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 practices for board of directors meetings

Click here to view in PDF. Clients often ask about the role and responsibilities of being a corporate director and whether or not they should accept an offer to join a board of directors (referred to in this blog as a "Board"). Although the decision to join a Board is ultimately a personal one and an experience that can be both personally and professionally rewarding, it is a decision that should be carefully made after completing adequate due diligence and obtaining a full and complete understanding of the needs of the business and the other people involved at the Board...

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Business Law

The Devil is in the Details Common Drafting Mistakes in Shareholder Agreements

Click here to view in PDF. This is the first article in a two part series discussing common issues arising from or related to shareholder agreements. If you are operating your business with one or more business partners, then it is often prudent to enter into an agreement to set out how the business will run, where financing will be obtained, whether and how additional owners can be recruited and, most importantly, how the business relationship can be ended if you and your partners no longer wish to work together. Operating a business with another person is like any other relationship...

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Business Law

Defend against an unsolicited take-over bid

Click here to view in PDF. Recent changes to Canadian securities laws (as of May, 2016) have created longer time frames and higher tender bid thresholds, amongst other things, in respect of take-over bids. These changes have been implemented to improve the integrity of the take-over bid regime. However, the receipt of an unsolicited take-over bid is still something that a target’s board of directors is often unprepared for. Thus, a target may be left scrambling for possible alternatives to combat or defeat such a bid, with little time to do so.  Therefore, evaluating some of the tactics available to...

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Business Law

Locking the Box to Avoid Price Chipping

Click here to view in PDF. Traditionally, change in control transactions in Canada involving private targets have been completed using a "closing accounts" pricing mechanism under which the parties agree to an enterprise value (often an EBITDA multiple) and a price on a "cash free, debt free" basis. Consideration paid on closing is based on estimated values which are then subject to a post-closing true up. The percentage of transactions using post-closing purchase price adjustments in Canadian deals remains high and a significant number of these transactions utilize more than one adjustment metric. As suggested in Andrew Wong's May 26...

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Business Law

Increased Reporting Requirements for Exempt Market Distributions

Effective June 30, 2016, issuers will be subject to increased reporting requirements for exempt market distributions with the introduction of a new version of Form 45-106F1, which will apply to exempt market distributions in all provinces and territories of Canada, including British Columbia. Previously, the form of report for exempt distributions in British Columbia was Form 45-106F6, rather than Form 45-106F1. The new version of Form 45-106F1 will require increased disclosure with respect to both the issuer and investors: Issuers will be required to disclose the particular basis for an investor qualifying as an accredited investor and whether the purchaser...

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Business Law

Alberta’s New Royalty Regime Presents Opportunities for Efficient and Precise Oilfield Service Operators

Today, Premier Notley publicly announced Alberta's new royalty regime. Among other things, this regime incentivizes the energy sector to reduce costs by introducing a 5% royalty rate until the producer's revenue surpasses the industry average drilling and completion costs. This enables producers whose costs are less than the industry average to capture the benefits of reduced royalties for an extended period of time while their peers are continuing to cover their drilling and completion costs. It is anticipated that such changes will help fortify incentives for the development of technologies which result in production efficiencies and demand for oilfield service providers...

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Business Law

Strategic Decisions Require Strategic Advice

Traditional strategies of reducing operating costs through cuts in inventory, personnel and capital expenditures, and the corresponding reduction in rates paid by oil producers to oilfield services companies and equipment providers, have had limited effectiveness as these reductions have supported the resiliency of North American marginal suppliers and have, in part, perpetuated the oversupply of oil. Amid this uncertainty and recognizing the fundamental shift that is underway within global energy markets, strategically minded companies are beginning to search for ways to capitalize on these changes. Given the protracted length of this downturn, it is likely that the Canadian energy sector...

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Business Law

Finding Financing in Difficult Capital Markets: Factoring and Receivables-Based Lending

Sustained periods of low oil prices and reduced economic activity have significantly impacted the cash-flow of many energy and non-energy businesses in Western Canada.  Over the past fifteen months, the collection period for many accounts receivable have aged-out, thereby exacerbating the pressure from decreased sales, leaving many businesses facing acute working capital deficiencies or insufficient cash flow to fund operating costs.  Moreover, weak cash flow may also result in a borrower being in technical default on the maintenance covenants of existing loan facilities.   This default may jeopardize the renewal of senior loan facilities or, worse yet, result in the...

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Business Law

Are You Ready? Preparing Your Business for Strategic Alternatives

As depressed oil prices persist and new domestic and international uncertainties mire an already battered energy sector, many businesses are being forced to evaluate strategic alternatives and develop contingency plans. Should oil prices not rebound in the next six to nine months, or if regulatory changes fundamentally affect the viability of previously profitable business models, many businesses may need to refocus, restructure and recapitalize in order to remain competitive, profitable or viable. High volatility and market uncertainty has perpetuated the natural tendency of businesses to focus on core competencies, often at the expense of long-term market and strategic factors.  However,...

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Business Law

Employee Compensation: Tying Compensation to Firm Performance

There are a number of potential benefits to tying employee compensation to firm performance. These benefits include maximizing shareholder returns, boosting overall employee morale, sending a signal to markets and strengthening brand awareness. However, studies have shown that there is almost no correlation between CEO compensation and firm performance at many leading North American firms.[i] So, while the idea of performance-based compensation gains traction, current practice suggests that employee compensation (especially top-tier management) remains unhinged from firm performance.[ii] In the current economic climate, savvy firms (especially private issuers with cash flow constraints) will choose tax-efficient compensation structures that effectively tie...

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