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Updates
Prison Sentence in Air India Bribery Scheme Sends Deterrent Message to Canadian Executives
May 25, 2014
On May 23, Nazir Karigar, an agent of Cryptometrics Canada Inc. (Cryptometrics), was sentenced to three years in federal prison under Canada's foreign bribery statute. Mr. Karigar was convicted last August of conspiring to pay approximately $450,000 to India's Minister of Civil Aviation and officials of Air India, a state-owned enterprise, in an attempt to win a multi-million dollar contract for Cryptometrics to supply security systems to Air India. Mr. Karigar was convicted largely on the evidence of another Cryptometrics executive, who was granted immunity from prosecution in exchange for his cooperation. Karigar had unsuccessfully attempted to negotiate immunity for himself, and instead became the focus of the prosecution.
Cyber-Security Corporate Governance: Three Essential Steps to Form a Cyber-Security SWAT Team
May 09, 2014
Last year, Canadian Lawyer InHouse Magazine posed the question, "Should in-house counsel be asking more questions about the strength of their company's cyber systems…" and they cited the Association of Corporate Counsel 2012 survey that reported 28 percent of their companies had experienced a cyber-security breach in the preceding 12 months and "data breaches and protection" as one of the top issues keeping them up at night. In my view, the best answer to that question is – in-house counsel should be actively participating in providing cyber-security corporate governance leadership and risk management guidance, including legal and compliance advice.
IT Consulting Contract's Distinction With A Difference
April 17, 2014
One of the most important and fundamental aspects of every IT consulting agreement is also one of the greatest sources of legal misunderstanding and commercial risk for those transactions. Luckily, based on my experience, that all too frequent and formidable source of IT project risk is entirely (yes, completely) within the ability of IT customers to mitigate, if not entirely avoid, if handled well.
Bill C-31 Proposes Major Changes to Canada's Trade-marks Act
April 16, 2014
The Federal Government recently introduced Bill C-31, the Economic Action Plan Act 2014, No.1. Bill C-31 is an omnibus bill which makes changes to nearly 40 different pieces of legislation. Among these amendments are changes to the Trade-marks Act that will have a significant impact on trademark owners.
OSC Credit for Cooperation
April 14, 2014
On March 13, 2014, the Ontario Securities Commission (OSC) released its revised Credit for Cooperation Program via OSC Staff Notice 15–702. As pointed out in our recent client update (OSC Adopts New Initiatives to Strengthen Enforcement), the Notice provides guidance respecting OSC expectations of market participants hoping to obtain credit for cooperation, and the basis for settlements in which there is no admission of fact or liability. The Notice is a positive step forward, and the OSC ought to be commended for the clarity provided to market participants. However, it remains an open question as to whether more might be done in the future to provide market participants with clearer guidance on the OSC's position respecting waivers of privilege.
M&A Technology Due Diligence Update 2014
April 04, 2014
The perfect storm created by the intersection of (on the one hand) the dramatic increase in the business use of cloud computing, open source software, prolific social media, the emergence of Big Data, wireless mobile devices (including for Board meetings), and the alarming increase in cyber security attacks (of many kinds), with (on the other hand) rapidly increasing IT corporate governance duties, expanded regulatory scrutiny concerning data security, privacy, anti-spam and corporate governance (OSC, SEC, OSFI, critical infrastructure regulators, and many others), increased audit awareness and sensitivity for IT risk, emerging shareholder activism, consumer rights (from e-commerce rights to privacy), and the growth of class action litigation…. all require a more specialized and comprehensive approach to technology risk due diligence for M&A transactions in 2014.
Canadian Court Certifies Visa/Mastercard Class Action
March 28, 2014
In reasons publicly released on Thursday March 27, 2014, Chief Justice Bauman certified two classes of Canadian merchants who allege a price-fixing conspiracy related to Visa and MasterCard interchange fees. As the first contested certification decision in a price-fixing case since a series of recent Supreme Court of Canada decisions, Watson v. Bank of America Corporation provides critical insight into how courts will decide contested certification motions in complicated price-fixing class actions.
OSC Adopts New Initiatives to Strengthen Enforcement
March 26, 2014
On March 11, 2014, the Ontario Securities Commission (OSC) issued Staff Notice 15-702 – Revised Credit for Cooperation Program (Staff Notice 15-702). Staff Notice 15-702 carries forward various existing codified or informal practices, and adopts new initiatives previously proposed by OSC Staff (Staff). The stated intention of these initiatives is to: (i) resolve enforcement matters more efficiently by providing market participants with incentives to "self-police, self-report and self-correct" potential misconduct that may breach Ontario securities laws or otherwise be contrary to the public interest; and (ii) cooperate with Staff during its investigations.
OPA Recommendations for Large Renewable Procurement
March 20, 2014
The Ontario Power Authority (OPA) recently published its final Large Renewables Procurement (LRP) recommendations to the Ministry of Energy. The report follows the OPA's interim recommendations published in August 2013 and incorporates the OPA's findings received through community outreach activities held from December 2013 to February 2014. Following the release of Ontario's Long Term Energy Plan (LTEP) by the Ministry of Energy on December 2, 2013, the OPA received a direction from the Ministry of Energy regarding the LRP.
IIROC Proposes Guidance for Underwriting Due Diligence
March 18, 2014
The Investment Industry Regulatory Organization of Canada (IIROC) published proposed guidance on March 6, 2014, setting forth nine key principles for underwriting due diligence.
Prospectus Exemption for Distributions to Existing Security Holders
March 18, 2014
On March 13, 2014, Canadian securities regulators in all jurisdictions except Ontario and Newfoundland and Labrador adopted a prospectus exemption for issuers listed on the Toronto Stock Exchange (TSX), the TSX Venture Exchange (TSXV), and the Canadian Securities Exchange (CSE) that would, subject to certain conditions, allow issuers to raise money by distributing securities to their existing security holders.
Sino-Forest: More Lessons as a Chapter Closes
March 17, 2014
On March 13, 2014 the Supreme Court of Canada dismissed applications for leave to appeal by a group of alleged former institutional shareholders of Sino-Forest Corporation. These institutions unsuccessfully sought leave to appeal from orders approving Sino-Forest's Companies' Creditors Arrangement Act plan and approving a settlement reached between Ernst & Young and the plaintiff group that was awarded carriage of Sino-Forest class actions in Ontario. The outcome of the leave applications, and the steps leading to that outcome, contain important lessons for class action and insolvency practitioners.
CSA Proposes Amendments to Accredited Investor and Minimum Amount Investment Prospectus Exemptions
March 11, 2014
On February 27, 2014, the Canadian Securities Administrators published for comment proposed amendments to National Instrument 45-106 Prospectus and Registration Exemptions. The proposed amendments, if adopted, would require individuals relying on the accredited investor prospectus exemption in section 2.3 of NI 45-106 and section 73.3 of the Securities Act (Ontario) to obtain a signed risk acknowledgement form in Form 45-106F9 Risk Acknowledgement Form for Individual Accredited Investors from certain individual accredited investors who are not permitted clients, and restrict the minimum amount investment prospectus exemption in section 2.10 of NI 45-106 to distributions to non-individual investors.
Norwich Orders and Copyright Trolls
March 07, 2014
The decision of the Federal Court in Voltage Pictures LLC v John D and Jane D, 2014 FC 161, provides insight into the collision of Norwich Orders, means used to identify unknown infringers, and the growing business model of copyright trolls giving rise for the Courts to be more mindful of playing a role in potentially abusive behaviour of the trolls.
Ontario Court Backs Wind Developer at Ostrander Point
February 25, 2014
In July 2013, the Environmental Review Tribunal (ERT) revoked the Renewable Energy Approval (REA) issued to Gilead Power to develop a nine-turbine, 22.5-megawatt wind power project at Ostrander Point in Prince Edward County. The ERT's decision was premised on the view that the local Blanding's turtle – a species protected under the Endangered Species Act (Ontario) (ESA) – would suffer serious and irreversible harm as a result of the wind farm development.
Interference with Economic Relations by Unlawful Means
February 19, 2014
In the recent case of AI Enterprises Ltd v Bram Enterprises
Ltd, 2014 SCC 12, the Supreme Court of Canada clarifies the unsettled
scope of the tort of unlawful interference with economic relations and warns
fiduciaries of the dangers of acting in their own self interest.
Domestic Anti-Treaty-Shopping Proposals and Further Consultation Announced in Canada's Federal Budget 2014
February 18, 2014
In the Canadian Federal Budget released on February 11, 2014, the Department of Finance signalled its intention to enact a domestic treaty-shopping rule, generally allowing the Canada Revenue Agency to deny treaty benefits when the "main purpose" of a particular transaction is to obtain treaty benefits. This new rule could come into force in the first taxation year after the year in which the final legislation is enacted. The potential for transitional relief is still an open issue. As the government works towards developing draft legislation, it has given stakeholders 60 days to comment on its proposed approach.
Defence Procurement Changes in Canada Announced
February 12, 2014
Despite the unusually well-frozen environs of Ottawa this winter, Canada's defence procurement machinery has been extremely active recently and there are several important developments to report.
Court of Appeal Addresses Outstanding Issues in Securities Class Actions
February 07, 2014
Ontario's statutory regime for secondary market liability came
into effect in 2006 as a result of amendments to the Securities Act
(Ontario) (the OSA), creating a statutory cause of action for deficient
market disclosure. Part XXIII.1 of the OSA creates a statutory cause of action
against reporting issuers, their officers and directors, and related parties
for misrepresentations made in secondary market disclosures.
Supreme Court Revitalizes Summary Judgment to Foster Access to Justice
January 28, 2014
In a much-anticipated decision released on January 23, 2014, Hryniak v Maudlin, the Supreme Court of Canada articulated a new approach to summary judgment under Rule 20 of Ontario's Rules of Civil Procedure. The decision overrules authority from the Ontario Court of Appeal that largely restricted the availability of summary judgment to straightforward, document-driven cases. Instead, the Supreme Court characterized summary judgment as an alternative model for adjudication that is no less legitimate than a conventional trial, and should be more widely available to provide litigants with less expensive and more timely access to justice. Notably, the Supreme Court refused to specify the types of cases that will tend to be appropriate for summary judgment.
Women on Boards and in Senior Management
January 22, 2014
The Ontario Securities Commission (OSC) has published for comment
proposed amendments to Form 58-101F1 of National Instrument 58-101
Disclosure of Corporate Governance Practices. The amended "comply or
explain" disclosure regime would require issuers listed on the Toronto Stock
Exchange and certain other non-venture issuers who are reporting issuers in
Ontario to annually disclose any director term limits and various details about
policies or lack of policies adopted by them relating to the representation of
women on boards and in executive officer positions.
Logging Company Awarded $1.75 million for B.C. Government's Failure to Consult
January 10, 2014
A recent decision of the B.C. Supreme Court suggests that recovering economic losses caused by blockades or activities that interfere with commercial activities will not be straightforward. After the decision of the Supreme Court of Canada in Behn v Moulton Contracting Ltd., 2013 SCC 26, the B.C. Supreme Court heard the trial of the action commenced by Moulton Contracting Ltd. against the Province of B.C., the Fort Nelson First Nation (FNFN), the Chief of the FNFN, and several members of the FNFN (the Behn Defendants) for economic losses alleged to have been caused by a blockade erected by the Behn Defendants.
Defining Copyright Infringement
January 06, 2014
The Supreme Court recently addressed the approach to assessment of copyright infringement in the case of Cinar Corporation v Robinson, 2013 SCC 73, and thereby provided some important guidance to courts facing similar difficult determinations.
Bennett Jones