TELEMARK • Volume 21 • Issue 10 • November 2016

Two new legislative initiatives on the Quebec side • Two news items from Corporations Canada • Article: Due Diligence • Recent case law.




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NEWS

Holiday Schedule – Service Availability

Be sure to check our holiday schedule and get all your critical documents in on time.


Please ensure that we receive all filings requests well in advance, particularly where a specific date is required.


With respect to the return of documents from governmental authorities, we also ask that you take into consideration the reduced schedules and request priority service where necessary to ensure your timelines are met.


The whole team at Marque d'or wishes you all a wonderful Holiday Season!



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Two new legislative initiatives on the Quebec side

Firstly, the Regulation respecting the language of commerce and business of the Charter of the French Language (RLRQ, c. C-11) is amended by adding sections 25.1, 25.2, 25.3, 25.4 and 25.5 and these provisions are now in force.


(The underlined and bolded sections are from us. Please note that these provisions are only available in French at the time of publication of this edition of the Telemark.)


« 25.1. Lorsqu’une marque de commerce est affichée à l’extérieur d’un immeuble uniquement dans une autre langue que le français en application du paragraphe 4° de l’article 25, une présence suffisante du français doit aussi être assurée sur les lieux, en conformité avec les dispositions du présent règlement.


Aux fins du premier alinéa, la présence du français fait référence à l’affichage :


1° d’un générique ou d’un descriptif des produits ou des services visés;
2° d’un slogan;
3° de tout autre terme ou mention, en privilégiant l’affichage d’information portant sur les produits ou les services au bénéfice des consommateurs ou des personnes qui fréquentent les lieux.


25.2. Pour l’application des articles 25.1 à 25.5 :


1° l’affichage d’une marque de commerce à l’extérieur d’un immeuble s’entend de celui qui est en lien avec un immeuble ou qui lui est fixé, y compris sur son toit, peu importe les matériaux ou le mode de fixation utilisés; cet affichage comprend notamment les dispositifs d’enseigne en saillie ou perpendiculaire, ainsi que l’affichage sur une borne ou sur une autre structure indépendante.


Est considéré à l’extérieur d’un immeuble :


a) l’affichage à l’extérieur d’un local lui-même situé dans un immeuble ou un plus grand ensemble immobilier.


Est notamment ainsi visé l’affichage à l’extérieur d’un local situé dans un centre commercial ou dans une galerie marchande, souterraine ou non;


b) l’affichage placé à l’intérieur d’un immeuble ou d’un local, si son installation ou ses caractéristiques le destinent à être vu de l’extérieur.


L’affichage d’une marque de commerce qui figure sur une borne ou sur une autre structure indépendante, y compris celle de type totem, à proximité d’un immeuble ou d’un local n’est visé que s’il n’y a pas d’autre affichage extérieur où figure la même marque.


Dans le cas d’une structure de type totem, l’affichage qui s’y trouve est aussi exclu si plus de deux marques de commerce y figurent;


2° « immeuble » : s’entend d’un bâtiment et de toute structure destinée à accueillir au moins une personne pour l’exercice d’activités, peu importe les matériaux utilisés, à l’exclusion d’installation à vocation temporaire ou saisonnière;


3° « local » : s’entend d’un espace, fermé ou non, dédié à une activité, notamment un kiosque ou un comptoir destiné à la vente de produits dans un centre commercial, à l’exclusion d’installation à vocation temporaire ou saisonnière.


25.3. Au sens de l’article 25.1, la présence suffisante du français s’entend d’un affichage dont les qualités permettent à la fois :


1° de conférer au français une visibilité permanente, similaire à celle de la marque de commerce affichée;


2° d’assurer sa lisibilité dans le même champ visuel que celui qui est principalement visé par l’affichage de la marque de commerce.


Est considéré satisfaire à ces exigences, l’affichage en français qui, par rapport à l’affichage de la marque de commerce, est conçu, éclairé et situé de manière à permettre de les lire facilement, tous deux à la fois, à tout moment où la marque est lisible, sans que cet affichage ne soit nécessairement présenté au même emplacement, dans un même nombre, avec les mêmes matériaux ou ne soit d’une même dimension.


25.4. Malgré le paragraphe 2° de l’article 25.3, la lisibilité d’un affichage en français doit s’apprécier :


1° s’il s’agit d’un affichage à l’extérieur d’un immeuble situé sur une rue longée de trottoir : du trottoir longeant la façade où figure l’affichage de la marque de commerce;


2° s’il s’agit d’un affichage à l’extérieur d’un local situé dans un immeuble ou dans un plus grand ensemble immobilier, tel un centre commercial : du milieu de l’allée ou de l’espace faisant face au local;


3° s’il s’agit de l’affichage d’une marque de commerce visible d’une autoroute : de cette autoroute.


25.5. Pour l’application des articles 25.1 à 25.4 :


1° n’est pas pris en compte l’affichage en français :

  1. d’heures d’ouverture, de numéros de téléphone et d’adresses;
  2. de chiffres et de pourcentages;
  3. d’articles définis, indéfinis et partitifs;
  4. d’un terme requérant pour sa lisibilité de se rapprocher dans un rayon de moins d’un mètre, sauf si la lisibilité de la marque de commerce le requiert également;

2° n’est pas considéré assurer une visibilité permanente du français l’affichage de nature précaire, par les matériaux ou les conditions suivant lesquelles il est fixé, notamment l’affichage en français susceptible d’être facilement enlevé ou arraché, à moins que le système d’affichage ne fasse l’objet de mesures propres à en garantir la présence ou le remplacement, dont la démonstration incombe à la personne qui souhaite en invoquer le bénéfice. ».


2. Le présent règlement entre en vigueur le quinzième jour qui suit celui de sa publication à la Gazette officielle du Québec.


Ses dispositions trouvent notamment application à compter de cette date à l’installation de tout nouvel affichage d’une marque de commerce et au remplacement d’un affichage existant.


Tout affichage existant à la date d’entrée en vigueur du règlement doit, au plus tard trois ans après cette date, être rendu conforme à ses dispositions.


Le délai de trois ans prévu au troisième alinéa trouve aussi application dans les situations suivantes, dont la démonstration incombe à la personne qui souhaite en tirer avantage :


1° la même marque de commerce fait déjà l’objet d’un affichage ailleurs au Québec, dans le cadre d’un système de franchise ou autrement;


2° la nouvelle installation ou le remplacement de l’affichage visé a fait l’objet, dans les six mois précédant la date de la publication du règlement à la Gazette officielle du Québec, de la délivrance ou d’une demande d’un permis municipal ou d’une autre forme d’autorisation gouvernementale.




Secondly, the Act respecting the legal publicity of enterprises ("ALPE"), RLRQ, c. P-44.1 undergoes several modifications. However, only a few are especially noteworthy:

  • The activities of the enterprise registrar are transferred to the Ministry of Labour?, Employment and Social Solidarity;
  • The bill provides for an increase in the fines set out in the ALPE and increases the penalties for repeat offenses; and
  • It adds to this Act an offense to cover the case of a person who does or omits to do something in order to help another person commit an offence.

Concerning the first point, an attempt at explanation: Services to the public are given by Services Québec, which is itself governed by the Ministry of Labour, Employment and Social Solidarity. Since the activities of the enterprise registrar are considered a service to the public and are already offered by Services Québec, it is normal for this organization to be transferred to said-ministry.


The following is the preamble to Bill 116, proposing the Act respecting the transfer of the activities of the enterprise registrar to the Ministry of Labour, Employment and Social Solidarity, which summarizes all the proposed changes.


An Act to transfer the activities of the enterprise registrar to the Ministère du Travail, de l’Emploi et de la Solidarité sociale


EXPLANATORY NOTES


This bill aims to allow the transfer of the activities of the enterprise registrar to the Ministère du Travail, de l’Emploi et de la Solidarité sociale.


Under the bill, the Minister of Employment and Social Solidarity is responsible for the administration of the Act respecting the legal publicity of enterprises, except the sections of that Act that govern payment of the annual registration fee to the Minister of Revenue, which remain under the administration of the Minister of Revenue.


The bill specifies that the sums required to finance the activities of the enterprise registrar will be taken out of the Goods and Services Fund established within the Ministère du Travail, de l’Emploi et de la Solidarité sociale.


The bill also increases the fines prescribed in the Act respecting the legal publicity of enterprises and doubles them for a second offence. A new offence is added to that Act for cases in which a person who does or omits to do something in order to help another person commit an offence.


It simplifies the notification of originating demands involving the enterprise registrar in civil matters.


Lastly, the bill contains transitional and consequential provisions, in particular with respect to the transfer of certain personnel members of the Agence du revenu du Québec, of assets made available to the enterprise registrar and of records relating to its activities.

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Two news items from Corporations Canada

Notice - New website content on boards of trade

On November 21, 2016, Corporations Canada launched a renewed Web section on boards of trade that includes information on creating, changing and dissolving boards of trade. Visit the new pages on boards of trade.


Notice - Changes to Corporations Canada forms

Corporations Canada has implemented changes to a number of its forms related to the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act and the Special Act of Parliament.

  • PDF forms now reflect the new name of the Department – Innovation, Science and Economic Development Canada. In early 2017, all forms available online will be modified to reflect the new name.
  • PDF forms now allow, under the Corporation Number heading, for an additional digit. It is expected that in late Fall 2016, Corporations Canada will start issuing 8-digit corporation numbers. This will not in any way alter the legitimacy of any previously issued corporation numbers with less than 8 digits.
  • Administrative changes are also being made to PDF forms.

For a complete list of changes made to PDF forms, see Changes to Corporations Canada documents released in the last 12 months.


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ARTICLE

Due diligence

Buying a business is a very important transaction for the parties involved and can be very complex.


This complexity stems mainly from the fact that it is necessary to establish as realistically as possible the best price to pay for the acquisition of the assets or the shares of the business.


By paying the right price, all parties involved ensure the maintaining of the business. Everyone wins.


Despite the guarantees that the vendor will give to the buyer, the latter must be diligent in his behaviour. The buyer cannot rely solely on these guarantees, if only to guard against problematic situations which should have been taken into account or he should have known.


The smart buyer will be surrounded: legal advisor, CPA, tax specialist and any other professional required. They will use their knowledge, but also the tools available to them in the market, such as Marque d'or Due Diligence solutions. Those are essential tools for the planned acquisition of any business.


In short, you do not spend a lot of money without asking a few questions first... and tools exist to find several answers to these questions.

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JURISPRUDENCE

Travelers Insurance Company of Canada v. Sellers

November 8, 2016, Superior Court, EYB 2016-272555


The broker, now in bankruptcy, issued insurance certificates for automobile dealerships after the insurer terminated the insurance policy. Even if the overwhelming evidence establishes acts that are akin to fraud on the part of the respondent director's partner, who has cashed the premiums knowing that there was no entitlement, the defendant cannot be held accountable, given its low level of involvement. Nothing allowed him to doubt his partner. Moreover, the evidence shows that the custom in the market is that when the insurer issues a notice of termination, it also sends a notice to the dealers. However, this notice was sent to the latter more than two years after the termination of the policy. In addition, the insurer acknowledged in a letter that the broker's representatives had behaved professionally. The extra-contractual liability of the defendant cannot therefore be upheld, and there is no need to lift the corporate veil.

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Pea Investments Inc. v. Resources Québec inc.

July 22, 2016, Superior Court, EYB 2016-272427


As part of the Anticosti Island oil project, the plaintiffs, alleging a deadlock they attribute to their partners, the defendants, are seeking a safeguard order for the release of a sum of nearly $13 million to continue the implementation of the project.


The search for the status quo at the stage of a safeguard order on an oppression remedy is the norm. Ordering the sought safeguard order as to the capital contribution could create the effect of a substantive judgment as opposed to the status quo. Indeed, the positions of the parties on the possibility of the defendants to withdraw from the project are opposed. According to the defendant Saint-Aubin, a single drilling followed by fracturing is sufficient to decide whether she exercises the opt-out option, while the applicants wish to proceed with three drillings this year. The costs associated with these operations are obviously not the same. The plaintiffs actually want to impose on Saint-Aubin their vision of the withdrawal option, which goes well beyond the status quo.


The appearance of law relied on by the plaintiffs is flawless since it results from the deadlock created as a result of the resignation of the independent director. The appointment of such director within 30 days is ordered. However, the criteria of urgency and irreparable harm are not met. Indeed, drillings anticipated in 2016 were initially planned in 2015. What was not urgent between 2015 and 2016 is not so now. At this stage, an order to satisfy the primary needs of the project, including the safeguarding of the jobs of the plaintiffs' employees, is sufficient.

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Rouhani v. GMR CPA inc.

October 31, 2016, Superior Court, EYB 2016-272143


Plaintiff’s application for an interim order seeking access to the documents to which she would normally be entitled as director and shareholder of the chartered accountants firm she allegedly founded with the Defendant, while they formed a couple, is granted. Defendant’s objection to the effect that Plaintiff does not qualify as an “Applicant” within the meaning of sections 450ff. of the Business Corporations Act is, prima facie, contradicted by his own actions and by documents that he issued and executed since the creation of the corporation. For instance, the business bank account opening form not only bears his signature, but the Plaintiff’s as well. The bank form also reveals that Defendant declared holding 75% of the shares while the Plaintiff held 25% of them that both could act as signatories of all banking documentation, and those parties were both directors of the corporation.


At this interim stage of the proceedings, Plaintiff must only establish, on a prima facie basis, that if in fact she is not actually a registered holder of the shares of the corporation (an information that she cannot confirm, being denied total access to the company's records), she can be considered to be a beneficial owner of said shares and be treated as a person eligible to avail herself of the remedies offered by sections 450, 451ff. of the Act. Plaintiff’s appearance of a right that she is a shareholder of the corporation is, on a prima facie basis, serious and compelling. Moreover, based on the allegations of her original application, Plaintiff would also qualify under subsection 439(3) of the Act, as “any other person who, in the discretion of the court, has the interest required to make an application under this division”. There is also prima facie evidence that Defendant has behaved in an oppressive manner that was and still is prejudicial to Plaintiff: his manoeuvres to suppress Plaintiff’s name from all public corporate records and his refusal to give her any access to the information to which she is rightfully entitled as director and shareholder constitute blatant illustrations of an oppressive conduct. If the interim order sought is not granted, Plaintiff risks sustaining irreparable prejudice in her quest to get the Defendants to purchase her shares at their fair market value.


Postponing until the trial the issues of Plaintiff's shareholding and of the value of said shares would be counterproductive; the Court’s limited resources must not be used to allow Plaintiff and her expert to analyze various corporate documents in the presence of the judge.


Considering indications of Defendant’s attempts to exhaust Plaintiff financially, provisional execution is ordered notwithstanding appeal.

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Hotte v. Réparaphone Inc.

November 13, 2015, Superior Court, EYB 2015-272048


It is not necessary for the applicant to be impecunious for a provision for costs to be granted to him under section 443 of the Business Corporations Act. We have to apply the reasonable person test. However, a reasonable person would not take the risk of jeopardizing the financial security of his family to finance a legal battle. Thus, the fact that the applicant has $82,000 in an RRSP and that his spouse owns a cottage with a net value of $250,000 does not deprive him of the right to obtain a provision for costs of $10,000.

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