Blogs list

Colin Moden - Titus-ColinModen

Corporate Security and the 2-in-1 Device - Sponsored Article Many office workers have a Windows laptop as well as an iPad. I began experimenting with leaving the laptop at my desk and only taking the iPad with me when going to meetings or was otherwise away from my desk. After all, it seemed silly to carry two devices when I could present from the iPad, takes note on the iPad, and answer email on the iPad, right? Well in practice, not so much. There always seems to be a last minute change that needs to be made to the slides and, while I can present from the iPad, I can’t easily edit the presentation. I can reply to an email from the iPad but I don’t have access to the network folders and SharePoint sites that contain all the background information I need to formulate the right answer. Plus the files I have on my iPad aren’t the same ones I have on my laptop – they are copies. Are these copies up to date? Are they in the same format? Can I sync one or both ways easily? So, I ended up taking both devices with me to conferences, using the laptop for work, and the tablet for movies, personal email & web surfing. Windows 8 was an attempt to solve that problem. Microsoft built a device (Microsoft Surface) that could be used as a tablet (with a touch screen and an on-screen keyboard), but really it was running Windows and it could be plugged into a monitor, keyboard and mouse to do…

Photo : Colin Moden April 05, 2016

Doug McLarty - MNP LLP - Doug McLarty

Arriving at a win-win when one partner wants out - “Doug, my partner wants to cash out and I don’t want to – what do you suggest we do?” Any time there is the prospect of a fundamental change in how your business operates, it’s time for a critical examination of where you are and where you are going. CLICK HERE TO WATCH RELATED YOUTUBE VIDEO FROM DOUG MCLARTY Ask these questions: Why does your partner want to leave (cover both personal and professional motivations)? What impact will this have on your business? Where you are headed as an organization? There are many factors to take into consideration to ensure an outcome is not one-sided. Your partner will need to be flexible about the timing to ensure there isn’t a negative impact on the organization as a whole. He or she may need to stay involved in a reduced role for a specified period of time. Your partner may need to be flexible about the timing of any payments, too, and may not receive all the cash at once. You will also need to take into account your current structure and the tax implications of any decisions.   You can start with what you already have in writing, such as your shareholder agreement. This should outline how partners can buy or sell shares. You will also need a professional valuation of your business, if you don’t already have a recent one, to understand what your business would be worth if you were to sell today. But this is just the beginning. You need to be…

Photo : Doug McLarty March 28, 2016

Peter Cronyn - Nelligan O'Brien Payne - Peter Cronyn

Auditors Liable for Failing to Catch Livent Fraudulent Activity - Sponsored Article Livent Inc., the infamous live entertainment creation of Garth Drabinsky and Myron Gottlieb, has successfully sued its auditors for failing to detect the fraudulent activities of its senior management. Livent had a voracious need for capital and had accessed North American money markets on the strength of its financial statements. However, those statements were, in fact, rife with a series of fraudulent accounting practices, which gave the appearance of a far more successful and stable enterprise. The fraud was ultimately caught when new equity investors initiated management oversight. Livent was required to restate its financial statements and file for insolvency protection. As part of that process, the Receiver advanced a claim against the former auditors for damages. The Ontario Court of Appeal has recently confirmed the precedent-setting trial decision in which Livent's auditors were found liable to the Receiver. The court awarded damages of $85 million on the basis that a more careful investigation would have revealed the fraudulent activity of management earlier than it was actually discovered. One of the principle arguments of the auditors was that they should not be held liable to the company itself for failing to reveal its own fraud. They also argued that the claim was in reality one being advanced on behalf of Livent's creditors, a group to whom they would not normally owe a duty in law. These arguments were rejected by both the trial judge and the Court of Appeal.  The court found the auditors liable for the 1997 audit onwards. It was the…

Photo : Peter  Cronyn March 21, 2016

Timothy McCunn - Perley-Robertson Hill & McDougall LLP - Timothy McCunn

Thinking of an Exit? - Sponsored Article The low Canadian Dollar is having a significant impact on various sectors of our economy.  One area not often discussed is the price of Canadian companies to U.S. buyers.  How low our dollar will go and for how long is a guessing game.  However, it does present an opportunity for those business owners who are considering selling their business.  In this article we discuss the process of selling a business. Firstly, consider using a broker who has extensive and deep knowledge of the U.S. market since that will likely be the source of your best offers. Secondly, consider what needs to be done prior to putting up the sale sign: (1) ensuring business continuity (2) removing impediments to a sale (3) assessing value and considering any possible re-structuring that could boost value  This stage entails a lot of financial advisor time and is critical in maximizing the value of your business.  Thirdly, negotiating the sale. This typically involves at least four steps: (1) identifying potential buyers (2) negotiating a letter of intent (3) negotiating and signing a purchase agreement (4) closing the transaction After working with your advisor on the identification of potential buyers, the next three steps are ones which involve the most important legal issues.  At the letter of intent (“LOI”) stage you will have many critical decisions to make:  (1) how extensive should the LOI be? I have seen some that are 2 pages and some as long as 30 pages: it really is a balancing act: how many issues…

Photo : Timothy McCunn March 14, 2016

Greg Draper - MNP LLP - Greg Draper

March is Fraud Prevention Month - Sponsored Article Every March is International Fraud Prevention (or Fraud Awareness) Month. 2016 marks the 12th anniversary of the event, which seeks to raise awareness and educate Canadians on how to identify, report and stop fraud. Fraud is a serious issue that has significant financial impacts for individuals and corporations alike, costing Canadians $10 billion annually. The RCMP has noted that 9 in 10 Canadians who are victimized by fraud don’t speak to anyone about it. MNP has continually supported this initiative by participating in fraud awareness events and publishing new insights and blogs related to fraud prevention throughout the year. To discover how MNP can protect you from fraud, contact Greg Draper, MBA, DIFA, FCPA, FCGA, CFE, ICD.D, Vice President of MNP's Valuations, Forensics and Litigation Services team at 403.537.7679 or greg.draper@mnp.ca.

Photo : Greg Draper March 14, 2016

Kelly Fraser - Titus - Kelly Fraser

3 Steps to Prevent Information From Just Walking Out the Door - Organizations put a lot of resources into data loss prevention, information classification and cyber security projects in an effort to ensure our information is safe. We have developed sophisticated methods of detecting sensitive information and stopping it from being copied over the network, uploaded to the cloud, copied to USB sticks and even burned to DVDs. But there is still one (low tech) leak that seems unstoppable: paper. What is to prevent someone from printing out sensitive information and then taking it out the door or losing control of it in some other way? At first glance it may seem there is nothing we can do, but there are steps that can be taken. 1. Data Classification The first step is to crowd source security. Have you ever watched a movie and seen that “Top Secret” stamp on a document, or maybe even an envelope marked “Confidential”? Well it turns out that visibly marking the information does protect it. You can classify files so the sensitivity of the information is always known, even when printed. Those who are security conscious will pick up and secure information if they see it at risk, such as an item marked “secret” and left unattended in the lunchroom. Usually they will follow up that act by identifying the person who put the information at risk and ensuring this does not happen again. So step one – clearly indicate the sensitivity of information when printed. 2. Protective Markings Step two is to assign responsibility. In the case of a printed…

Photo : Kelly Fraser March 07, 2016

Calvin Carpenter - MNP LLP - Calvin Carpenter

Tax Changes Could Spell Trouble for Professional Corporations - Sponsored Article As a leading national accounting, tax and business consulting firm in Canada, MNP has been helping professional practices recognize the tax advantages available for professional corporations (PC) for more than 50 years. Some of these tax benefits however, may be curtailed significantly under proposed tax legislation currently being reviewed by the federal government. Although the rules vary by province, practicing members of most professions — such as law, medicine, dentistry or accounting — can choose to incorporate. Under such an arrangement, the professional is an employee of the PC, which carries on the business of the professional practice. Most provinces restrict the activities that the PC may carry on and limit the business of the corporation to the practice of the profession or activities ancillary to the practice. With that being said , the provinces generally permit surplus funds earned by the practice to be left in the corporation and be invested therein, providing a potentially significant tax-deferral advantage. There are various tax reasons why a professional may wish to incorporate, from the potential for significant tax savings or deferral, the various income-splitting opportunities with a spouse or adult children for certain professions or to take advantage of the lifetime capital gains exemption on the first $824,000 of gains on the sale of the shares of the professional corporation, assuming this is permitted and / or feasible in the professional's province. The use of a corporation has often been cited as a great tax deferral mechanism, provided the incorporated professional does not need…

Photo : Calvin Carpenter February 29, 2016

David Contant - Nelligan O'Brien Payne - David Contant

Court of Appeal Keeps It Rolling - Sponsored Article The Ontario Court of Appeal has recently provided important guidance in terms of when a claim is discovered for limitations purposes in the context of a continuing breach of contract. The recent decision of Pickering Square Inc. v. Trillium College Inc. dealt with a commercial leasing dispute between a tenant, Trillium College Inc. (“Trillium”), and its landlord, Pickering Square Inc. (“Pickering”).  Trillium leased space in a shopping centre for the period of June 1, 2006 until May 31, 2011. It agreed, in the lease, to pay rent, to occupy the premises, and to operate its business continuously.   In December 2007, Trillium gave notice to Pickering and vacated the leased premises. Although Trillium ultimately paid rent for the remainder of the lease, it failed to operate its business continuously from October 1, 2008 until May 31, 2011 (which gave rise to a claim for damages). Pickering only commenced its action for damages on February 16, 2012 - over four years after Trillium first gave notice of its intention to terminate the lease. A claim for damages in Ontario normally must be brought within two years from the earlier of the day that the claimant knew of the essential elements giving rise to a claim, or the day a reasonable person ought to have discovered them. Trillium argued that its breach of the lease was complete the first day that it failed to continue its occupation of the premises, and that each subsequent day added damages to that initial breach but were not themselves…

Photo : David Contant April 18, 2016

Paul Braunovan - Perley-Robertson Hill & McDougall LLP - Paul Braunovan

IP Protection at the Border - The Trans Pacific Partnership - Sponsored Article The Trans Pacific Partnership (TPP) is a trade agreement signed on February 4, 2016 in Auckland, New Zealand.  The TPP is not yet in force as it still needs to be ratified by the twelve member countries.  The TPP will expand the rights and responsibilities of customs officials with respect to identifying and detaining goods that infringe upon the intellectual property rights of others.  However, not everybody is in agreement that border officials have the legal background to be able to assess trade-mark infringement.  Others argue more broadly that the TPP will not benefit Canada’s economy and is designed to promote the interests of other countries such as the U.S. and China. As the TPP was being negotiated, in recent years the Canada Border Services Agency (CBSA) has established an intellectual property rights program for intellectual property rights holders in Canada.  Under this program, the CBSA has established a process whereby IP rights holders can file a Request for Assistance (“RFA”) asking for the CBSA to detain (temporarily) suspected counterfeit goods encountered at the border while the IP rights holder seeks legal redress.  If the CBSA identifies suspected counterfeit goods at the border, they can use the information contained in the RFA application to contact the IP rights holder and inform them of the details they need to allow them to pursue their remedies in the Courts.  Any criminal investigations relating to large scale commercial counterfeiting operations are handled by the Royal Canadian Mounted Police. The TPP would require Canada to enact further…

Photo : Paul Braunovan February 16, 2016

Catherine Tremblay - MNP LLP - Catherine Tremblay

Shareholders Beware: Does Your Buy-Sell Clause Set a Fair Price? - Sponsored Article Just as every apartment needs a fire escape, every shareholders’ agreement needs a buy-sell clause to set a price for the company’s shares on the occurrence of certain triggering events. A buy-sell clause outlines a process and pricing mechanism for the sale of the shares of a departing shareholder (e.g. upon death, disability, retirement, etc.) that necessitates a change in the ownership of a closely-held private company. The purpose of the clause is to provide a pre-determined procedure that ensures a fair price for all shareholders, while ensuring an orderly transfer of control to the remaining owners. Yet, in this author’s experience, these clauses can often create havoc if the pricing provisions are not properly thought out. This article provides an overview of some commonly used pricing mechanisms and discusses the pros and cons of each. Don’t use Book Value! The pricing mechanism in the buy-sell clause should be designed to ensure that both the buying and selling shareholders will be able to automatically transact at a price that is fair to all parties. One solution commonly adopted is for the shareholders to base the price on the net book value of the company. Net book value is simply the difference between the assets and liabilities reported on a company’s balance sheet at a point in time. The calculation of net book value is typically a straightforward mathematical exercise, but it may not result in a fair price. To understand why, consider the following example: - When ABC Corp. was founded, it issued 100 shares…

Photo : Catherine Tremblay February 16, 2016