Tag: Business

COVID-19 and Collecting Personal Information

The COVID-19 pandemic changed the way people do business. For many businesses, government regulations currently require operators to record the name and contact information of every person who enters the establishment and to maintain these records for at least one month. The purpose of this is to assist with contact tracing should a COVID-19 outbreak occur at an establishment. For other businesses, collecting personal information is a by-product of increasingly doing business online.

Business owners must be aware of the implications when collecting this sort of private information and the laws that govern its collection. In particular, the federal Personal Information Protection and Electronic Documents Act SC 2000, c5 (PIPEDA), sets the ground rules for handling personal information in the course of commercial activities. This act applies whether businesses are collecting personal information in person or online.

The following are best practices that businesses should adopt in order to be compliant with PIPEDA and other applicable privacy laws:

Understand and identify the purpose for collecting private information. Do not collect more information than is necessary.
Adopt privacy policies and procedures that set out the reason for collecting information, the length of time the information will be stored and its destruction procedure. Do not collect any information contrary to these procedures.
Appoint someone to be responsible for privacy issues.
Make information about your privacy policies and procedures available to customers.
Inform customers of the purpose for collecting this information and obtain consent.
Keep the information only for as long as is necessary and then destroy it using proper procedures.
Use proper safeguards when storing the information. Do not leave the information in plain sight and keep it safe.
Develop a simple and easily accessible complaint procedure. If a customer contacts you about a privacy concern, the customer should be informed about avenues of recourse.

If you have further questions regarding collecting personal information during the era of COVID-19 or regarding your obligations under Canada’s privacy laws in general, or if you require assistance in developing effective privacy policies and procedures, please contact Esther Abecassis, lawyer at Devry Smith Frank LLP at esther.abecassis@devrylaw.ca or 416-446-3310.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”

By Fauzan SiddiquiBlog, Corporate Law, COVID-19March 15, 2021March 15, 2021

Shareholder Disputes: An Overview of Three Procedures to Achieve a Business Divorce

While business partners will usually be totally optimistic at the time of start-up, it is important to provide for a solution to unresolvable disagreements. This post considers three different solutions by which business partners can go their separate ways. Each of these establishes a procedure whereby one shareholder can buy out the other shareholder(s) or force the other shareholder(s) to buy, or require the other shareholders to co-operate in a sale of all shares in the business.

1) Shotgun Provision

The “shotgun” is the most commonly used provisions in shareholder agreements and works best with two shareholders, although it can work with more shareholders. Under this provision, one shareholder presents another shareholder with an offer to purchase all of the other shareholder’s shares in the business at a specified price. The other shareholder then has two options:

i) sell all of the other shareholder’s shares in the business to the offering shareholder at the specified price; (or)

ii) buy all of the offering shareholder’s shares in the business at the same price.

This result is that the offering shareholder is either bought out or ends up owning 100% of the business. The shareholders’ agreement will usually, or should, set out all of the terms that will apply to any sale.

There are some potential disadvantages of shotgun provisions. First and foremost, they are not ideal if there is disparity between the economic strength of the shareholders. If one shareholder has considerably more financial means than the other(s), a shotgun provision can result in a situation where a stronger party can effectively force a weaker party to sell shares to the stronger party for consideration below market value. Another issue to be considered is where one of the shareholders has considerable operating knowledge about the business that might put the other partner, especially a passive partner, at a disadvantage by having to step into managing the business when they have no past experience or contacts with the customers or suppliers.

Furthermore, a shotgun provision may not be ideal in the early stages of a business. One party could choose to exit or force another party out before the business has gained much value. To avoid this, it is recommended that a provision be included in the agreement that states that the “shotgun” provision, or for that matter any similar provision, may not be exercised until after the business has been operating for a certain period of time, say three to five years.

2) Put option, with option to buy or cause sale of 100% of business

One alternative to the shotgun provision is to provide the shareholders with a ‘put option’. This enables a shareholder (an “Offering Shareholder”) to request that the other shareholder(s) purchase the shares owned by the Offering Shareholder at a price specified by the Offering Shareholder. If the other shareholder(s) decide not to buy the Offering Shareholder’s shares, the Offering Shareholder has the option to buy the shares owned by the other shareholder(s) or cause the sale of 100% of the shares of the company.

The advantage of this provision over the shotgun provision is that the Offering Shareholder cannot find himself forced to be the buyer. There is, however, still a risk that the other shareholder(s) may refuse to co-operate in a sale of 100% of the shares of the Company, however the agreement can contain penalties for refusal to co-operate.

3) Private Auction Provision

Under a private auction, one shareholder can require that all shares in the business be placed on auction. Only the shareholders can bid at the auction. A minimum starting price and minimum bid increments can be set. The auction continues until one shareholder’s bid is accepted by the other shareholder(s) or the other shareholder(s) do not respond with a higher bid.

Essentially this is a variation of the shotgun provision, that provides all shareholders with more control over the price at which shares in the business are ultimately bought or sold. The private auction also reduces the risk of stronger economic parties taking advantage of weaker economic parties because it increases the likelihood that a buyout will occur close to the market value of the shares.

Summary

There are a variety of provisions that can be used in shareholder agreements to govern shareholder buyouts or provide for the sale of a company in the event of a breakdown in the relationship between shareholders. To further discuss these provisions or other aspects of shareholder agreements, please contact our corporate law department to book a consultation.

By Fauzan SiddiquiBlog, Corporate LawDecember 17, 2020February 22, 2024

Estate Freeze – What Is It and What Does It Do?

An estate freeze fixes the value of the asset that is frozen, such as shares of a corporation, in the hands of the owner until the time of death, allowing the freezor to calculate the expected tax liability that arises on death. In the usual course of business, the deceased will be deemed to have disposed of all capital assets immediately prior to death at their fair market value determined on that date. The tax, which is now imposed on one-half of the capital gain is based on the difference between the cost base of the relevant asset and its fair market value at the date of death. Without the estate freeze, the amount of the gain would be expected to increase over time.

A further benefit of an estate freeze is the accrual of the post-freeze growth in value in the hands of other persons, usually the owner’s family. This makes the estate freeze an effective way of transferring value to the future generation, and hopefully, defer the tax that would accrue on the future growth to the time that the asset is sold by the persons who are to benefit from the future growth.

Under certain circumstances, the receiving family member may be able to claim the lifetime capital gains exemption, so that the tax-saving based on that exemption can be multiplied among several family members when the shares the family member receives in the course of the estate freeze transaction qualify as shares of a “qualified small business corporation”.

The estate freeze is also worth considering when the market is experiencing a low, as is the case during the ongoing Covid-19 pandemic. This would permit the owner/parent to fix the capital gain at a lower value, attracting less tax on death. A subsequent increase in value is passed on to the beneficiaries of the freeze. However, care needs to be taken that the value of the assets is not too low at the time of the freeze, as the current owner may wish to retain a reasonable amount of value. The balance that needs to be achieved will depend on the amount of the asset value to be frozen, the age of the freezor and a number of other factors that may be of importance to the person who is implementing the freeze. One size does not fit all.

If you have any questions related to tax or business law matters, please contact our Tax and Wealth Planning lawyers at 416-449-1400 to book a consultation.

The Firm

Devry Smith Frank LLP is the largest full-service firm outside of the Toronto downtown core with additional offices in Barry and Whitby. DSF offers its clients a wide range of legal services including litigation, business, real estate, employment, and family law-related services. The firm is comprised of over 175 lawyers with vast expertise and experience.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please contact a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”

By Fauzan SiddiquiBlog, TaxNovember 4, 2020April 3, 2024

OCCUPATIONAL HEALTH & SAFETY REOPENING ONTARIO –THINGS TO CONSIDER IMPLEMENTING AS BUSINESSES BEGIN TO REOPEN

Reopening Ontario

The province of Ontario has presented a multi-phase plan to reopen the economy. The province will follow a gradual approach to allow public health officials to monitor and assess conditions before moving onto the next phase. A practical guide to follow from the City of Toronto has been provided for employers, workplaces and businesses on workplace recommendations, protocols and procedures to protect employees and customers. The link can be accessed here.

Stage 1

Stage 1 will consist of reopening business that can immediately meet or modify operations to satisfy public health recommendations and occupational health and safety requirements.

Stage 1 will focus on workplaces that are well equipped and positioned to follow public health advice in terms of ensuring safe workplaces and appropriate physical distancing measures.
What businesses can open in Stage 1?
Construction, retail, vehicle dealerships, media industries, health services, outdoor recreational amenities, professional sports without spectators and many more.

Stage 2

Ontario announced they will be taking a regional approach to Stage 2, reopening more workplaces and businesses based on additional risk assessments and public health information, determining which regions will be permitted to enter the stage when certain criteria are met.

What businesses can open in Stage 2?
Restaurants & bars, personal care services, shopping malls and centres, beaches, parks & camping, drive-in & drive-thru venues, libraries, community centers, along with weddings, funerals and other similar gatherings.

Stage 3

Stage 3 will consist of reopening most remaining workplaces and businesses, while carefully and gradually lifting restrictions. Public health and workplace safety guidelines will remain in place, while large public gatherings will also continue to be restricted.

Fifteen Proactive and Protective Measures to Keep Everyone Safe

Keeping two meters or six feet of distance from others
Washing your hands often – using soap and hand sanitizers
Avoid touching your face with unwashed hands
Cough into your elbow or a tissue
Staying at home when you are sick or experiencing signs of illness
Cleaning & disinfecting frequently touched objects and surfaces
Wearing facemasks
Avoiding all non-essential trips
Screening staff and clients in regards to COVID-19 when possible, briefly questioning or implementing screening measures, prohibiting anyone with symptoms from entering the workplace
Ensuring staff do not come to work when sick
Maintaining flexibility, reducing operating hours, staggering of shifts and implementing flexible work policies when work can be done remotely, manage meetings electronically if possible
Reduce overcrowding by establishing proper physical distancing measures and markings within workplaces for employees, workers and clients
Managing entrances/exits effectively, controlling both the flow and capacity within workplaces while maintaining physical distancing
Implementing signage and additional information to help advise individuals regarding important changes during this time, as it may additionally help the flow of information for workers, employees and clients
Implementing proper cleaning and disinfection protocols for workplaces and/or implementing the use of air filters and cleaning services to reduce airborne contamination

It is important that employers and employees work together to develop effective plans to manage and ensure the wellbeing of everyone as businesses begin to reopen.

Occupational Health and Safety Act, RSO 1990, c. O. 1 (“OHSA”)

In Ontario, employers have an obligation to ensure employees have a safe and healthy work environment. Employers are required to show that they acted reasonably to protect the safety of employees in hazardous circumstances, which may include exposure to COVID-19.

For additional information, we encourage employers and employees to visit the Ontario website and review the latest information as it relates to the reopening of Ontario. Clickable Link here

If you have more questions as it relates to occupational health and safety standards, or if you are an employer or employee who needs additional assistance regarding returning to work, please contact our firm to discuss your rights and options.

By Fauzan SiddiquiBlog, COVID-19, Employment LawJune 25, 2020September 29, 2020

The Baby Boom Shift: The Impact of An Aging Workforce, the Projected Big Business Transfers and the Millennial Changeover

The baby-boomer generation (those born between 1946 and 1964) represents a significant share of the Canadian population. While many within this category are opting to continue working well into what would traditionally be their retirement years, it appears that once they do retire, the resulting mass retirement will initiate an abundance of handovers of wealth and business ownership.

Transformation of the workforce as we know it is therefore on the not-too-distant horizon. An entire generation of baby boomers will depart the workforce, taking with them their talent, knowledge and industry familiarity, and potentially creating a talent gap.

Are we in a baby-boomer succession crisis?

A vast number of baby-boomer business owners do not have a succession strategy in place. At times, finding a successor can be challenging. As a result, what could be deemed as an undesired consequence becomes unavoidable, and the business may have to be dissolved. Should this occur with any degree of frequency, it could have a significant negative impact on the Canadian economy as a whole.

Planning ahead

Several small business owners depend on the sale of their business as a source of retirement income. Preparing for a smooth and efficient transition is therefore as important as the day-to-day operation of the business. This preparation eliminates the added pressure of leaving the future of the business to chance and increases the likelihood of receiving fair value for it upon its ultimate transfer.

There are various benefits to devising a formal succession plan. Formal written succession plans are typically prepared with the help of relevant professional advisors. The input of legal professionals can address a number of issues, including earn-outs, restrictive covenants, and developing a dispute resolution mechanism.

Business owners considering developing and implementing a succession plan and/or a merger or acquisition, or those in need of general corporate and commercial counsel, should seek guidance from an experienced legal professional.

Contact Elisabeth Colson of Devry Smith Frank LLP for experienced corporate assistance, at elisabeth.colson@devrylaw.ca or at (416) 446-5048.

By Fauzan SiddiquiBlog, Corporate LawDecember 18, 2019June 15, 2020

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