Small and medium sized businesses are the engines which drive the North American economy. Increasingly, people go in to their own business. Often spouses and other family members are in business together. Because of mutual trust and sharing which exists at the start of these arrangements, spouses tend not to make agrements about what will happen if the marriage breaks down.
When spouses who are in business together divorce, there are also consequences for the business. Who will keep the business? What will the spouses be able to work together? How much is the business worth? Who should buy the business? How will a buyout be funded? These questions are just the tip of the iceberg.
In this PowerPoint slide presentation, we provide useful information about the legal problems confronting separating or divorcing couples who are in business together. By reviewing these slides you will gain important insights about the issues lawyers have to deal with in these situations. What law applies? What other kinds of experts do you need? What legal advice will you need to find a workable resolution? What evidence will you need if the case has to go to trial? What procedure must be followed? If you are in business with your spouse or life partner, the information in these slides provides a few pointers about Ontario law even if the relationship is continuing. Sometimes, a unanimous shareholders’ agreement or some strategic advice can help avoid expensive litigation down the road.
These slides were part of a presentation at a lawyers conference conducted by Osgoode Professional Development in Toronto on March 27, 2012. They are intended as information only and not legal advice.
The authors are experienced litigation and arbitration lawyers in Toronto, Ontario, Canada, who act on complex shareholder disputes, typically involving closely-held corporations.
Introduction to Business Entities in Pakistanhamidjalal
The document provides a brief description of Legal Entities that could be incorporated in Pakistan to start a business and the merits and demirits of using each entity as a launch pad
How To Relocate An International Startup to Silicon Valleyideatoipo
You began your startup outside of the United States, and now you would like to relocate it to Silicon Valley. Every year many startups make the move without working through the complex legal issues. Failing to address those issues can kill your startup. San Francisco-based startup and venture capital attorney Jason Putnam Gordon of Polsinelli LLP will provide a high-level overview of the common US legal issues surrounding the move. This program will provide information on the following key issues:
· Corporate structure
· Tax consequences
· Intercompany agreements
· Immigration
· Intellectual property issues
· US employment laws
· The Committee on Foreign Investment in the United States, also known as CFIUS
· Export-control Issues
· Common pitfalls and mistakes
· And much, much more.
Having been an “early adopter” of the series LLC, we wanted to share some insights into where it is appropriate and (more to the point) inappropriate to use series organizations.
Our view is that the series company is a potentially complicated solution in search of a need that rarely exists.
Despite the apparent attractiveness of series organizations, on balance, there are usually more reasons to avoid them rather than to use them. This presentation will demonstrate a few.
Selecting a new business entity type used to be straightforward — the corporation or the LLC.
However, in today’s fast-changing business market states are authorizing new statutory entity types to meet specific needs of business owners. That’s great, because the more choices available, the better your chances of finding a good fit for business owners’ and investors’ needs. But now you have more entity types to consider. How do you choose?
In this in-depth seminar, you’ll get acquainted with new entity types that are gaining in popularity and ascertain the key considerations when researching what entity type is best for your organization or client.
Business Entities: classify, understand, choose, and manage.Berkman Solutions
Business entities are essential for starting, managing, and growing your business. This guides to business entities covers every major type, core concepts, criteria for choosing an entity, and legal entity management.
“Business entity” is a generic term with no legal significance per se. A business entity simply refers to the form of incorporation for a business. When a business incorporates, the law recognizes the business as a distinct entity which can enter contracts and acquire property among other rights and privileges.
There are, of course, some exceptions like sole proprietorships and general partnerships, which do not require incorporation. They also do not have the same right and privileges as incorporated legal entities.
There are four broad groups of business entities: limited liability companies, corporations, partnerships, and sole proprietorships. There are important flavors of each class of business entity.
Introduction to Business Entities in Pakistanhamidjalal
The document provides a brief description of Legal Entities that could be incorporated in Pakistan to start a business and the merits and demirits of using each entity as a launch pad
How To Relocate An International Startup to Silicon Valleyideatoipo
You began your startup outside of the United States, and now you would like to relocate it to Silicon Valley. Every year many startups make the move without working through the complex legal issues. Failing to address those issues can kill your startup. San Francisco-based startup and venture capital attorney Jason Putnam Gordon of Polsinelli LLP will provide a high-level overview of the common US legal issues surrounding the move. This program will provide information on the following key issues:
· Corporate structure
· Tax consequences
· Intercompany agreements
· Immigration
· Intellectual property issues
· US employment laws
· The Committee on Foreign Investment in the United States, also known as CFIUS
· Export-control Issues
· Common pitfalls and mistakes
· And much, much more.
Having been an “early adopter” of the series LLC, we wanted to share some insights into where it is appropriate and (more to the point) inappropriate to use series organizations.
Our view is that the series company is a potentially complicated solution in search of a need that rarely exists.
Despite the apparent attractiveness of series organizations, on balance, there are usually more reasons to avoid them rather than to use them. This presentation will demonstrate a few.
Selecting a new business entity type used to be straightforward — the corporation or the LLC.
However, in today’s fast-changing business market states are authorizing new statutory entity types to meet specific needs of business owners. That’s great, because the more choices available, the better your chances of finding a good fit for business owners’ and investors’ needs. But now you have more entity types to consider. How do you choose?
In this in-depth seminar, you’ll get acquainted with new entity types that are gaining in popularity and ascertain the key considerations when researching what entity type is best for your organization or client.
Business Entities: classify, understand, choose, and manage.Berkman Solutions
Business entities are essential for starting, managing, and growing your business. This guides to business entities covers every major type, core concepts, criteria for choosing an entity, and legal entity management.
“Business entity” is a generic term with no legal significance per se. A business entity simply refers to the form of incorporation for a business. When a business incorporates, the law recognizes the business as a distinct entity which can enter contracts and acquire property among other rights and privileges.
There are, of course, some exceptions like sole proprietorships and general partnerships, which do not require incorporation. They also do not have the same right and privileges as incorporated legal entities.
There are four broad groups of business entities: limited liability companies, corporations, partnerships, and sole proprietorships. There are important flavors of each class of business entity.
- Importance of structuring - trading trust
- Role of ATO in insolvency of small business
- Liquidator actions to be mindful of
Presenter: Ben Sewell
Sewell & Kettle Lawyers
If you have further questions later please contact me
Email: bsewell@sklawyers.com.au
This talk outlines the valuation, minority and majority owner disputes, control proof, contract authority, failure to plan for funding buy-sell agreements, and proof of profits to obtain adequate sales prices for family companies after an owner dies.
Make it Legal! Advantages of Legalizing BusinessesAffiliate Summit
Philip Akalp will change the way small businesses think about legalizing their business, as he scurries away falsities of Incorporating and forming LLC’s, while sharing many key advantages.
Experience level: Intermediate
Target audience: Affiliates/Publishers
Niche/vertical: Legalizing Business
Philip K. Akalp, CFO, Corpnet.com (Twitter @Corpnet)
Getting it Right: What You Need to Know about Nonprofit Executive CompensationGuideStar
Paying your executives too much can have negative consequences: public anger, loss of tax-exempt status, substantial fines on both the executives who receive the overpayment and the board members who approved it, attention from state attorneys general, and criticism from those who oppose your organization’s mission.
Underpaying your executives has risks too. It can cause valuable employees to leave for greener pastures and make it difficult to attract the best candidates to lead your organization.
What’s a nonprofit to do?
Presenters: Jeffrey S. Tenenbaum, Esq., Partner and Chair of the Nonprofit Organizations Practice, Venable LLP; Matthew T. Journy, Esq., Counsel, Nonprofit Organizations Practice, Venable LLP; Cody Cassady, Marketing & Outreach Coordinator, GuideStar USA, Inc. (moderator).
11 Legal Essentials the Every Board Director Must UnderstandVirtual, Inc.
It’s important that directors understand what their responsibilities are – and most directors will find it comforting to understand them so that they can act without fear of running afoul of the law. Learn the specifics of the laws governing boards and their individual members.
Garland Brown, an attorney with GreenBerg, Traurig, LLP discusses fundamentals of organizing, funding and IP for startup technology companies. See www.danlistens.com for other notes.
The first seminar of a four-part series on growing a business and preparing it for sale led by the co-chair of Kegler Brown's M+A practice, Eric Duffee. Eric partnered with Jeff Tubaugh and Maggie Gilmore of BDO for this presentation, which focused on the fundamentals of entity selection. It detailed different entity types and the related impacts from tax reform affecting them. It also discussed concerns related to outside investors, partnerships, various structural forms and the tax impact of each.
What advantages and disadvantages are there to illinois s corporations and ll...www.growthlaw.com
This memo describes the state tax, liability, and agency authority differences between Illinois business corporations with a subchapter S federal tax election and Illinois limited liability companies with the same election. It also discusses how the differences in entity type and location may relate to mergers and acquisitions.
The LLC now leads as the most popular statutory business entity in the United States. If you manage business formations and compliance, chances are you’re looking at a lot of LLCs. But with only 30 years of LLC law — compared to 100+ years of corporation law — you can also be facing some uncertainty.
Whether you’re managing just a few LLCs or many, accuracy is essential. Learn the basics of LLC law from CT’s expert staff attorneys. With a solid grounding in current LLC state laws, you can confidently make better-informed decisions for forming, qualifying, and maintaining LLCs.
Igor Ellyn, QC, CS is a leading Toronto litigation lawyer, chartered arbitrator and mediator, who specializes in shareholders disputes and arbitration. In this highly informative presentation, Mr. Ellyn discusses litigation and arbitration of shareholder oppression cases.
- Importance of structuring - trading trust
- Role of ATO in insolvency of small business
- Liquidator actions to be mindful of
Presenter: Ben Sewell
Sewell & Kettle Lawyers
If you have further questions later please contact me
Email: bsewell@sklawyers.com.au
This talk outlines the valuation, minority and majority owner disputes, control proof, contract authority, failure to plan for funding buy-sell agreements, and proof of profits to obtain adequate sales prices for family companies after an owner dies.
Make it Legal! Advantages of Legalizing BusinessesAffiliate Summit
Philip Akalp will change the way small businesses think about legalizing their business, as he scurries away falsities of Incorporating and forming LLC’s, while sharing many key advantages.
Experience level: Intermediate
Target audience: Affiliates/Publishers
Niche/vertical: Legalizing Business
Philip K. Akalp, CFO, Corpnet.com (Twitter @Corpnet)
Getting it Right: What You Need to Know about Nonprofit Executive CompensationGuideStar
Paying your executives too much can have negative consequences: public anger, loss of tax-exempt status, substantial fines on both the executives who receive the overpayment and the board members who approved it, attention from state attorneys general, and criticism from those who oppose your organization’s mission.
Underpaying your executives has risks too. It can cause valuable employees to leave for greener pastures and make it difficult to attract the best candidates to lead your organization.
What’s a nonprofit to do?
Presenters: Jeffrey S. Tenenbaum, Esq., Partner and Chair of the Nonprofit Organizations Practice, Venable LLP; Matthew T. Journy, Esq., Counsel, Nonprofit Organizations Practice, Venable LLP; Cody Cassady, Marketing & Outreach Coordinator, GuideStar USA, Inc. (moderator).
11 Legal Essentials the Every Board Director Must UnderstandVirtual, Inc.
It’s important that directors understand what their responsibilities are – and most directors will find it comforting to understand them so that they can act without fear of running afoul of the law. Learn the specifics of the laws governing boards and their individual members.
Garland Brown, an attorney with GreenBerg, Traurig, LLP discusses fundamentals of organizing, funding and IP for startup technology companies. See www.danlistens.com for other notes.
The first seminar of a four-part series on growing a business and preparing it for sale led by the co-chair of Kegler Brown's M+A practice, Eric Duffee. Eric partnered with Jeff Tubaugh and Maggie Gilmore of BDO for this presentation, which focused on the fundamentals of entity selection. It detailed different entity types and the related impacts from tax reform affecting them. It also discussed concerns related to outside investors, partnerships, various structural forms and the tax impact of each.
What advantages and disadvantages are there to illinois s corporations and ll...www.growthlaw.com
This memo describes the state tax, liability, and agency authority differences between Illinois business corporations with a subchapter S federal tax election and Illinois limited liability companies with the same election. It also discusses how the differences in entity type and location may relate to mergers and acquisitions.
The LLC now leads as the most popular statutory business entity in the United States. If you manage business formations and compliance, chances are you’re looking at a lot of LLCs. But with only 30 years of LLC law — compared to 100+ years of corporation law — you can also be facing some uncertainty.
Whether you’re managing just a few LLCs or many, accuracy is essential. Learn the basics of LLC law from CT’s expert staff attorneys. With a solid grounding in current LLC state laws, you can confidently make better-informed decisions for forming, qualifying, and maintaining LLCs.
Igor Ellyn, QC, CS is a leading Toronto litigation lawyer, chartered arbitrator and mediator, who specializes in shareholders disputes and arbitration. In this highly informative presentation, Mr. Ellyn discusses litigation and arbitration of shareholder oppression cases.
In this presentation, Silicon Valley attorney Alidad Vakili highlights and discusses a number of case stories which illustrate some of the frequent missteps made by entrepreneurs and startups -- and how to avoid making these mistakes.
Topics include:
1) When and How to Document Your Deal
2) Capitalization
3) Raising Funds
4) Attracting Investors
and more!
The discussion uses real case stories to illustrate each topic in a meaningful and easy to understand manner.
By understanding these common missteps, entrepreneurs and startups will be better able to successfully navigate the pitfalls and traps that can keep their startup from getting off the ground.
The speaker will highlight and discuss of a number of case stories which illustrate frequent missteps made by entrepreneurs and startups.
Topics will include:
when and how to document your deal
capitalization
raising funds
attracting investors
and more!
The discussion will use real case stories to illustrate each topic in a meaningful and easy to understand manner.
By understanding these common missteps, entrepreneurs and startups will be better able to more successfully navigate the pitfalls and traps that can keep their startup from getting off the ground.
Please come with your questions, comments and scenarios.
About the Speaker
Alidad Vakili is an attorney in the Palo Alto office of Foley and Lardner, an international law firm. He regularly represents startup and emerging growth companies at every stage of the company lifecycle—from startup to liquidity. He frequently advises clients on a variety of strategic growth issues including venture capital and private equity financing, private offerings, joint ventures and M&A transactions. His work includes not only advising on major corporate milestones but also significant involvement in day-to-day operations and strategic business issues, such as formation, governance, and commercial agreements.
How to Raise Seed Funding for Your Startup: Convertible Notes and SAFEs ideatoipo
Seed financings enable a startup to put together its initial team, build a working prototype, and begin to test the market. Often these investments are made via convertible debt or SAFEs.
In this presentation, Silicon Valley startup and corporate attorney Alidad Vakili discusses the following topics:
1. Required corporate structure
2. Legal considerations when pitching investors for seed financing
3. Differences between using convertible debt and SAFEs
4. Key terms and considerations when raising seed funding
5. Common mistakes and pitfalls that companies make when raising seed funding via convertible debt and SAFEs
6. How to close your seed financing
7. Important post-closing tasks
and more!
About the Speaker
Alidad Vakili is an attorney in the Palo Alto office of Foley and Lardner, an international law firm. He regularly represents startup and emerging growth companies at every stage of the company lifecycle—from startup to liquidity. He frequently advises clients on a variety of strategic growth issues including venture capital and private equity financing, private offerings, joint ventures and M&A transactions. His work includes not only advising on major corporate milestones but also significant involvement in day-to-day operations and strategic business issues, such as formation, governance, and commercial agreements.
This webinar is critical for entrepreneurs who will be raising a preferred round in the near future. This webinar is designed to teach you what to expect when your company sells preferred stock in a venture round.
During this webinar, veteran Silicon Valley venture capital attorney Jason Putnam Gordon will cover the following topics:
· What venture capitalists are looking for when they invest in a company
· What makes a company a potential investment for a venture capital fund
· Pre-round issues
· What makes a good investor and how to find them
· How to negotiate a term sheet
· The deal documentation
· The diligence process
· Closing issues
· Post-closing issues
· Common pitfalls when raising venture capital
· And much, much more
Come with your questions and get ready to get excited about venture capital financings!
This webinar is critical for entrepreneurs who will be raising a preferred round in the near future. This webinar is designed to teach you what to expect when your company sells preferred stock in a venture round.
During this webinar, veteran Silicon Valley venture capital attorney Jason Putnam Gordon will cover the following topics:
· What venture capitalists are looking for when they invest in a company
· What makes a company a potential investment for a venture capital fund
· Pre-round issues
· What makes a good investor and how to find them
· How to negotiate a term sheet
· The deal documentation
· The diligence process
· Closing issues
· Post-closing issues
· Common pitfalls when raising venture capital
· And much, much more
7.30.20 How to Do a Venture Capital Financingideatoipo
This webinar is critical for entrepreneurs who will be raising a preferred round in the near future. This webinar is designed to teach you what to expect when your company sells preferred stock in a venture round.
During this webinar, veteran Silicon Valley corporate attorney Jason Putnam Gordon will cover the following topics:
· What venture capitalists are looking for when they invest in a company
· What makes a company a potential investment for a venture capital fund
· Pre-round issues
· What makes a good investor and how to find them
· How to negotiate a term sheet
· The deal documentation
· The diligence process
· Closing issues
· Post-closing issues
· Common pitfalls when raising venture capital
· And much, much more
Come with your questions and get ready to get excited about venture capital financings!
About the Speaker:
Jason Putnam Gordon is a results-oriented corporate attorney practicing in the Venture Capital and Emerging Growth Companies group in Polsinelli's San Francisco office. He has a passion for working with experienced entrepreneurs and executives to make their vision a reality.
Jason regularly represents companies throughout their life cycle in matters related to venture capital financing, strategic corporate relationships, corporate formation, complex mergers and acquisitions, sales, and divestitures. Jason regularly works in wide array of verticals including artificial intelligence, virtual reality, augmented reality, video games, software, hardware, life sciences, the internet of things and agricultural technology. His clients are based locally, elsewhere in the U.S., and internationally.
If you have any questions regarding the content of this presentation, you can reach Jason at:
JGordon@polsinelli.com
A presentation on fiduciary duties. This presentation was given by Gateley LLP as part of the Sport and Recreation Alliance's, Sport and the Law Conference 2015.
How to Raise Seed Funding for Your Startup: Convertible Notes and SAFEsideatoipo
Seed financings enable a startup to put together its initial team, build a working prototype, and begin to test the market. Often these investments are made via convertible debt or SAFEs. Veteran Silicon Valley startup and corporate attorney Jason Putnam Gordon will cover the following topics:
1. Required corporate structure
2. Legal considerations when pitching investors for seed financing
3. Differences between using convertible debt and SAFEs
4. Key terms and considerations when raising seed funding
5. Common mistakes and pitfalls that companies make when raising seed funding via convertible debt and SAFEs
6. How to close your seed financing
7. Important post-closing tasks
8. And much, much more
Come with your questions and get ready to be excited about seed financings!
7.23.20 How to Raise Seed Funding for Your Startup: Convertible Notes and S...ideatoipo
Seed financings enable a startup to put together its initial team, build a working prototype, and begin to test the market. Often these investments are made via convertible debt or SAFEs. Veteran Silicon Valley startup and corporate attorney Jason Putnam Gordon will cover the following topics:
1. Required corporate structure
2. Legal considerations when pitching investors for seed financing
3. Differences between using convertible debt and SAFEs
4. Key terms and considerations when raising seed funding
5. Common mistakes and pitfalls that companies make when raising seed funding via convertible debt and SAFEs
6. How to close your seed financing
7. Important post-closing tasks
8. And much, much more
Come with your questions and get ready to be excited about seed financings!
.
About the Speaker
Jason Putnam Gordon is a results-oriented corporate attorney practicing in the Venture Capital and Emerging Growth Companies group in Polsinelli’s San Francisco office. Jason has a passion for working with experienced entrepreneurs and executives to make their vision a reality.
In his practice, he regularly represents companies throughout their life cycle in matters related to venture capital financing, strategic corporate relationships, corporate formation, complex mergers and acquisitions, sales, and divestitures. With industry focuses on consumer goods and technology, because of his broad skill set and deep network, Jason regularly works in wide array of verticals including artificial intelligence, virtual reality, augmented reality, video games, software, hardware, life sciences, the internet of things and agricultural technology.
Jason works with companies based locally, elsewhere in the U.S. and internationally. Jason brings a unique skill set to the negotiating table and to litigation-minimization strategies in the board room. He started his career as a federal law clerk in the United States District Court for the Eastern District of Pennsylvania and then continued as a litigator handling corporate, securities, intellectual property, and commercial litigation before establishing a transactional practice.
Outside of the office, Jason is dedicated to his family and has a passion for skydiving and indoor body flight.
If you have any questions regarding the content of this presentation, you can reach Jason at:
JGordon@polsinelli.com
How to Structure Venture Capital Term Sheets for a Win-Win Deal ideatoipo
T 4/13/21 How to Structure Venture Capital Term Sheets for a Win-Win Deal
7 PM to 8:30 PM Pacific Time (Online)
https://www.meetup.com/Silicon-Valley-Startup-Idea-to-IPO/events/276787604/
Analysis of legal principles to real estate contracts in Ontario, Canada, including specific performance, action for damages, certificates of pending litigation, cautions and related matters.
These tips, pointers and information are intended for persons who must attend for cross-examination or examination for discovery in a civil proceeding in Ontario. There are some procedural differences between cross-examination and discovery but generally, preparation for the examination is the same.
At the root of appeals from judgments in commercial cases is the burning question: Does the result make sense from a business perspective? or put in more legally-eloquent language: Does this result meet the test of commercial reasonableness? "Commercial Reasonabless" is a concept Canadian courts address frequently to determine if business conduct or a result makes sense.
This paper will show that in commercial appeals, the Court of Appeal generally operates on the principle of commercial reasonableness. If the relief sought is not commercially reasonable, then you are unlikely to achieve a successful result for your client. I hope to show that appellate courts in Ontario approach appeals involving commercial disputes by asking whether the trial judge’s decision was commercially reasonable. In short, The court will not adopt an interpretation that is clearly commercially absurd.
The author is a senior business litigation and arbitration lawyer in Toronto who has argued many business appeals in the Ontario Court of Appeal. He is also an experienced trial and arbitration counsel. Senior partner of Ellyn Law LLP Business Litigation & Arbitration Lawyers, Mr. Ellyn heads a team of competent litigation lawyer who are at the vanguard of developments of business litigation and arbitration in Ontario. Igor Ellyn is also the Chair of the Business Litigation & Arbitration Practice Group of INBLF.com, the International Network of Boutique Law Firms.
The authors explain how a Business Legal Checkup ("BLC") can be useful. BLC is a diagnostic tool small and medium size businesses can use to verify if legal aspects of their operation comply with law and to minimize risk, litigation and expense. When the BLC is completed, the business owner receives a lawyer’s report red-flagging matters which need correction, improvement or further legal advice. Contact the authors for more information.
When advising business clients about doing business in Canada, lawyers must turn their minds not only to the kinds of corporate vehicles which Canadian law permits but also the remedies permitted if disputes arise. In this paper, we highlight the range of remedies available in the common law jurisdictions of Canada to protect shareholders and others from abusive corporate action.
This is the fourth update revision of a paper which was first published on the internet in 2005. It has been widely read and has been well-received by clients and other lawyers. We believe that we have been repeatedly quoted by other lawyers. Our paper was used in global corporate law texts in Asia and was including in required reading for a business valuators program in Canada.
This paper begins by discussing the various sources of shareholder rights, including corporate statutes, articles of incorporation and by-laws, and shareholder agreements. Although securities laws will also be briefly mentioned, the securities regime is exceedingly complex and it is beyond the scope of this paper to address it in detail. We then discuss the remedies provided by corporate statute to shareholders who are aggrieved by the manner in which management conducts the business and affairs of the corporation, including voting, court-ordered meetings, derivative actions, the oppression remedy, investigations, appraisals and court-ordered winding-up on the “just and equitable principle”.
The oppression remedy, widely acknowledged to be the most powerful weapon in the shareholder's arsenal of remedies, focusses on two particular points: the broad definition of "complainant" under corporate statutes, and the manner in which the courts have defined the reasonable and legitimate expectations of shareholders and other "proper persons" under the oppression remedy.
The authors are members of ELLYN LAW LLP Canadian Business Litigation & Arbitration Lawyers, a Toronto law firm, specializing in dispute resolution for small and medium businesses and their shareholders. The firm is a member of the International Network of Boutique Law Firms (www.inblf.com), a prestige network of specialized law firms who have demonstrated pre-eminence their practice fields. Ellyn Law LLP is INBLF’s designated Toronto firm for shareholder disputes and arbitration. Igor Ellyn, QC is the Chair of INBLF's Business Litigation & Arbitration Practice Group.
In the seven years since this paper was first published, ELLYN LAW LLP has acted on dozens of complex shareholder disputes. Despite our long experience in this area, each case brings its shares of new twists and surprises. In each revision of this paper, we have added the benefits of our added experiences.
In this paper, Toronto lawyers Evelyn Perez Youssoufian and Orie Niedzviecki discuss the impact of an important case in the commercial arbitration and the supervision of arbitration by the Superior Court of Justice of Ontario.
The Ontario Superior Court decision of Farah v Sauvageau Holdings Inc., 2011 ONSC 1819, resolves many issues regarding orders and awards in arbitration proceedings. The application was brought because there were novel issues raised in its underlying arbitration. In his decision, Justice Paul Perell addresses several important issues, some brought up at the Superior Court for the first time, which should be taken into account by both arbitrators and arbitral counsel when conducting an arbitration.
This paper discusses the issues of orders and awards in an arbitration as raised by Farah v Sauvageau; including an arbitrator's jurisdiction to make orders affecting non-parties, Mareva injunctions, Anton Piller orders, Norwich orders, orders for interim preservation of property or orders for Certificate of Pending Litigation. It also discusses whether it is or when it may be appropriate for arbitral counsel to have ex parte communications with the arbitrator.
The also paper discusses whether an arbitral award can become an order of the court without resorting to the procedure in s. 50 of the Ontario Arbitration Act, 1991, in any circumstance (even an ex parte award).
The authors are members of ELLYN LAW LLP Business Litigation & Arbitration Lawyers, a Toronto law firm, specializing in dispute resolution for small and medium businesses and their shareholders. The firm is a member of the International Network of Boutique Law Firms (www.inblf.com), a prestige network of specialized law firms who have demonstrated pre-eminence their practice fields. Ellyn Law LLP is INBLF’s designated Toronto firm for shareholder disputes and arbitration. The authors were counsel on Farah v Sauvageau, and have been counsel on various international arbitrations.
This paper is for information only. It is not legal advice. It was presented at a legal seminar presented in Toronto on October 26, 2012.
This article is an excerpt of the Canada Chapter of International Liability of Corporate Directors, 2nd edition, published by Juris Publishing in February 2013. This excerpt excludes numerous aspects of the full chapter, particularly in reference to offering corporations, national corporate reporting, the supervisory role of the securities commissions, insider trading, prospectus violations, director loans and directors’ and officers’ liability insurance and indemnification of officers and directors. Further, some sections have been abridged. The full article should be consulted for the omitted aspects and for a more complete analysis of the applicable law. This article is not legal advice and is intended solely as information. Further information can be obtained from the authors.
In Canada, there is a large body of statutory and common law which provides guidance about the standards of conduct expected from directors and attaches personal liability for failing to meet those standards. Directors now owe expanded duties to shareholders, employees, creditors, and other stakeholders and are increasingly being held personally responsible for the corporation’s conduct. Liability attaches under the Canada Business Corporations Act (CBCA), and under provincial corporations acts, most of which are similar to the Ontario Business Corporations Act (OBCA). This article deals only with liabilities under business corporations.
Commercial Arbitration is a process which depends on the consent of the parties. Only parties to the arbitration agreement can be affected by the arbitrator's award. In this article, the authors review a recent judgment of the Ontario Superior Court of Justice which set aside an arbitrator's award which made orders against third parties.
The case concerned a business transaction for the sale of a collection agency. The sale closed but the purchaser, a corporation operated by a lawyer, thought it had been defrauded by the seller. The purchaser commenced a claim in court attempting to place a certificate of pending litigation on the seller's house but then decided that he wished to arbitrate the dispute under the arbitration clause in the sale agreement.
After the arbitrator was consensually selected, the purchaser made a motion to the arbitrator without notice to seek a Mareva Injunction. A Mareva injunction is an order which restrains the defendant from disposing of his assets until the lawsuit has been concluded. It is typically obtained where there is reason to fear that the defendant will remove his assets from the jurisdiction before the case is completed and thereby avoid enforcement of any judgment which may be obtained. Typically, the order is also directed at banks and others who have financial dealings with the defendant, in the hope that they will freeze the defendant's accounts.
In the case discussed in the article, the claimant sought a Mareva injunction from the arbitrator without notice to the defendant. The arbitrator granted the order including an order directing banks to freeze the defendant's accounts. The claimant then filed the arbitrator's order in the court office without following the proper procedure to turn it into a court order. On a motion to the Court, the judge, the Hon. Justice Paul Perell, discussed in detail the principles affecting arbitral awards made without notice and whether an arbitrator can make an order which affects parties who are not involved in the arbitration. After an exhaustive analysis which is explained in the article, the Court decided that the arbitral order had to be set aside. The judge also called the arbitral award filed in the court office "bogus" because the correct procedure had not been followed.
Orie Niedzviecki, a partner of Ellyn Law LLP Business Litigation and Arbitration Lawyers, Toronto, and Evelyn Perez Youssoufian, an associate of the firm, were counsel for the seller. Assisted by Igor Ellyn, QC, CS, FCIArb., Senior Partner of Ellyn Law LLP, they explain the issues and legal principles enunciated by Justice Perell in this article.
The hallmark of international commercial arbitration is the right of parties to select the law to govern their dispute. However, choice of law or party autonomy is subject to limits. Sometimes arbitrators are obliged to apply the mandatory law of a jurisdiction contrary to the will of one or more of the parties. The scope of these issues was discussed by Igor Ellyn in a presentation to the NY State Bar Association and Cornell University at the Bloomberg Center in New York in March 2008. These power point slides summarize the presentation.
Enforcement of a U.S. or international judgment in Canada requires expert knowledge of Canadian law and procedure.
Courts in Ontario, Canada, which includes the Greater Toronto Area, are receptive to the enforcement of final and conclusive foreign money judgments is subject to certain statutory exceptions and procedural requirements. This article explains the law and procedure applicable in Canada, with emphasis on the Province of Ontario, where one-third of Canada's population resides.
The authors are business litigation and arbitration lawyers in Toronto, Canada. This article is an excerpt of a chapter of which they are authors which comprehensively deals with the law of enforcement of foreign money judgments in Canada.
Business litigation is usually about numbers. The damages, value, financial analysis and appraisal you need to prove your case will often require the opinion of an independent financial expert such as a business valuator, forensic accountant, economist, appraiser or any of a panoply of other financial experts.
The expert's evidence could make or break the case. So it's important to engage counsel who knows the rules and an expert whose opinion will be accepted by the court.
In this interesting presentation, Igor Ellyn, QC, CS, FCIArb, a senior business litigation and arbitration counsel in Toronto, Canada, discusses the law affecting the use of financial experts and best practices to make their evidence most effective. Mr. Ellyn was assisted by Evelyn Perez Youssoufian, also, a business litigation and arbitration lawyer. Both are members of Ellyn Law LLP.
The following topics are discussed:
- What an expert witness should accomplish
- Determining when to use a financial expert
- What kind of financial expert do you need?
- Types of financial expert witnesses
- Factors to consider when hiring the expert
- New developments in presentation of expert evidence
- Conflicts of interest and disclosure
- Litigation privilege relating to expert reports
- Best practices for qualifying a financial expert
- Limits of admissibility of expert evidence
- Preparing the financial expert to testify at the hearing
- Preparing for cross-examination of the opposing expert
- The Court’s power to appoint an expert
- Counsel’s role in the content of the expert’s report
This presentation was prepared for a legal conference which took place in Toronto on May 30, 2013. The contents are not legal advice. Please contact the author if you have any questions.
Corporate Law and Family Law at the Crossroads: Spouses as Shareholders in Canada 2012
Small and medium sized businesses are the engines which drive the North American economy. Increasingly, people go in to their own business. Often spouses and other family members are in business together. Because of mutual trust and sharing which exists at the start of these arrangements, spouses tend not to make agrements about what will happen if the marriage breaks down.
When spouses who are in business together divorce, there are also consequences for the business. Who will keep the business? What will the spouses be able to work together? How much is the business worth? Who should buy the business? How will a buyout be funded? These questions are just the tip of the iceberg.
In this PowerPoint slide presentation, we provide useful information about the legal problems confronting separating or divorcing couples who are in business together. By reviewing these slides you will gain important insights about the issues lawyers have to deal with in these situations. What law applies? What other kinds of experts do you need? What legal advice will you need to find a workable resolution? What evidence will you need if the case has to go to trial? What procedure must be followed? If you are in business with your spouse or life partner, the information in these slides provides a few pointers about Ontario law even if the relationship is continuing. Sometimes, a unanimous shareholders’ agreement or some strategic advice can help avoid expensive litigation down the road.
These slides were part of a presentation at a lawyers conference conducted by Osgoode Professional Development in Toronto on March 27, 2012. They are intended as information only and not legal advice.
The authors are experienced litigation and arbitration lawyers in Toronto, Ontario, Canada, who act on complex shareholder disputes, typically involving closely-held corporations.
Memorandum Of Association Constitution of Company.pptseri bangash
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
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The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
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Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
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The Crossroads of Corporate Law and Family Law - Spouses as Shareholders
1. The Intersection of Family Law
and Corporate Law
Igor Ellyn, QC, CS, FCIArb. Evelyn Perez Youssoufian
ELLYN LAW LLP
Business Litigation & Arbitration Lawyers
www.ellynlaw.com
(c) Ellyn Law LLP
www.ellynlaw.com
Spouses as
Shareholders
1
2. Spouses as Shareholders
Some spouses are also business partners
Spouse might be a shareholder even if s/he does not work in
the business
Corporation may also have other shareholders including
children, other relatives, employees and business associates
Spouse could be a party to a Unanimous Shareholders
Agreement
(c) Ellyn Law LLP
www.ellynlaw.com
There are often one or more corporations
Shareholding creates a panoply of rights, restrictions,
remedies and obligations
Spouses may be directors of the corporation and subject to
other statutory and common liabilities
2
3. • The points in this presentation deal with private
corporations incorporated under the OBCA or
CBCA
• Typically the business will have five or fewer
shareholders
(c) Ellyn Law LLP
www.ellynlaw.com
Shareholders in closely-held,
non-offering corporations
• Sometimes an employee might have a minority
shareholding in the business
3
4. Is it Family Law or Corporate Law?
Usually, it’s both!
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
Family Law Judge
Family Law Rules
Family Law Act
Financial Statement
Questioning
Disbursements, Costs
Impact on NFP
Constructive Trust Claim
Joint Family Venture
Equalization Payment
Source of Support
◦ Corporate Law:
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
OBCA or CBCA
Commercial List, usually
Rules of Civil Procedure
Proceeding by Application or
Statement of Claim
Cross-exam. or Discovery
Self-dealing and Fraud
Breach of fiduciary duty
Director’s duty OBCA s.134
Oppression remedy s.248
Court-Ordered Meetings
Winding-up s.207
Mandatory Audit
Advance on Legal Fees
Termination of Employment
(c) Ellyn Law LLP
www.ellynlaw.com
Family Law
4
5. • Will one spouse buy the other’s share in the
business?
• Will an independent valuation be required?
• Who should do the valuation?
• Can parties agree on valuation parameters?
• Can financing be secured to fund a buyout?
• Other buyout arrangements?
• Earn out over a period of years
• Sale to a third party
(c) Ellyn Law LLP
www.ellynlaw.com
What will happen to the family business
going forward? #1
5
6. If the purchase price is not paid on closing,
what security is needed to secure the balance?
Should the business be put up for sale?
How will sale affect employment?
Non-competition and non-solicitation clauses
Income tax considerations of a sale
Does the USA provide for “keyman” life
insurance which cannot be replaced due to cost
or health factors?
More about valuation later
(c) Ellyn Law LLP
www.ellynlaw.com
What will happen to the family
business going forward? #2
6
7. Corporate issues to consider
on marriage breakdown #1
◦
◦
◦
◦
◦
Partnership of corporations
Corporation, Joint Venture
Holdco, Opco, other corporations
Domestic or international
Tax considerations
Who are the shareholders?
◦ Are there other shareholders apart from the spouses?
◦ Are there different classes of shares with differing
rights?
Who are the officers and directors?
What are voting and quorum requirements for
meetings of directors and shareholders?
Who is managing the business?
(c) Ellyn Law LLP
www.ellynlaw.com
Structure of the business
7
8. Corporate issues to consider
on marriage breakdown #2
◦
◦
◦
◦
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◦
◦
◦
◦
Shareholders’ Agreement?
Has the USA been amended?
Have circumstances changed since the USA was made?
Does it have a buyout or buy-sell (“shotgun”) clause?
Does it have a mandatory valuation clause?
Who does the USA mandate to do the valuation?
Is there an arbitration or forum selection clause? (FSC)
What kinds of disputes are covered?
Is oppression excluded from FSC – Deluce v. Air Canada
If there is an international element, is there a
governing law clause?
◦ Appeal rights under the FSC
(c) Ellyn Law LLP
www.ellynlaw.com
Is there a Unanimous
8
9. Corporate issues to consider
on marriage breakdown #3
◦
◦
◦
◦
Who prepared the Agreement? Lawyer? Corp.’s CA?
Was there independent legal advice?
Was there adequate disclosure?
Were the provisions as to shares, management, business plans,
etc. implemented?
◦ Has anything occurred which affects the operation of the USA:
departure or death of a shareholder, restructuring, acquisition of
a competitor, children acquiring shares, retirement, sale of the
business?
Has the USA been observed?
Have the shares been valued? How was the valuation
done? Who did the valuation?
Is there an entire agreement clause?
Has the USA been replaced or abandoned?
(c) Ellyn Law LLP
www.ellynlaw.com
How did the Unanimous Shareholders’ Agreement
(USA) come about?
9
10. Corporate issues to consider
on marriage breakdown #4
• Should a buy-sell notice be served?
• How should the buy-out price be determined?
• Would an exercise of the buy-sell clause be an
oppressive act because the playing field is not
level?
• If a buy-sell notice is received, should
negotiations be proposed instead of responding
to the notice?
• Should a different dispute resolution method be
proposed?
(c) Ellyn Law LLP
www.ellynlaw.com
• If there is a buy-out clause under the
Unanimous Shareholder Agreement:
10
11. Corporate issues to consider
on marriage breakdown #5
• Can the parties agree to a modified dispute
resolution process which ties in both the family
law and corporate law issues?
• Should the corporate law issues be left for
separate resolution after all other family law
matters have been resolved?
• Are interim payment or preservation
arrangements necessary until the corporate
situation can be settled or adjudicated? Was
there independent legal advice?
(c) Ellyn Law LLP
www.ellynlaw.com
• If there is a dispute resolution clause under
the Unanimous Shareholder Agreement:
11
12.
Do both spouses work in the business?
Can the spouses still co-operate?
Are the salaries reflective of each spouse’s work?
Notice / Severance on leaving employment
CRA’s review of income splitting/undeclared income
Have dividends been paid? Are any payable?
Is the failure to pay dividends an act of oppression?
Does the corporation have redundant assets?
How will the shares be valued?
Will other shareholders be affected?
Are there other relatives or partners in the business?
Is independent representation required for any other
party or for the corporation itself?
(c) Ellyn Law LLP
www.ellynlaw.com
Corporate issues to consider
on marriage breakdown #6
12
13. • Business is primary source of revenue for support
• How will corporate action affect the revenue stream?
• Will attack on corporate activities give rise to:
• a CRA audit
• charges under ITA
• Insolvency
• Receivership or demand by creditors?
• Will disclosure in family dispute provide fodder for a
fraud claim by another partner?
• Is there undisclosed income and how will its disclosure
impact on corporate value?
• If spouse is a corporate partner, will a voluntary
disclosure to CRA be necessary?
• How will a buyout of one spouse’s shares be financed?
(c) Ellyn Law LLP
www.ellynlaw.com
Corporate Finance Issues
13
14. Corporate Statutes
◦ Business Corporations Acts
◦ Securities Acts
◦ Extra-Provincial Corporations Act
Articles of Incorporation
By-Laws of the Corporation
Minutes of Directors Meetings
Minutes of Shareholders’ Meetings
Unanimous Shareholders’ Agreements
Financial Statements of the Corporation(s)
(c) Ellyn Law LLP
www.ellynlaw.com
Sources of Shareholders’ Rights
14
15. • Exercisable by a quorum – majority or agreed
number: OBCA s. 101(1)
• Election of Board of Directors to manage affairs
of the corporation
• Participate in major business decisions affecting
the corporation’s business
• Subject to limitations in articles of incorporation,
by-laws or shareholders’ agreement
(c) Ellyn Law LLP
www.ellynlaw.com
Voting Rights
15
16. Records required to be kept under OBCA
◦ Articles and by-laws and all amendments
◦ Unanimous shareholders’ agreements
◦ Minutes of meetings
◦ Director and shareholder resolutions
◦ Register of directors with info as in s.140(1)
◦ Securities register with info as in s.141
Shareholders are entitled to receive a copy of the
financial statements which must be placed before the
annual meeting of the corporation and other relevant
financial information: ss.154(1)(a)(d)
(c) Ellyn Law LLP
www.ellynlaw.com
Access to Information #1
16
17. • OBCA entitles shares to view corporate records at
the office of the corporation
• In a closely-held corporation, failure of managing
shareholder to provide easy access and full
disclosure may give rise to an adverse inference
• Notices of directors/shareholders’ meetings must
provide background and supporting information to
enable director/shareholder to make a reasoned
decision
• When information is deficient, results of meeting
may be voided by the Court
(c) Ellyn Law LLP
www.ellynlaw.com
Access to Information #2
17
18. • Court-ordered Meetings
• Derivative Action
• Oppression Remedy
• Investigations and Audits
• Appraisals
• Winding-Up
• Motion for corporation to pay shareholder’s
legal fees of an action
(c) Ellyn Law LLP
www.ellynlaw.com
Shareholders’ Remedies
18
19. • Quorum and notice are required for all meetings
• Business conducted and resolutions passed at a
meeting:
• Not properly constituted as to notice or quorum are a
nullity
• Without proper disclosure of materials are voidable
• Director or shareholder may seek to void the results
• OBCA s. 106: Court may order a meeting where
“impracticable” to call a meeting
• Court has wide discretion to make orders as to the
purpose and structure of the meeting
(c) Ellyn Law LLP
www.ellynlaw.com
Court-ordered Meetings
19
20. Oppression Remedy #1
The most effective and frequently-used shareholder remedy
“Reasonable expectation” is a question of fact to be
determined from the agreements, history, conduct and
dealings of the shareholders.
OBCA/CBCA do not define reasonable expectation.
Applies to only OBCA/CBCA corporations: PMSM Inv. Ltd. v.
Bureau, 1995 CanLII 7123 with some exceptions: Manulife v.
AFG Ind. 2008 CanLII 873 (ON SC). (Of course, there are
similar remedies in Corp. Acts in other provinces.)
(c) Ellyn Law LLP
www.ellynlaw.com
Intended to prevent one or more shareholders from
operating the corporation in a manner contrary to the
reasonable expectation of the shareholders
20
21. Oppression Remedy #2
◦
◦
◦
◦
◦
◦
Setting aside a transaction
Amending a shareholder agreement
Amending corporate articles or by-laws
Directing purchase of shares
Directing an auction or other buyout method
Winding-up the corporation and directing sale of assets
and distribution
◦ Appointing a receiver to manage or oversee the business
◦ Directing the trial of an issue
(c) Ellyn Law LLP
www.ellynlaw.com
Court has broad discretion where oppressive conduct
exists to remedy oppression by appropriate order,
including
21
22. Oppression Remedy #3
◦ Conduct which is unfairly prejudicial
◦ Conduct which unfairly disregards the interests of
a shareholder or security holder
◦ Conduct which is inconsistent with the reasonable
expectations of the parties
◦ Conduct can oppressive even if it is legal
◦ Conduct can oppressive even if not done in bad
faith
(c) Ellyn Law LLP
www.ellynlaw.com
What is oppressive conduct?
22
23. Oppression Remedy #4
◦ Failure to disclose financial information
◦ Self-dealing, fraud, non-disclosure of related party
transactions
◦ Payment of director/shareholder personal expenses
or debts
◦ Unilateral increase in salary or expenses
◦ Exposing the business new ventures or risks beyond
the ordinary business of the corporation
◦ Unilateral or disproportionate dividend payment
◦ Unilateral dismissal of a key employee
(c) Ellyn Law LLP
www.ellynlaw.com
Examples of oppressive conduct
23
24. Oppression Remedy #5
More examples of oppressive conduct
(c) Ellyn Law LLP
www.ellynlaw.com
◦ Diversion of funds or business to another entity
◦ Unilateral changes of corporate structure
◦ Binding the corporation to new debt out of the
ordinary course of business without notice
◦ Operating the business as if the other shareholder
does not exist
◦ Preferring some shareholders with management fees
◦ Paying unfairly high directors’ fees
◦ Creating a “smokescreen insolvency”
24
◦ See BCE Inc. v. 1976 Debentureholders, 2008 SCC 69
25. Oppression Remedy #6
• The oppression remedy is also available to nonshareholders, including
(c) Ellyn Law LLP
www.ellynlaw.com
• officers and directors
• employees
• security holders
• creditors to prevent fraud by shareholders
• anyone the court considers a “proper person”
• The oppression remedy can also be used to prevent a
shareholder from arranging his affairs though a network of
corporations where liabilities are incurred in one
corporation and assets are in another: Downtown Eatery
25
(1993) Ltd. v. Ontario, 2001 CanLII 8538 (ON CA)
26. Oppression and Arbitration
Many shareholders’ agreements have arbitration clauses.
Is the oppression remedy available when there is a
mandatory arbitration clause in a shareholders’
agreement? It depends on the wording.
Deluce v. Air Canada (1992 ONSC): where the majority
shareholder was trying to squeeze the minority
shareholder out of the business, the Court held that was
outside the scope of the arbitration clause and the
oppression action was allowed to proceed.
(c) Ellyn Law LLP
www.ellynlaw.com
There is a strong tendency to defer to a forum selection
clause unless there is a clear intention to the contrary.
26
27. • Powerful remedy to deal with fraud, abuse or breach of
fiduciary duty: OBCA s.246
• “Complainant”, who can be a shareholder, officer,
director, employee, creditor or “proper person”
• Seeks permission from Court to sue or defend a
lawsuit in name of corporation
• Claim can be against another shareholder, director or
employee
• Can be for defence of a lawsuit which management is
unwilling to defend
(c) Ellyn Law LLP
www.ellynlaw.com
Derivative Action #1
27
28. Derivative action might be required where managing
director or majority shareholder is self-dealing or breached
fiduciary duty
Often involves a breach by director of OBCA s.134 – duty to
act honestly and in good faith with a view to the best
interests of the corporation and exercise reasonable care,
diligence and skill
Malata Group v. Jung, 2008 ONCA: “No bright line” : There
can be overlap between oppression remedy and derivative
action especially where directors in a closely held corp.
engage in self-dealing to the detriment of the corporation
and other shareholders or creditors.
Serious breaches of fiduciary duty could give rise to punitive
damages of $125,000 or more: Capobianco v. Paige 2009
CanLII 29899 (ONSC)
(c) Ellyn Law LLP
www.ellynlaw.com
Derivative Action #2
28
29. Derivative Action #3
• Complainant seeks leave to sue or defend in name of the
corporation
• Fairness to complainant
• Fairness to corporation
• Who will bear the legal cost
(c) Ellyn Law LLP
www.ellynlaw.com
• The Court has to consider:
• Corporation’s exposure to legal costs
• Management of corporation going forward
29
30. Derivative Action #4
• Four part test for leave to commence a derivative action:
• Notice to directors of intention to seek leave
• Complainant is acting in good faith
• Court is persuaded that the proceeding is in the
interests of the corporation
• “No bright line” test in Malata. If derivative action
could also have been an oppression claim, there is no
reason to refuse leave.
(c) Ellyn Law LLP
www.ellynlaw.com
• Directors’ refusal to prosecute or defend
30
31. Other OBCA remedies
Investigations, OBCA s.161
◦ Looking for instances of fraud
Appraisal Remedy, OBCA, s.188
Winding up, OBCA, s. 207
◦ Just and equitable termination of the corporation where deadlock
exists in a corporation which is used as a vehicle for a partnership or
where there is animosity which prevents the business from
continuing
◦ Directions for disposition of assets, payment of liabilities and
distribution of surplus among shareholders
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◦ To require corporation to buy shares of dissenting shareholders
where right of dissent to fundamental change exists
Payment of shareholder’s legal fees s.247(d), 248(4)
◦ Stringent 3-part test: 1) applicant in financial difficulty; 2) financial
difficulty arises out of the alleged oppression; and 3) strong prima
facie case for oppression: Molinaro v. U-Buy Discount Foods 2000
CarswellOnt 4656
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32. Some USAs contain a valuation clause. The clause
might be out of date. Many corporations do not bother
to have a valuation done as contemplated. Other
factors may make the valuation unfair or irrelevant
Who is doing the valuation? It should not be the
corporate accountant – who may not how to value
What agreement can be reached on the parameters of
valuation – including valuation date, special factors,
normalizing management salary, other factors?
Are other experts required: real estate appraiser,
machinery appraiser, trademark or patent appraiser?
What are the special assets of the corporation?
If a spouse is a minority shareholder, should there be a
minority discount? – depends if there is oppression?
How much should the minority discount be?
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More about valuation
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33. Final Thoughts
These may involve litigation, arbitration and
valuation which might have to be separate from
other issues in the family law proceeding,
especially if other parties are involved in the
business.
We have only scratched the surface to touch on
the most common items but
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Corporate Law, Fiduciary Duty and Employment
Law issues arise in many family cases where
spouses are involved in a business.
. . . our time is up and you need a coffee break.
Thank you for your attention.
Igor Ellyn, QC, CS
Evelyn Perez Youssoufian
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