TELEMARK • Volume 21 • Issue 6 • June 2016

In this issue: Imminent Strike at Canada Post • New format for our name search reports • Improvements to our electronic due diligence solutions • Corporations Canada announcements • 2016 ILCO Conference • Article: The CRTC signed a memorandum of understanding with ten international enforcement agencies to fight spam • Recent case law.




Name Search Result Enhancement




NEWS

Imminent Strike at Canada Post

Notice to clients

There is a strong likelihood that a general strike at Canada Post will be declared shortly. As a result, we will be taking the following measures effective immediately:


In order to mitigate risk, we will not be using Canada Post services as mail deliveries may not be completed. No documents or legal supplies will be sent by mail for the duration of the strike, should it materialize.


Shipments by courier are not affected by this strike


We strongly suggest you avail yourself of a courier delivery service despite a higher cost. This delivery method is the only one at the present time which provides a degree of certainty around the delivery of your legal documents and legal supplies.


In order to reduce your costs, we also recommend that you order your legal supplies (e.g. spine, brass plates, shares certificates, etc.) in batches where possible.


For any questions do not hesitate to contact us.


mdo.info@thomsonreuters.com • 1-800-668-0668




New format for our name search reports

You will notice a colourful difference on our name search reports. In addition to offering you the industry’s most comprehensive name search report, we have enhanced the display of problematic names by highlighting them in yellow. While we will still enumerate them, we feel that this visual touch greatly facilitates the reading of the report. Let us know what you think!




We are constantly improving our electronic due diligence solutions

Increased research capability

It is now possible to perform the following searches:

  • Former names in British Columbia
  • Inactive names in Nova Scotia
  • Previous names in Newfoundland and Labrador

Improving the functionality of the "Select All" button

We’ve streamlined our display to facilitate the selection and deselection of all jurisdictions with a simple click.


Information on our services and hours of operation

If you’re looking for details on our hours of service and report turnaround times, these are now conveniently available from the service toolbar.


For access to this service or further information, please contact: mdo.info@thomsonreuters.com.




Corporations Canada recently published the following two announcements:


1. On July 5, Corporations Canada will be renewing its website

On July 5, 2016, Corporations Canada will be introducing website enhancements. In order to better serve Canadians, we have been renewing some of our Web content and have reorganized our home page in order to offer all our clients a tailored access to products and services.


Here are some of the improvements you may notice:


Home page – The new design will be articulated around tasks and user types, as well as topics most likely to be of interest to each type of user.


Business corporations section – While the information related to the Canada Business Corporations Act will remain unchanged, it will be organized by topic. Note that all related policies will now be found under the 'Resources' section.


Online Filing Centre and Search for a Federal Corporation – While functionalities will be the same, the look and feel will have been updated to meet new government standards.


2. New online service — Letter of Satisfaction

As of July 5, 2016, registered intermediaries will be able to request a Letter of Satisfaction online – one of the steps involved in continuing a federal corporation into another jurisdiction. In the case of a pre-approved statute, the request will be processed automatically and the Letter of Satisfaction will be issued through the online system.


Letters of Satisfaction issued by Corporations Canada following requests submitted online or on paper, under the Canadian Business Corporations Act (CBCA) and the Canada Not-for-profit Corporations Act (NFP Act), will indicate the name of the jurisdiction as well as the title of the importing legislation. Letters of Satisfaction issued before this change will remain valid.


It should be noted that in addition to this new service, two policies were reviewed and modified and, will be published on July 5: the policies on continuance (export) under both the CBCA and the NFP Act. To learn more about these changes, see the Policy on continuance (export) for federal business corporations and the Policy on continuance (export) for not-for-profit corporations.


Marque d'or offers all these services and can take care of it all for you!


mdo.info@thomsonreuters.com




2016 ILCO Conference – Montréal

Thank you to all of the ILCO conference attendees who visited our booth, attended our seminar and shared a cocktail with us at the 2016 ILCO Conference in Montréal. We hope that our secret garden put a ‘spring’ in your step and we’re already looking forward to 2017! As always, this important event was made possible by the hard work of the ILCO organizers – thank you!


Congratulations also go out to all our prize winners – stay tuned for more details.


We look forward to seeing you at next year's conference!




ARTICLE

The CRTC signed a memorandum of understanding with ten international enforcement agencies to fight spam

We will remember that the Canadian Anti-Spam Act, the full name of the Act being the Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Personal Information and Protection and Electronic Documents Act and the Telecommunications Act (SC 2010, c.23), came into force on July 1st, 2014.1 Various corporations have since been subject to investigations and were condemned to fines. Among these corporation, CompuFinder2 and Plenty of Fish.3 There was also the dismantling of a network of zombies.4



On June 14, 2016, the Government of Canada announced that the Canadian Radio-television and Telecommunications Commission (CRTC) partnered with international agencies to fight spam and unsolicited phone calls. The memorandum of understanding was signed with ten enforcement agencies all over the world. This agreement favors cooperation with the CRTC and its international counterparts in the application of Canadian and international laws regarding spam and telemarketing.


The CRTC and the ten signing agencies are members of the London Action Plan. This action plan was elaborated in 2004 in London, England. Its purpose is to fight a plague without borders that evolves and grows quickly. At a conference between the enforcement agencies for the fight against spam, these agencies and representatives of the industry decided to adopt a common fighting plan open to all who wish to participate in the effort to identify and fight spammers. For more information regarding the London Action Plan, consult www.londonactionplan.org.



1 See Telemark of September 2014 and February 2015.
2 See Telemark of April 2015.
3 See Telemark of July 2015.
4 See Telemark of January 2016.


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JURISPRUDENCE

Financial difficulties of the corporation do not necessarily entail the personal liability of the directors and shareholders

Fers et métaux américains, s.e.c. v. Gilbert, 2016 QCSC 1752


Fers et métaux américains is a Québec subsidiary of a global corporation (AIM) operating in the field of recycling of metal and other materials. It has been doing business for a number of years with 9183-8268 Québec inc., a corporation doing business under the name Pièces d’auto universelles (PAU). PAU filed a notice of intent in September 2012. AIM is claiming from its two shareholders and directors the balance of cash advances made to PAU. AIM is basing its action on their conduct and their personal undertaking to guarantee the debt.


The Court analyses the provisions of Articles 317, 1457, 1458, 2333 and 2335 C.C.Q. The evidence shows that AIM was not a lender but a purchaser of scrap metal. The advances are accounts on material. PAU’s sole obligation is to make the material available following the cashing of the advances. The advances from AIM are not related to PAU’s financial situation. The directors did not commit any extracontractual fault.


Regarding the personal guarantee, the Court indicates that the testimonies are not sufficient evidence of its existence.


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The minority shareholder obtains an interim order for the destitution of a director and the authorization to represent the corporation

Sa. D v. R.E., 2016 QCSC 1634


Company A has three shareholders, D: 28%, S: 35% and T: 37%. Following the death of D and the inaptitude of T, R is appointed executor of D’s estate and curator for the property of T. He manages Company A by himself. The sole income of Company A is a monthly income from a balance of sale price of a property. Company A also owns a vacant lot that does not generate any income.


S, as minority shareholder, filed an action in destitution of R and T as directors of the corporation, for a rendering of account and a claim in money. She is requesting interim orders in order to replace T and R as directors of Company A. She is also requesting to be authorized to file suit in the name of Company A.


The Court first indicates that T, due to her inaptitude, must be dismissed as director of the corporation. Her office cannot legally be transmitted to R. With respect to the destitution of R, the evidence shows that he uses Company A and its assets for his own personal purposes, on the pretext that D and T would always have agreed with him. The evidence is sufficiently serious to justify the intervention of the Court in order to protect the rights of S, minority shareholder.


Finally, the Court estimates that this is an exceptional situation and that it is in the interest of justice to authorize S, in her capacity of minority shareholder, to file suit in the name and on behalf of Company A.


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Does the Plaintiff own 25% of the shares of the corporation?

Basha v. Singh, 2016 QCSC 1564


Mr. Basha was hired by 8378975 Canada inc. (Pro Global), a transport corporation, in February 2011. He claims that he was to become an equal shareholder (25%) from day one. The other three shareholders claim that he was to become an equal shareholder (25%) once the corporation would have reimbursed its loans.


Mr. Basha has since left the corporation and his now claiming oppression under the CBCA. He is asking that his shares be purchased by the other shareholders and he is also asking for $50,000 for moral damages.


Mr. Basha was appointed director and treasurer of Pro Global. His name does not appear on the enterprise register as a shareholder since the format of the report does not allow for more than the name of the three principal shareholders of a corporation.


The Court must determine:

  1. Does Mr. Basha qualify as complainant under the CBCA?
  2. Does Mr. Basha hold 25% of the shares of Pro Global?
  3. If he is a shareholder, is he entitled to be paid the value of his shares?
  4. What is the value of his ownership?
  5. Are the defendants entitled to be compensated for their alleged damages.

The Court finds that Mr. Basha qualifies as complainant since he received a verbal promise that he would receive 25% of the shares of the corporation. The parties also acted as if he was a shareholder. The Court also finds that Mr. Basha was to become a shareholder and a director of Pro Global immediately upon joining the corporation. The Court is unable to find any conduct that would be characterized as oppressive. There are no legal grounds that would allow the Court to order the defendants to buy his shares.


With respect to Defendants’ claim for damages, the Court finds that Mr. Basha did not use the procedures abusively and there is no ground to claim punitive damages.


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Is the Subscription Agreement null and void in the absence of a prospectus?

Sarrapuchiello v. Marzoli, 2016 QCQC 1993


Mr. Sarrapuchiello invested $50,000 in Mazcorp Oil & Gas Inc. (Mazcorp) and received 200,000 common shares. He signed a Subscription Agreement. He claims that Mr. Marzoli, president of Mazcorp, guaranteed him principal repayment within six months in addition to a return of 20%.


Mr. Sarrapuchiello is now claiming the amount from Mazcorp and from Mr. Marzoli. He also alleges that the Subscription Agreement is null and void in the absence of a prospectus.


The Court finds that Mr. Sarrapuchiello has not established a commencement of proof that would enable him to contradict or vary the terms of the written and signed Subscription Agreement, pursuant to Article 2863 C.C.Q. The Subscription Agreement cannot be ignored and binds Mr. Sarrapuchiello.


With respect to the allegation that the Subscription Agreement is null and void in the absence of a prospectus, the Court finds that the exemption for an accredited investor provided by Regulation 45-106 respecting Prospectus Exemption (CQLR, c. V-1.1, r. 21) applies. In the Appendix A of the Subscription Agreement, Mr. Sarrapuchiello declared that he was an accredited investor, i.e. a person who, with his wife, has financial assets in excess of $1,000,000.


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