Our Take on Things

It is the time of year again when we start sending out our corporate maintenance reminder letters.  And as such, I thought it would be appropriate to cover that issue here.

 

Various provincial and federal statutes require that corporations meet basic requirements in terms of annual record keeping and reporting.

 

In addition to the obvious requirement to report the corporation’s income for the purposes of taxation (which we will not discuss here), there are two major categories of annual maintenance that every corporation must concern itself with.

 

The first is the duty to maintain internal records of the annual meeting of the shareholders of the corporation. 

 

While neither the Ontario Business Corporations Act or the Canada Business Corporations Act specify the extent of detail that is required, experience tells us that the minutes should record attendance, the election of accountants and auditors (if required by the Acts), and the election of directors and officers.  As well, any resolutions passed at such meetings must be kept by the corporation.

 

The second duty is to keep the relevant governing body apprised of your basic corporation information on an annual basis – generally this relates to the names and address of current directors and the address of the corporation. 

 

In the case of provincially incorporated entities, the Corporations Information Act requires that you submit a CIA return, along with your annual income tax return.

 

For federal corporations, however, a separate corporate annual return must be submitted to Corporations Canada.

 

Penalties for failure to adhere to the annual requirements range from fines to having the corporation cancelled.  It’s something that should be taken seriously by all directors.

 

If you have any questions about this, or any other compliance matter, do not hesitate to contact me.

 

Scott R. Young

April Fools Day is almost upon us and as tempting as it is to prank our Blog, I think that April Fools jokes are probably best left to my personal, rather than professional life (my family is hereby on notice of potential pranks and warned that any pranks played on the writer of this blog will be met with harsh retribution).

 That being said, I would hate for any of our blog readers to think that lawyers and for that matter, Judges are without humour, and to that end, I recommend your read the decision of The Honourable Justice J.W. Quinn in Miller v. Carley – you can find it here: http://canlii.org/en/on/onsc/doc/2009/2009canlii39065/2009canlii39065.html

Appreciating that many of you don’t have the time to scan through the 218 paragraph decision, allow me to point out a few highlights that make this decision “entertaining”.  These are taken directly from the text of the Judgment:

INTRODUCTION

[1] After a busy day conducting illegal drug transactions, the plaintiff, the defendant and a mutual friend stopped at a corner store where the defendant purchased some “scratch” lottery tickets. One of the tickets proved to be a $5-million winner.

[2] The parties dispute ownership of the winning ticket. If the ticket were a child and the parties vying for custody, I would find them both unfit and bring in Family and Children’s Services.

Later in the case, perhaps, my favourite quote from a decision, ever, is:

 [151] When confronted with this discrepancy in his evidence, the plaintiff stated, “I have a really bad memory, really, really, really.”[33]

 [33] It is difficult to win a lawsuit with an admission like that one.

 In case you’re wondering, the plaintiff went on to lose the case, the Judge not believing that he had paid for ½ of the lottery ticket that lead to the $ 5-million dollar win.

 Trusting this has convinced at least some of you, the law is not as completely dry & dour as many believe.

Inga B. Andriessen Sr. Lawyer

 

There is a great article in the Globe and Mail this week about the breakup of the business partnership behind the popular restaurant Le Papillon.

 

The story is an excellent example of what can go right when people plan ahead for the future of a business, and when, failing that, they act reasonably in the business’ evolution.  I think the co-sharing agreement regarding the branding is ingenious, and although the lawyer in me shudders at all of the potential for disaster such an arrangement entails, the business person in me revels in the simple elegance of the plan.

 

The story doesn’t, however, tell of all of the things that can and do go wrong when partners fail to plan for eventualities.  In a blatant attempt to scare you into making that sort of plan, let me give you a brief rundown of some recent situations I’ve encountered:

 

• A well-funded group of business people started a new media corporation, with the intention of establishing a ground-breaking online social media website.  Despite several meetings to iron out the details of a comprehensive shareholders agreement, the document was never signed.  A year later, the shareholders were trying to push out one of the original investors for a failure to comply with their expectations.  Referrals to several litigation firms followed.  It’ll be tens to hundreds of thousands of dollars in legal fees and years before the dispute is settled.  Funding to launch the website was tied up in legal expenses, thus making the whole thing virtually worthless.

 

• Two partners setting up a health club decide, against my advice, to go ahead and set up the business, incur debts and seek out financing, prior to papering their arrangement.  A minor fraud involving the planned lease of gym equipment spiraled into the loss of their financing, which in turn lead to their personal liability for a lease, as well as potential litigation from hundreds of gym members.  The litigators took over that one as well.

 

• Two corporations with a years-long joint venture-type relationship got into a dispute about the allocation of income.  When they brought the written agreements to us, it was clear that they had been drafted by the business people involved, who relied on found precedents that did not include many of the issues that were relevant to the parties, and were never reviewed by legal counsel.  The documents turned out to be worthless in terms of settling the dispute.  The parties are now faced with the prospect of litigating or setting aside their differences until they can figure out how to extricate themselves from the venture.

 

We’ve seen what can go wrong and we know where the pitfalls are.  Before getting into a business arrangement, or before going further down the road in your current arrangement without a plan, talk to me about planning for any future eventualities, before they happen.

 

Scott R. Young

Are you ready for the changes that are coming to the internet domain name registry system?  If you do business on the internet, or if your online presence represents a significant aspect of your brand, then you better get ready.

 

After years of consultation and planning, ICANN will be introducing two major changes to the Top Level Domain (TLD) system currently in place.  TLDs are the .com, .net, and .org identifier that follows a domain name.  In addition to the most popular three, currently there are various country code TLDs and just 21 generic TLDs (.biz, .gov,. .edu, etc.).

 

The first change is the addition of non-Latin script characters.  This means that existing TLDs will now be available in Arabic, Greek, Cyrillic and various other scripts.

 

The second change is a major opening of the generic TLD range.  It is expected that industry specific TLDs such as .law and .computers will be introduced, as well as a plethora of other TLDs from every possible interest area imaginable.  Current expectations are that 500 new TLDs will be introduced as the change is rolled out in the next year.

 

As a brand owner and trade-mark holder (whether your rights are registered or common law), these changes demand your consideration.  It is currently estimated that 14% of web searchers are hi-jacked away from their legitimate search target into misleading typosquatting sites or other unauthorized websites.  The changes to the TLD system represent an exponential increase in the potential for identity theft, brand misappropriation and website fraud.  Maintaining the value of your brand online is about to get very complex.

 

The new system will bring with it new remedies that address takedown provisions and other dispute resolution procedures.  The remedies may be vastly different among the different registries however and dispute resolution models currently in place do not appear to favour rights-holders to the extent that might be desired.

 

If you have any questions about the new system or your online branding, please contact me as soon as possible.  This promises to be an interesting year for the internet.

 

Scott R. Young

We are interrupting the usual legal topics on this blog due to the 2010 Vancouver Olympics.   

Boy do I love the Olympics – you?

Boy do I love controversy – of course I do, I’m a trial lawyer. 

Boy do I love the concept of Owning the Podium – if only it were actually happening, but then again, we’re not ½ way through the games yet.  

I can’t help laugh when the world press is attacking the Own the Podium concept for being un-Canadian. 

Pride is not un-Canadian.  Setting a lofty goal and working towards it is not un-Canadian.

This Country is made up of people who on a daily basis set goals and work towards achieving them, granted, generally in a more polite manner than some other countries, but still, goal setting is fundamental to achieving success and moving forward, be it in sport, business or life.

There is no podium for our firm to own, but we still set the goal of being a cost effective, aggressive, pro-business law firm and each day we attain that goal for the benefit of our clients. We do all of this while being Canadian, and generally still polite.

Are we your business  law firm?  If not, we should be as your business will benefit from our firm’s expertise and attitude.

In conclusion and without apology:  Go Canada – Own the Podium !

Inga B. Andriessen J.D.

One of the benefits of using a lawyer instead of an accountant or paralegal is that what you tell your lawyer cannot be revealed to others.

Many people don’t realize that if they have evaded income tax and speak to their accountant about it, the accountant can be required to give evidence about that conversation – a lawyer cannot.

Similarly, if you retain a paralegal to represent you in Small Claims Court, nothing you say is confidential and the paralegal can be called to give evidence about what you have told them.

The better way to handle the above situations are to retain a lawyer who will then retain the account – all of the conversations are then covered by privilege.   In the case of the paralegal – the better way is to retain our firm: we handle Small Claims on a flat fee basis and we’re good at what we do.

Inga B. Andriessen J.D.

So, lets say you have a contract with, oh lets say your spouse. We don’t handle family law here, but let’s say it’s a prenup.  Imagine if you can, that you have stepped out on your spouse during your relatively brief marriage, more times than you have fingers and in a desperate attempt to remain married you offer to pay more money for a longer term of service, er marriage. 

Timing is everything  – and offering 60 million for 2 more years to your spouse after many ” transgressions” is not the time to renegotiate that contract.

Similarly, in the commercial world, negotiating the consequence for breach of contract needs to take place before the contract is breached.  It is not enough to meet someone, agree to provide a service for a fee, shake hands and walk away. 

While in that ” honeymoon ” stage, you need to have a contract signed that clearly sets out what happens if either party doesn’t do what they say they would do.   Pay a lawyer to create this contract, it is much less expensive to do it at that point, than to pay a lawyer to litigate it after the breach of the contract.

Of course, getting back to my prenup example, I have a funny feeling that lawyers are going to make a lot of money off that situation.

Inga B. Andriessen,  Sr. Lawyer