone was ready to move forward on the corrected basis. The family ultimately agreed to proceed on the documented figures rather than dispute them, recognizing that the resolution authorizing Kaveh's larger stake had been valid from the start and was not something a court or a securities regulator would have set aside on the strength of a shared family recollection alone, however sincerely held.

The deal closed within several months of the corrected ownership picture being established and agreed to, considerably faster than either of the two earlier attempts had progressed before stalling out for reasons the family had never fully understood at the time. Whatever had gone wrong with those earlier efforts, the same discrepancy did not have the chance to derail this one, because it had already been found, confirmed, and resolved openly among the family before a single arrangement document was filed with either country's regulators. The buyer's own diligence team, reviewing the same corrected records, raised no further questions about ownership at any point in the process.

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