Stay informed on the latest business and legal insights and events.
Updates
Summary of Actions Against Exxon Mobil for Securities Fraud
January 30, 2019
Since 2013, investors in Exxon Mobil Corporation ("Exxon") stock have consistently shown an interest in understanding how the effects of climate change will impact their investment. Over the years, in response to these concerns, Exxon released a series of voluntary publications such as their Energy and Carbon—Managing the Risks, Energy and Climate, which described certain actions that Exxon was undertaking and, in 2016, their Outlook for Energy report. In the latter report, Exxon indicated that it used a proxy cost1 in its long-term projections for purposes of business planning, investment decision-making, and financial reporting. As investor concerns grew and became more public in 2015, the Attorney General of New York State ("AG") launched an investigation into the company’s disclosures.
2019 ISS and Glass Lewis Updates to Canadian Proxy Voting Guidelines
January 22, 2019
Institutional Shareholder Services (ISS) and Glass, Lewis & Co ("Glass Lewis") have both released their updates to their respective Canadian proxy voting guidelines for the 2019 proxy season. The ISS updates apply to shareholder meetings of publicly traded Canadian companies occurring on or after February 1, 2019, while Glass Lewis updates apply to meetings that are held on or after January 1, 2019.
Recommendations from proxy advisory firms such as ISS and Glass Lewis can have a significant impact on the outcome of business conducted at shareholder meetings, especially if institutional investors comprise a significant component of the company's shareholder base. Canadian public companies should review the updates with their legal counsel to determine the likely impact and take steps to mitigate any potential adverse voting recommendations from ISS or Glass Lewis.
Are You Ready? IFRS 16 and Your Contractual Arrangements
January 14, 2019
IFRS 16 Leases becomes effective for annual reporting periods beginning on, or after, January 1, 2019. Consequently, entities with a December 31 year end, who did not adopt the new standards early, will report financial results utilizing IFRS 16 for the first time in their March 2019 quarterly financial statements. While entities have already been evaluating the impact of IFRS 16 on their financial statements, many have yet to fully consider its impact under various agreements including, in particular, their financing agreements. It is important to note that the Financial Accounting Standards Board is concurrently implementing similar rules (ASC 842) resulting in entities who report utilizing US GAAP needing to consider many of the same issues.
Orders for Consolidation and Common Hearings Under Tax Court Rule 26
January 04, 2019
Overview of Rule 26
Section 26 of the Tax Court of Canada Rules (General Procedure)1 (the "Tax Court Rules"), referred to as "Rule 26", can be useful where multiple taxpayers are involved in related matters and are simultaneously appealing their respective assessments before the Tax Court, or where a single taxpayer has separately appealed different reassessments. Rule 26 provides litigants before the Tax Court with the ability to consolidate two or more proceedings, have the proceedings heard at the same time or sequentially, or to stay a proceeding until the determination of another. The rule provides:
When Proceedings May be Consolidated
[26] Where two or more proceedings are pending in the Court and:
(a) they have in common a question of law or fact or mixed law and fact arising out of one and the same transaction or occurrence or series of transactions or occurrences; or
(b) for any other reason, a direction ought to be made under this section;
the Court may direct that;
(c) the proceedings be consolidated or heard at the same time or one immediately after the other; or
(d) any of the proceedings be stayed until the determination of any other of them.
The underlying policy of Rule 26 is to avoid a multiplicity of proceedings, to promote expeditious and inexpensive determination of those proceedings, and to avoid inconsistent judicial findings. While the application of Rule 26 is technically limited to appeals involving the General Procedure, its application has been extended to appeals under the Informal Procedure.2
Ontario and Toronto Land Transfer Tax Update 2018
December 14, 2018
In the current market of soaring real estate values, particularly in and around the City of Toronto (Toronto being the only Ontario municipality to levy its own transfer tax in addition to the provincial tax), an understanding of provincial and municipal land transfer tax (“LTT”) has never been more important. Today, the drive to collect LTT has intensified, and the government bodies responsible for collecting that tax are routinely reviewing and revising their regulations and policies to ensure no revenues are lost. In addition to its use as a revenue generation tool, with the imposition of the non-resident speculation tax, the Province has now returned to using the tax for policy purposes. This paper provides a general overview of the LTT regime in Ontario and discusses some of the key areas in which tax battles are currently being won and lost.
Bennett Jones Fall 2018 Economic Outlook
November 27, 2018
The world economy has expanded at a solid rate in the first three quarters of 2018, although growth has been somewhat slower and less synchronized than during 2017. In the first half of the year, growth in OECD countries as a whole lost some of the strong above-trend momentum experienced throughout 2017. The slowing was most pronounced in the euro area where annualized growth fell from 2.7% during 2017 to 1.7% during the first half of 2018. Growth in other advanced economies was also weaker in the first quarter than in 2017, but did rebound strongly in the second quarter, notably in the United States and Japan. In 2018-Q3 growth continued to be brisk in the United States at 3.5% while growth in the euro area receded further to 0.7%. China and India continued to expand at a rapid pace in the first three quarters. In China, however, the manufacturing purchasing managers’ index fell in October to a level that barely exceeded the threshold that separates expansion from contraction, signaling that slower manufacturing activity is to be expected in the fourth quarter. Stronger oil prices benefited oil-producing countries this year, notably Russia. In contrast, growth in Brazil has been very anemic during the year, hampered by strikes and political uncertainty, and in Argentina activity has plummeted.
Property Tax Priorities in Alberta Insolvency Proceedings: Current Uncertainty
November 12, 2018
Recent decisions of the Court of Queen's Bench of Alberta have put into question the priority of municipal property taxes in insolvency proceedings. Two such decisions are the subject of pending appeals. A third recent decision of the Court of Queen's Bench of Alberta has confirmed the scope of a special lien for municipal property taxes. This article is the first in a series addressing these issues.
Your 10-Step Guide to New Mandatory Breach Reporting Regulations
October 17, 2018
This 10-step guide will walk you through the upcoming changes to the Personal Information Protection and Electronic Documents Act (PIPEDA), the factors to consider in being prepared under PIPEDA and other related considerations. This guide is no replacement for targeted legal advice. If you are an organization affected by the changes to PIPEDA, please contact us to determine what you need to do to be prepared and how you can minimize your organization’s potential legal exposure. There is no “one size fits all” when it comes to managing compliance with privacy regulation.
Canada to Impose Provisional Steel Safeguards Effective October 25
October 15, 2018
Effective October 25, 2018, provisional safeguard measures apply to seven categories of steel products imported into Canada from most countries. These provisional safeguard measures take the form of tariff rate quotas (TRQs), with a 25% over access surtax that will apply to imports for 200 days from October 25, 2018, to May 13, 2019.
Introducing the U.S.-Mexico-Canada Agreement (USMCA)
October 04, 2018
After 13 months of negotiations, the United States, Mexico and Canada have concluded the United States-Mexico-Canada Agreement (USMCA). The USMCA is designed to replace the quarter-century-old North American Free Trade Agreement (NAFTA). The new agreement, reached on September 30, 2018, should temper the uncertainty that has hung over access for Canadian goods and services to the U.S. market and improve business confidence in Canada. However, the USMCA will not come into force until it is ratified, which may not occur before early 2019.
Property Tax Assessments—Why You Should Respond to Requests for Information
September 27, 2018
The Alberta Municipal Government Act (MGA) has been amended to expand the information that an assessor can request from taxpayers regarding preparation of assessments. This expanded legislative scope has the potential to also expand the consequences to taxpayers that do not respond in accordance with the legislation, and may be of particular importance to companies in the energy industry seeking to challenge their municipal taxes.
Until this year, subsection 295(1) of the MGA required a person to provide, on request by a property tax assessor, "any information necessary for the assessor to prepare an assessment or determine if property is to be assessed". If a taxpayer failed to comply with such a request within sixty days, subsection 295(4) provides that the person cannot make a complaint about an assessment in the following year.
Pursuant to that previous version of section 295, the Alberta Court of Appeal considered the circumstances where a taxpayer's right of complaint could be lost under subsection 295(4) in Boardwalk REIT LLP v Edmonton (City), 2008 ABCA 220 [Boardwalk]. There, the Court of Appeal held that the remedy of the loss of a taxpayer's right of complaint was "draconian" in nature, stating that it was "the largest possible penalty in a taxation statute", and that subsection 295(4) was not an automatic rigid bar to challenge an assessment. The Court upheld Alberta v Amoco Can Petroleum Co Ltd., 2000 ABCA 252 [Amoco], where the Court of Appeal had held there are several pre-conditions to a finding that a taxpayer failed to comply with a request of an assessor under section 295, including whether a request for information was made, whether that request was made by an assessor, in the proper and in an intelligible form, whether the request was reasonable having regard to all of the circumstances including past practices, information already available to the assessor, and information available to the owner, what if any information was provided by the owner and what was done with that information, whether the information provided by the owner complied with the request, and whether the information was necessary.
In Boardwalk, the Court of Appeal held that "necessary" means information that is "indispensable, not merely expedient, useful or convenient". Further, the information had to be necessary for assessing the subject property itself, not for the purposes of mass appraisal. The Court of Appeal held that where the information requested pursuant to subsection 295(1) of the MGA was not necessary to prepare an assessment of the property that the request for information related to, the consequences of subsection (4) were not warranted. Further, a taxpayer was only required to act reasonably, in providing information that was substantially complete, with only a reasonable amount of work, based on information which the taxpayer has (as compared to information that the taxpayer must create or go out and find), and in consideration of all of the circumstances, including past practice and information already available to the assessor. Further, assessors owed a duty of fairness to taxpayers, and where an assessor did not tell the taxpayer that the answer to the request appeared incomplete, the assessor had violated this duty.
Alberta Courts and Assessment Review Boards have continually upheld and applied Boardwalk, finding that Assessment Review Boards only had the jurisdiction to dismiss a taxpayer's complaint pursuant to subsection 295(4) if the information requested by the assessor is actually "necessary" within the meaning of section 295 of the MGA (assuming all other requirements of the section were also met).
However, as of January 1, 2018, the wording of subsection 295(1) changed. It now states:
"A person must provide, on request by the assessor, any information necessary for the assessor to carry out the duties and responsibilities of an assessor under Parts 9 to 12 and the regulations." [emphasis added].
Arguably the meaning of "necessary" has been expanded, in that information that is "necessary" presumably now means information that is "indispensable, not merely expedient, useful or convenient" to the assessor's performance of its duties and responsibilities as set out in Parts 9 to 12 of the MGA and pursuant to the regulations, and not just in preparing an assessment for the particular property owned by the taxpayer to whom the assessment request for information has been sent.
Parts 9 to 12 of the MGA and the related regulations cover the entire scope of the legislation regarding assessment of property, including preparation of assessments, all manners of municipal taxation, and legislation relating to Assessment Review Boards and Municipal Government Boards in Alberta. The duties and responsibilities of an assessor thereunder include but are not limited to preparing assessments, preparing the assessment roll, and preparing assessment notices. The reference in section 295(1) to Parts 9 to 12 seems overly broad, considering that those Parts cover, among other things, the establishment and function of Assessment Review Boards and of Municipal Government Boards.
Next year, if a taxpayer has failed to respond to an assessment request for information provided to the taxpayer under section 295 of the MGA, the scope of whether that requested information is "necessary" will be significantly expanded. It remains to be seen how Assessment Review Boards and Courts in Alberta will interpret a taxpayer's obligations to provide information in the context of the amended legislation, whether the "draconian" remedy of eliminating a taxpayer's right of complaint will be more readily employed. Arguably, the pre-conditions to a find that a tax payer failed to comply with a request under subsection 295(1) as set out in Amoco will continue to apply, and it will only be if those pre-conditions are met that a remedy under subsection 295(4) can be considered. However, if the pre-conditions are met, and with the expanded meaning as to what is "necessary", applications for the remedy of elimination of taxpayer rights of complaint could be successful more often.
It should also be noted that as of January 1, 2018, section 295 was also amended to add subsection (6), which essentially states (in part) that where an assessment of a property is the subject of a complaint before an Assessment Review Board, then notwithstanding subsection 295(1), the assessed person is not required to provide any information to an assessor regarding that assessment until after the complaint has been heard and decided by the Board. It may be that because of this amendment, municipalities will shift the dates when they issue assessment requests for information, so the deadline to respond to those requests occurs outside of the period in which an assessed person may have a pending complaint before the Board.
To avoid the risk of losing the right to make a complaint about the assessment of a property (and the risk of having to defend an application by an assessor for that relief), it is recommended that taxpayers take the following steps:
Contact the municipality in which your property is located to endure that it has your correct mailing address and contact information on file. Find out when and how the municipality sends out assessment requests for information (as municipalities throughout Alberta differ on this point. Edmonton requests are usually sent in the fall, for example, whereas Calgary requests are sent in the spring). Check whether any responses to information requests regarding your property are outstanding.
Keep records of information requests received and responded to.
If the information requested is confidential, advise the municipality of this. The MGA includes mechanisms to ensure that confidential information remains confidential.
Respond to information requests even if the response is that there has been no change to the requested information since the previous year. Keep in mind, however, that an assessed person is not obligated to provide information to an assessor where the assessed person has a complaint before the Assessment Review Board regarding the assessment of the property.
Legal counsel can assist in determining whether information requested by an assessor is "necessary" within the meaning of amended subsection 295(1). While the scope of "necessary" information has been expanded, it is not unlimited.
Kelsey Meyer is a partner in the Litigation Department at Bennett Jones. She regularly appears as legal counsel at hearings before Assessment Review Boards in Alberta and in the Court of Queen's Bench of Alberta on applications for review of decisions of those Boards.
Equity Claims Relief Granted as Part of CBCA Restructuring
September 07, 2018
On June 26, 2018, Regional Senior Justice Morawetz of the Ontario Superior Court of Justice granted an order approving a plan of arrangement under the Canada Business Corporations Act (“CBCA”), in respect of Concordia International Corp. and Concordia Healthcare (Canada) Limited (collectively, “Concordia”).1 The Concordia plan of arrangement, and the order approving it under subsection 192(4) of the CBCA, contained provisions which, in effect, limited recovery on equity claims embodied in class action proceedings which were extant to available insurance proceeds, and released all other equity claims against Concordia. Such provisions, while common in plans of arrangement under the Companies Creditors’ Arrangement Act (“CCAA”), had not previously been implemented within a CBCA plan of arrangement. The Concordia decision represents an example of the flexible use of the CBCA plan of arrangement provisions to implement balance sheet restructurings that would otherwise need to be implemented under the CCAA with the resultant increase in cost, delay and potential value destruction.
Updates to Extractive Sector Transparency Measures Act Guidance
June 28, 2018
After reviewing the reports submitted under the Extractive Sector Transparency Measures Act (ESTMA) and consulting with stakeholders, Natural Resources Canada (NRCan) recently updated its implementation tools that assist entities in understanding ESTMA. ESTMA was implemented on June 1, 2015 as Canada’s contribution towards a global effort to “increase transparency and deter corruption in the extractive sector.” Under ESTMA, entities active in Canada may be required to publicly disclose certain payments made to governments, in Canada or abroad, on an annual basis. See our previous blogs for more information on ESTMA and its application.
Bennett Jones Spring 2018 Economic Outlook
June 05, 2018
The outlook for global growth in 2018 and 2019 is now considerably stronger than forecasters anticipated it would be a year ago. Advanced economies are now expected to grow at rates well in excess of potential in both years, eliminating remaining slack in the United States, Europe and Japan. This strong growth is underpinned by accommodative financial conditions, a stronger expansion in many emerging economies, and a large tax and expenditure stimulus in the United States. At the same time, central banks in the advanced economies continue to be cautious in raising interest rates and have indicated their willingness to accommodate above-trend growth as wage and price inflation continues to be benign. Credit conditions will continue to be favourable for continued growth through the end of 2019 even as central banks cautiously raise interest rates. But continued expansion of credit brings with it the collateral risk of rising aggregate debt (household, business and government) that could seriously threaten stability and growth down the road. Thus, both Canadian business and government should keep in mind that the buoyant prospects for global growth over the next two years, growth sustained by accommodative monetary and fiscal policies in the advanced economies, are associated with an increasing risk of a major correction in the 2020s.
Update on Proposed Amendments to the Health of Animals Regulations
May 01, 2018
On March 1, 2018, there was a regulatory update to the Livestock Identification and Traceability Program. This update provides an overview of the progress for the proposed amendments to Part XV of the federal Health of Animals Regulations.
Soliciting Dealer Arrangements—CSA Staff Notice 61-303 and Request for Comment
April 25, 2018
The Canadian Securities Administrators (CSA) published Staff Notice 61-303 and Request for Comment on April 12, 2018, which outlines issues that the CSA has identified regarding the use of soliciting dealer fee arrangements in proxy contests and corporate transactions. The CSA has proposed no rule changes at this time and is seeking input generally and in response to specific questions (our experience in the past is that members of the CSA have taken different views on the use of soliciting dealer fees). However, it is clear that as a result of the recent use of this mechanism in the proxy contest for board control of Liquor Stores N.A. Ltd., there is renewed interest in these types of arrangements and their impact on market participants. Comments must be submitted by June 11, 2018.
Upcoming Policy Projects Announced by the Canadian Securities Administrators
April 09, 2018
The Canadian Securities Administrators (CSA) announced on March 27, 2018, the initiation of six policy projects aimed at reducing regulatory burdens for non-investment fund reporting issuers. The announcement comes after stakeholders had the opportunity to respond and comment on a CSA Consultation Paper released in April 2017.
Mandatory Breach Notification Across Canada
April 04, 2018
By Order in Council 2018-0369 on March 26, 2018, mandatory breach notification under the federal Personal Information Protection and Electronic Documents Act (PIPEDA), comes in force November 1, 2018, for all entities subject to its jurisdiction.
Securities Commissions Provide Guidance on New Takeover Rules in Hostile Cannabis Bid
March 29, 2018
For close to three months, M&A lawyers and other capital markets participants had been anxiously awaiting the release of written reasons from the Ontario Securities Commission (“OSC”) and the Financial and Consumer Affairs Authority of Saskatchewan (“FCAAS” and, together with the OSC, the “Commissions”) for their December 22, 2017 orders (collectively, “CanniMed Order”) in the matter of Aurora Cannabis Inc. (“Aurora”) and CanniMed Therapeutics Inc. (“CanniMed”). The Commissions' written decision (released on March 15, 2018) is of considerable interest, as the Aurora/CanniMed proceeding engaged a number of key provisions of the new takeover bid rules introduced in May 2016 (the "New Rules") and represented the first time securities regulators have had to address elements of the New Rules in the context of contested applications.
Updates to Energy Diversification Act Investment Programs
March 15, 2018
This week, the Alberta government announced additional details with respect to three primary investment programs pursuant to the proposed Energy Diversification Act.
Fair Trading Act Becomes the Consumer Protection Act and Other Key Amendments
March 13, 2018
Bill 31: A Better Deal for Consumers and Businesses Act passed First Reading on November 29, 2017, in the Alberta Legislature and received Royal Assent very quickly thereafter on December 15, 2017. Bill 31 amends the Fair Trading Act and changes its name to the Consumer Protection Act (Act). Certain sections of the Act have already come into force while others await proclamation. The following key amendments are in force in Alberta...
Status of Measures Targeting Private Corporations Following the 2018 Federal Budget
March 12, 2018
The Federal Budget, released February 27, 2018, has clarified federal plans to change the tax treatment of private corporations and represents a substantial retreat from proposals announced in July 2017. In July 2017, the government released a consultation paper and draft legislation which proposed to radically change the taxation of private corporations and their shareholders. The proposals were aimed at: (a) income splitting among family members; (b) passive investment income of private corporations; (c) use of the capital gains exemption by family members; and (d) realizing capital gains on private corporation shares instead of receiving dividends. The proposals were not well received in the small business sector.
Bennett Jones