Blogs list

Kyle Stout - Nelligan O'Brien Payne - Kyle Stout

When Is Late Too Late? Supreme Court of Canada Clarifies Limits on Courts’ Jurisdiction to Backdate Orders - Sponsored Article On December 4, 2015, the Supreme Court of Canada released its highly anticipated decision in a trilogy of shareholder class actions under the secondary market liability provisions of the Ontario Securities Act – Canadian Imperial Bank of Commerce v Green (“Green”), Silver v Imax Corporation (“Imax”), and Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v Celestica Inc. (“Celestica”) – reported as Canadian Imperial Bank of Commerce v Green (“CIBC v Green”). At issue in each of the trilogy cases was whether the limitation period for commencing a statutory claim for secondary market misrepresentation under the Ontario Securities Act (the “OSA”) is suspended: (a) once the representative plaintiff files a statement of claim pleading an intention to seek leave to commence the statutory claim; or (b) only once leave has been granted.  The Supreme Court’s finding that the clock did not stop running on the limitation period under Section 138.14 of the OSA until leave was actually granted, is unlikely to have any major impact on future securities class actions cases in Ontario, given the 2014 amendments to the OSA, which provide that the limitation period is suspended when a motion for leave to commence the statutory claim is filed with the court.  More interesting, for those law or Latin geeks among the OBJ readership, are the Court’s findings regarding the courts’ jurisdiction to issue orders nunc pro tunc. Limits on the Nunc Pro Tunc Doctrine Nunc pro tunc, the Latin phrase “now for then” refers to the power of…

Photo : Kyle Stout May 16, 2016

Doug Snow - Titus - Doug Snow

When Did You Last Upgrade Your Data? - Sponsored Article What kind of month would it be if there was not another news story about a data breach? This time it is the “Panama Papers” – the leaked documents from the law firm Mossack Fonseca. In an article posted to TechRepublic, James Sanders reviews how the outdated Fonseca IT infrastructure likely contributed significantly to the hack. With a 2009 version of Microsoft Exchange, a client portal (Dupral) from 2013 running on Apache from 2010, and finally a homepage built using a 2014 version of WordPress, the Fonseca infrastructure was enormously vulnerable to attack. Clearly, the Mossack Fonseca perimeter defenses were vulnerable.  But was it just the perimeter defenses that were behind the times? What about their data? Was their data up to date? The defense of data ultimately has to start with the data itself. Without knowing what the data is and how damaging it would be to your organization if lost, it is not possible to organize a strategic defense. Limited IT resources may mean it is not possible to ensure that all of your systems are immediately updated with the latest security patches. But even with limitless IT resources (oh, to dream!), it makes sense to focus data protection efforts on the most important information you own. So how do you upgrade your data? With identifying metadata. By adding additional details about the information to the file’s metadata, such as the classification, information lifecycle details, and applicable regulatory codes, it becomes possible to focus data protection efforts where they are needed…

Photo : Doug  Snow May 02, 2016

Jeff Harrison - MNP LLP - Jeff Harrison

Real Property – Too Good to be True? - Sponsored Article First - What is Real Property? Real property is any property attached directly to land, as well as the land itself. This can include not only buildings and other structures, but also rights and interests. Remember the old adage “if something appears too good to be true it probably is”? We see time and again, people and businesses find themselves in a difficult spot having bought or sold real property. It usually followed by the comment of ‘they were told’ GST did not apply. More often than not, these large transactions tend to move quickly. Reading the fine print or getting proper advice isn’t always top of mind. Being under pressure to make the deal leads to short cuts, only to find out they simply took the tax obligation away from the seller or the seller having to come back and ask for tax they forgot to collect. This can create difficult circumstances at the best of times, let alone receiving a large assessment from the Canadian Revenue Agency (CRA). Two general rules to always be aware of: First – real property is always taxable when sold until an exemption can be supported. Second – the seller has the obligation to collect the GST / HST unless the legislation puts the obligation in the hands of the purchaser in a taxable sale. It may also be the purchaser bought it exempt but, through a change in use, has triggered a self-assessment. Exemptions for real property tend to be tied to sales of used…

Photo : Jeff Harrison April 26, 2016

Janet Weichel McKenzie - The Hillbrooke Group - Janet Weichel McKenzie

The Value of Information: a Barometer for Change - Sponsored Article The release of this week’s Ottawa Chamber of Commerce’s second annual Ottawa Business Growth survey is an excellent example of how valuable information can be in helping determine organizational priorities. By surveying their business members, the Chamber of Commerce is able to find out first-hand what issues matter most to them. This includes topics such as the current business confidence in the city; access to credit and market expectations; and which industry has the greatest potential for growth in the National Capital Region. In addition to informing future priorities, information is also valuable for successful communications and marketing. It helps teams make informed decisions based on objective results rather than anecdotal evidence. A few key advantages of using information in your communications efforts include: Learn what’s working and what’s not Understanding how your communications efforts resonate inside and outside your organization is invaluable and can help teams improve the effectiveness of their activities. It can be achieved in many ways such as conducting a comprehensive survey (data collecting) with target audiences, or it can be as simple as counting website page views or Twitter followers. It can also be achieved through one-on-one interviews which gives you the opportunity to further engage with your audience. Communicating change Information is also important when managing and communicating change. It can be as simple as enacting a role-playing scenario and seeing how people react. Test your communications ideas out and see how people’s behavior changes as you are running a campaign. It provides valuable information and analytics…

Photo : Janet  Weichel McKenzie May 30, 2016

Gavin Miranda - MNP LLP - Gavin Miranda

Don’t let your bottom line get tangled in foreign tax laws - Sponsored Article “Gavin, what are some of the tax implications of expanding internationally?” There a number of tax considerations that vary depending on how you are targeting customers outside Canada. Is it via the Internet or are you considering a physical presence in another country? Let’s take the U.S., our largest trading partner. It can be a great time to begin selling or to expand sales to American customers, given the current value of the loonie. In the U.S., there are federal tax laws, and there are state tax laws that vary by state. Take software as an example. A cloud-based vendor can sell software to anyone in any state, without having any physical presence there at all. How does U.S. sales tax apply to Internet software sales? Although sales tax is collected from the customer, some states can put the onus on the seller to remit state sales taxes, even if it was not collected – regardless of where they are located. But how, you ask, would the tax man in a U.S. state discover there was a sale in which local sales tax was not collected? If your customer is audited, and the auditor finds an invoice with no sales tax on it. If the needs of your business are best served by establishing a physical presence somewhere in the U.S., additional tax considerations arise. Staffing a sales office south of the border, for example, creates a taxable presence in the U.S. that requires federal, and likely state, income tax filings. But even…

Photo : Gavin Miranda May 20, 2016

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

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

Alternative Dispute Resolution - The Benefit of Experience - Sponsored Article As legal fees continue to rise, business professionals are often faced with a difficult decision. Should I attempt to resolve this dispute on my own, or should I retain a lawyer with expertise in dispute resolution? In his book Outliers: The Story of Success, author Malcolm Gladwell examines what it takes to be successful. Gladwell argues that innate talent will never become expertise without a tremendous amount of practice. Gladwell cites research indicating that the “magic number” of hours it takes to achieve expertise is 10,000 hours.  Most people will probably not spend 10,000 hours developing expertise in dispute resolution. That’s 40 hours/week for nearly five years! As a litigation professional, it took me a long time to get accustomed to alternative dispute resolution, and I learn more every day. I still recall my first exposure to mediation over ten years ago. I am a freshly minted lawyer. I have an almost brand new Blackberry Quark. It sends email to my cellphone! I’m assigned a case. My guy allegedly skimmed money from some type of shady retail distribution operation. Deny, deny, deny… There is a last-minute document produced during discovery. An audio tape of my client? Wait - did he just admit to taking the money? The lawyer says something about a “statement against his own interest?” Man, this law stuff is complicated… The lawyer for the other side is seasoned. He suggests we use his office. It will save money. Makes senses to me. He proposes a mediator. This guy seems okay.…

Photo : David Contant September 19, 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