Insights

The practice of law is changing every day, and the effect of changing legislation on businesses is significant. We write about recent developments in the world of tax & business law, keeping a watchful eye on the changing landscape for our clients. See what we’re thinking about, and what your business should be looking out for.

Business Law

Best Efforts, Reasonable Efforts, Commercially Reasonable Efforts or Reasonable Best Efforts?

What is the standard of effort that a contracting party must meet in order to satisfy its obligations under a contract?   That will depend on the language of the contract. Consequently, before agreeing to be held to a particular standard, it is prudent for a contracting party to understand the terms often found in contracts to set forth the applicable standard. SUMMARY: “Best efforts”: Taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving no stone unturned. “Reasonable efforts”: This does not mean "all efforts". It does not mean...

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Business Law

OSC Finalizes Disclosure Rule on Gender Diversity

The Ontario Securities Commission (“OSC”), together with most of the other securities commissions in Canada, announced that they have finalized a new disclosure rule that will require issuers listed on the Toronto Stock Exchange to provide annual disclosure on their policies to add more women to their boards and executive ranks. The new rules unveiled will also require companies to report on their term limits for directors, which proponents argue will help ensure there is more board turnover so new directors – including women – can be added to the mix. The model for the new disclosure requirements follows a...

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Tax Law

The Taxation of Employee Stock Options

Employers offer a variety of different forms of stock incentive compensation.  An understanding of the relevant tax rules is essential in designing incentive plans that meet the needs of both employer and employee. This article will consider the most common type of incentive plan – employee stock options. Employee stock options are popular because they meet a number of business objectives. In particular, they help employers to recruit, retain and motivate employees, without impacting cash flow. Most of the tax rules governing employee stock options are found in section 7 of the Income Tax Act. A stock option is defined...

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Business Law

ASC Prosecution and Settlement in Daylight Case Sets Troublesome Threshold For Insiders

On August 1, 2013, the Alberta Securities Commission (ASC) announced that it had concluded a settlement with former Daylight Energy Ltd. (Daylight) President and CEO Anthony Lambert (Lambert) related to allegations of insider trading.  This prosecution and settlement agreement should cause insiders of Canadian reporting issuers to pause and reconsider their own trading practices in order to insulate themselves from investigation, prosecution and punishment by securities regulators. The bottom line: Regardless of whether or not the position of the ASC in the Daylight case is accurate (and many in the legal community do not believe it is accurate), if there...

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Tax Law

Rule Changes Target Personal Service Businesses

If you provide services through a corporation, or employ such persons, you should be aware that recent legislative changes have dramatically increased the tax risks of such arrangements. According to these legislative changes, the tax payable by Personal Services Businesses (PSB) has been significantly increased. In addition to losing the ability to deduct most business expenses, if a worker’s corporation is considered to be a PSB, then the corporate tax rate will increase from 14% to 38%. A PSB is defined in the Income Tax Act to include a business carried on by a corporation through which services are provided by an...

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Tax Law

IRS Extends Offshore Voluntary Disclosure

On January 9, 2012 the United States Internal Revenue Service (“IRS”) announced the indefinite extension of the 2011 Offshore Voluntary Disclosure Initiative (“OVDI”). Because Canada is the great neighbour to the north and home to many U.S. taxpayers, many residents here find themselves with unmet U.S. tax filing obligations.  The good news is that the extension of the 2011 OVDI may afford these individuals the opportunity to file delinquent U.S. returns pay reduced penalties. The OVDI has been touted by the IRS as a beneficial way for delinquent taxpayers to bring their filing obligations current and to save time, money...

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Business Law

Timing is Everything: Public Disclosure Obligations in M&A Transactions

Increased volatility in the financial markets and overall economic uncertainty continue to affect corporate planning and go-forward strategies. The drive to increase shareholder value may cause management to seek out and assess a broader range of enhancement and maximization alternatives. Current market conditions have created opportunities for both the hunter and hunted. Canadian reporting issuers (sometimes referred to as public companies) should be keenly aware of their continuous disclosure obligations as they proceed down the path towards a business combination, corporate sale or other strategic opportunity. Canadian securities legislation distinguishes between a ‘material fact’ and a ‘material change’. A material...

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