While changes to the legal landscape in Ontario can sometimes be a little “dry”, the following are a few recent developments which business owners and managers will want to be aware of.
1.The Forfeited Corporate Property Act, 2015
The Forfeited Corporate Property Act, 2015 (“FCPA”) came into force in Ontario. It requires corporations to maintain registers of their ownership interests in land at their registered office. The register is to indicate date of acquisition and disposal, as applicable, as well as additional prescribed information and documents.
The FCPA also introduces changes to the manner in which the Crown can deal with forfeited corporate properties and changes the timelines for reviving dissolved corporations and recovering assets. This could have significant implications for corporations that are dissolved for failure to file.
Comment/Action: Compliance with the FCPA has the potential to require considerable information gathering. Corporations with ownership interests in land should start gathering the necessary information and working with their professional advisors for compliance purposes.
2. SR&ED Credits
a) AG Shield Canada Ltd. vs. The Queen, 2017 TCC 10004
This ruling of the Tax Court of Canada provides a thoughtful review of compensation structures, including dividends in lieu of salary, in the context of SR&ED tax credit claims and demonstrates that proper documentation and delineation can support claims that salary and wages paid to shareholder employees in respect of specific SR&ED project expenditures are permissable.
b) Non-resident De Facto Control of Corporation
In Aeronautic Development Corporation v. the Queen, 2017 DTC 1019, the court determined that the economic influence of a non-resident minority shareholder (by virtue of rights contained in a development agreement), gave the non-resident minority shareholder de facto control of the subject corporation and that, as a result, the corporation was unable to claim SR&ED credits by virtue of its not being a Canadian controlled private corporation.
Comment/Action: The above two cases will be of interest to those businesses which apply for SR&ED credits.
3. Price Claim Enforcement in Canada
The Competition Bureau announced that it filed an application to seek an end what it considers to be deceptive marketing practices, by offering sleep sets at inflated prices and then advertising discounts. Observers have indicated that the Competition Bureau will be taking a greater interest in retailers’ price representations.
Comment/Action: Retailers are advised to review the Bureau’s published “Ordinary Price Claims Enforcement Guidelines” to help them better understand the Competition Bureau’s view on misleading price representations.
4. Repeal of Bulk Sales Act (Ontario)
After years of being one of the only remaining jurisdictions to have legislation similar to the Bulk Sales Act (Ontario) (the “Act”), Ontario has repealed the Act. While parties involved in a bulk asset sale would sometimes agree to waive compliance with the Act, more often purchasers would require compliance, which was both time consuming and costly.
Comment: The repeal of the Bulk Sales Act (Ontario) is welcome news in the context of M&A transactions, eliminating a time consuming and often costly compliance issue.