You have founded your company and raised capital. Now it is time to operate your business. What are the legal aspects that you need to pay attention to? This webinar covers the knowledge and tools you need to make decisions and manage your business successfully.

1. Smooth Operator –
Managing an Operating
Business
MARCH 24, 2016
EMMANUELLE FREDERIC-POPA & MIKE WEBER
1

2. 2

3. Agenda
q Employee Matters – Employee vs. Contractor
q Protecting Your IP
q Founders’ Dilemma – Managing your Board and Investors
3

4. Employee vs. Contractor:
Why do we care?
4
Successful companies use multiple types of working arrangements.
Considerations:
Ø Overhead and administration: employer must make required deductions
(EI premiums, CPP contributions, income tax, etc.)
Ø Worker’s entitlement to benefits (EI, overtime, vacation, severance, etc.)
Ø Desired level of control over worker

5. Employee vs. Contractor:
Test for contractor relationship
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Is the worker truly operating his or her own business?

6. Employee vs. Contractor
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1. Intention of the parties.
2. Level of control exercised over the worker’s work.
3. Ownership of tools.
4. Whether the worker hires his or her own helpers.
5. Financial risk taken by the worker and chance of profit/risk of
loss for the worker.
6. Degree of responsibility for investment and management of
the worker.
Factors to Consider

7. Factors to Consider
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1. Intention of the Parties
Key questions:
Ø What was the worker told by the Company when hired or engaged?
Ø What are the terms of any written agreement between the worker and the
Company?
Ø How have the Company and worker behaved and accounted for the
worker’s work on a day-to-day basis?

8. Factors to Consider
8
2. Level of control
Key questions:
Ø Is the worker supervised by the Company?
Ø Is the worker only told what work needs to be done and is left to
perform the work using his or her own skills and experience?
Ø Does the business relationship reflect a long-term and continuous
engagement, loyalty to the Company and high integration with the
Company’s business?

9. Factors to Consider
9
3. Ownership of tools
Key questions:
Ø Does the worker provide his or her own tools/
equipment?
Ø Has the worker made a large investment
in and is responsible for the costs of maintaining
the tools/equipment?

10. Factors to Consider
10
4. Whether the Worker Hires Helpers
Key questions:
Ø Can the worker hire his or her
own subcontractors/helpers?
Ø Can the worker send in replacements?

11. Factors to Consider
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5. Financial Risk/Chance of
Profit/Risk of Loss
Key questions:
Ø What is the degree of financial risk taken
by the worker?
Ø Can the worker control his or her
opportunity to make a profit or incur a
loss?

12. Factors to Consider
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6. Investment and Management
Key questions:
Ø Has the worker made a capital investment?
Ø Does the worker have an office?
Ø Does the worker manage his or her own staff?

13. Relevant Cases:
Uber cases
Ø June 2015 decision of the California Labor Commissioner – worker found to be an
employee. The decision is being appealed by Uber.
Ø June 2015 decision of the California Unemployment Insurance Appeals Board – worker
found to be an employee
Ø March 2015 decision a judge of the federal district court in San Francisco:
o judge agreed with the plaintiffs’ arguments about why certain California Uber
drivers may be properly classified as employees
o case has been certified as a class action and is set to begin trial on June 20, 2016
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14. Relevant Cases:
Factors considered in Uber cases
Ø extensive screening processes and quality control procedures;
Ø company documents issued to drivers provided detailed instructions as commands;
Ø significant control over revenue drivers can earn (i.e. setting fares, making adjustments to
charges and deciding requests for reimbursements);
Ø Uber does not receive a flat fee from its drivers in exchange for an unlimited number of
“leads”;
Ø clients cannot request specific drivers;
Ø drivers cannot subcontract;
Ø drivers have no investment in their business other than a vehicle and phone (and a phone
would be provided by Uber if driver did not already have one) and no managerial skill that
could affect profit or loss; and
Ø High integration - Uber would not be a viable business entity without its drivers.
14

15. Protecting Your IP
Ø Ensure Company owns IP under any employment agreement, license or
sales contract.
Ø Ensure any IP developed pre-incorporation is assigned to the Company.
Ø Invest in well-written non-disclosure agreements.
Ø Patent what is important to others and you.
Ø Identify, register, track and police all trademarks and copyrights.
15

16. Founders’ Dilemma:
Managing your board and investors
Establish corporate
governance best practices
right from the start.
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17. Founders’ Dilemma:
Managing your board and investors
Ø Each party plays its part:
17
Provide capital and approve major
Company transactions
Shareholders
Board of Directors
Elect
Appoint
Officers/Senior
Executives
Responsible for
day to day operations
Oversee the management of the
Company

18. Founders’ Dilemma:
Managing your board and investors
18
Accountability
and
Transparency
to all
Stakeholders
Books and
Records
Standard Form
Contracts
Documented
Decision
Making
Process

19. Books and Records
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Create and maintain books
and records of the Company:
Minute Books:
● articles and by-laws
● initial organizational
resolutions
● directors’ and shareholders’
resolutions
● issued share certificates
● annual maintenance
(resolutions, reports, etc.)
Financials
Policies and Procedures/
Manuals

20. Ø Invest in a set of well-written standard form contracts tailored to
your needs:
o non-disclosure agreements
o employment and consulting agreements
o sales agreements
o licensing agreements
o etc.
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Standard form contracts

21. Ø Be familiar with and obtain all required consents and approvals
for transactions under:
o articles and by-laws
o shareholders’ agreements
o loan agreements
o etc.
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Documented decision making

22. Documented decision making
Directors owe a fiduciary duty to the Company:
Ø Document decisions, and decision making process, in directors’
resolutions/minutes
Ø A due diligence defense requires due diligence
Ø Disclose any conflicts of interests and abstain from voting if
any exist
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23. Client-Centered. Responsive. Innovative.
At Michael, Evrensel & Pawar LLP (MEP Business Counsel), we approach the practice of business law differently. As a guiding principle, we are committed to provide the same
high-quality expertise of a top-tier national law firm, but deliver it with the innovation, cost-efficiencies and personal attentiveness you’d expect from dedicated in-house counsel.
As a Canadian corporate and entertainment law firm with extensive international experience, our contemporary model is simple but far from common:
World-Class Experience – Our team of highly experienced and award-winning lawyers – with training and experience from internationally recognized firms in London, New
York, Toronto, Montreal, Beijing and Vancouver – provide world-class business and entertainment legal services to some of North America’s most notable companies.
Client-Centred Approach – Clients now demand more of their legal advisors, which is driving a change in the legal services landscape in Canada, and rightly so. Businesses
expect greater value at sensible prices, which is achieved by receiving practical legal advice tailored to advance their goals. At MEP Business Counsel, we have an unwavering
commitment to your business, with a goal to provide you with bespoke legal services that put your real needs first.
Business-First Thinking – We have a unique combination of established legal expertise and commercial understanding. Effective business counsel should help drive your
commercial success by crafting solutions, not by simply identifying constraints. At MEP Business Counsel, we pride ourselves on aligning our advice with your core business
objectives, offering solutions to overcome obstacles. After all, we are entrepreneurs in our own right.
Flexible Value-Based Pricing and Alternative Fee Arrangements – Your business needs are unique. That’s why MEP Business Counsel is flexible when it comes to pricing
and fee arrangements. Unhindered by the rigidity of the conventional “big law” firm model, MEP Business Counsel is able to work with you to respond to those unique demands.
Regardless of the fee arrangement, at the core of each of our mandates is a commitment to provide exceptional value and build lasting business relationships.
23
meplaw.ca facebook.com/mepbusinesscounsel @meplaw MEP Business Counsel 604.669.1110

24. SR&ED – Documentation and Time
Tracking
Presented by Jeff Christie, Partner, Boast Capital

25. OUTLINE
I. Overview of the SR&ED Program
II. Benefits of Claiming SR&ED
III. Time Tracking and Documentation
IV. CRA’s Requirements
V. Do’s and Don’ts
VI. Q&A

26. I. OVERVIEW OF THE SR&ED
PROGRAM

27. WHAT IS SR&ED?

28. APPLICABLE INDUSTRIES

29. QUALIFYING CRITERIA
Must meet three criteria to qualify for SR&ED:
1. Technological Challenges
2. Technological Uncertainty
3. Technical Content or Iterations

30. ELIGIBILITY
The CRA’s 5 questions:
1. Was there a scientific or a technological uncertainty that could not
be removed by standard practice/engineering?
2. Did the effort involve formulating a hypothesis specifically aimed at
reducing or eliminating the uncertainty?
Continued…

31. ELIGIBILITY
3. Was the adopted procedure consistent with the total discipline of
the scientific method, including formulating, testing, and
modifying the hypothesis?
4. Did the process result in a scientific or technological
advancement?
5. Was a record of the hypothesis tested and results kept as the
work progressed?

32. EXAMPLES

33. II. SR&ED BENEFITS

34. WHO CAN CLAIM?
SMEs = defined as generating less than $500K taxable net income in the
prior fiscal year.

35. SR&ED BENEFITS
Return rates for SME CCPCs:

36. SR&ED BENEFITS
Return rates for non-CCPCs:

37. III. CRA REQUIREMENTS

38. TECHNICAL DOCUMENTATION
CRA requires that SR&ED documentation must:
§ Have been documented at the time the work was completed
§ Highlight technical obstacles or challenges
§ Be dated

39. TECHNICAL DOCUMENTATION
§ Most important thing is to document the technical challenges/obstacles as the work
progresses.
§ Capture: the problem and the iterations undertaken to attempt to resolve the
problem
§ What are the different hypotheses and how was each hypothesis tested?

40. TECHNICAL DOCUMENTATION
§ For a typical software project, only the major technical challenges/obstacles
encountered by the team in a month need to be documented -- not every
little problem.

41. TIME TRACKING

42. TIME TRACKING
Track time by project and activity
§ For a software company, time should be tracked by the following activities:
§ Development
§ Testing
§ Project Management
§ Assignment of Resources
§ Technical Analysis
§ Technical Requirements
§ Non-SR&ED (catch all for time that doesn't fit into activities above)

43. TIME TRACKING
§ Any type of system can be used (i.e. Excel or web time tracking system)
§ Important thing is that time is tracked and broken down by project and activity
§ Specified employees who are likely to be included in the claim, need to track
time as well.
§ Time claimed for specified employees comes under additional CRA scrutiny
§ Time sheets can be entered daily or weekly and at half or quarter day intervals
§ no need to be too precise; more important that time is captured

44. FINANCIAL STATEMENTS

45. WHEN TO CLAIM?
18 Months Past Fiscal Year End
§ Current Claim = Within 6 mo
§ Amended Claim = Within 7 to 18 mo

46. TURNAROUND TIMES
From receipt of a complete claim:
§ CCPC Current Claim – 4 months
§ CCPC Amended Claim – 8 months
§ Non-CCPC Claim – 12 months

47. CRA REVIEWS
CRA Review ≠ Tax Audit
Multiple types of Reviews:
§ Desktop
§ Financial
§ Technical & Financial
§ First Time Claimant Advisory Service (FTCAS)

48. IV. THE DO’S AND DON’TS

49. THE DO’s
Do:
§ Pay yourself and staff
§ Start time tracking and proper documentation
now
§ Incorporate your company

50. THE DON’T’S
Don’t:
§ Underestimate the importance of
documentation
§ Focus on the business opportunity
§ Leave SR&ED claims until the last minute

52. JEFF CHRISTIE
PARTNER
403 589 2809 | jchristie@boastcapital.com
BoastCapital.com | @BoastCapital | @ChristieLuge

53. Presenter Bios
53
Call to the Bar
Alberta, 2012
British Columbia, 2014
Areas of Expertise
Mergers and Acquisitions
Corporate Finance
Corporate and Commercial
Technology
Start-up Companies
Venture Capital / Private Equity
Education
J.D., University of British Columbia, 2011
B. Comm, Concordia University, 2003
@meplaw
Emmanuelle Frederic-Popa
Emmanuelle Frederic-Popa (epopa@meplaw.ca; (778) 331-0286)
Associate
Emmanuelle Frederic-Popa is an Associate at MEP Business Counsel. Emmanuelle’s practice encompasses a wide variety of corporate and commercial
law transactions, with a focus on mergers & acquisitions, corporate governance and financings. Emmanuelle advises public and private companies in
Canadian and cross-border mergers & acquisitions, financings, securities offerings, technology-related transactions and regulatory compliance. She also
regularly assists clients on general corporate matters and corporate governance issues.
Prior to joining MEP Business Counsel, Emmanuelle worked in the Calgary office of Blake Cassels & Graydon LLP representing both private and publicly
traded issuers and acting on behalf of underwriters and dealers in a wide variety of private and public offerings of debt and equity securities as well as
mergers & acquisitions.
Prior to practising law, Emmanuelle was an Information Technology project manager at Johnson & Johnson and has experience in the consumer, medical
devices and pharmaceutical industries.
Selected Representative Work
§ Represented Shoes.com Technologies Inc. in its acquisitions of all of the shares of St. Louis based Shoes.com and California based Richer Poorer,
Inc.
§ Represented a publicly traded Alberta-based company on numerous cross-border private equity commitments in private technology companies.
§ Represented Thunderbird Films Inc., a Vancouver based film and television production company, in connection with its acquisition of all of the
shares of Great Pacific Media Inc. and Soda Pictures Limited.
§ Represented a British Columbia-based food and beverages distribution company in the sale of its assets to a New-York based private equity fund.
§ Represented a publicly traded company on its $69-million acquisition, through a Canadian subsidiary, of a private Alberta-based Engineering,
Procurement and Construction Management company.
§ Represented the target in connection with its $15.1-billion acquisition by a foreign company and subsequent restructuring.
§ Represented numerous junior oil and gas companies on approximately $220-million of aggregate private equity commitments.

54. Presenter Bios
54
Call to the Bar
British Columbia, 2013
Areas of Expertise
Corporate and Commercial
Corporate Governance
Mergers and Acquisitions
Joint Ventures
Private M&A
Corporate Finance and Securities
Education
J.D., University of Victoria, 2012
B.A., SFU, 2004
Mike Weber (mweber@meplaw.ca; (604) 891-1153)
Associate
Michael Weber is an Associate at MEP Business Counsel. Michael’s primary practice focuses on mergers & acquisitions, corporate
finance, and corporate/commercial legal matters. Michael advises public and private companies and underwriters in Canadian and
cross-border mergers & acquisitions, financings, securities offerings and regulatory compliance. He also routinely assists clients on
general corporate matters and corporate governance issues.
Prior to joining MEP Business Counsel, Michael practiced business law in the Vancouver office of McCarthy Tétrault LLP. Prior to
practicing law, Michael lived in Taiwan and was a teacher.
Selected Representative Work
§ Advised Travelers Capital Corporation on the multi-phase $28 million financing of wind projects totaling 61-megawatts under
Nova Scotia’s COMFIT program, representing the first successful financing under such program.
§ Co-advised a joint-venture group in its bid ($100 million) for a 25-megawatt run-of-river hydroelectric project located near the
Lower Mainland, British Columbia.
§ Assisted a banking syndicate in connection with $102 million dollar financing of a 36-megawatt Electricity Purchase
Agreement-awarded biomass project near Fort St. James.
§ Represented an industrial construction services company in its acquisition of a Vancouver-based construction management
company.
§ Advised Thunderbird Films Inc. in its acquisition of all of the shares of Atomic Cartoons Inc.
§ Represented Nerd Corps Entertainment Inc., a Vancouver-based animation studio, with the sale of all of its shares to DHX
Media Ltd. for approximately $57 million.
§ Advised Coastal Contacts Inc. during its USD$430 million acquisition by Essilor International by way of a Plan of Arrangement
under the Business Corporations Act (British Columbia).
@meplaw.ca
Mike Weber