The post Corporate and Commercial Litigation 101 appeared first on Inch Hammond Business Lawyers.
]]>As a legal entity, a corporation has many of the rights and responsibilities of an individual. This includes the standing to sue and be sued, should a dispute arise. Disputes may be internal, such as shareholder disagreements, or they may be contractual disputes with other businesses or allegations of negligence by individuals.
Corporate and commercial legal proceedings have the potential of becoming very costly. The good news at least, is that a major benefit of a corporation is its limiting of personal liability. When operating business through a corporate entity, most potential legal liabilities will only be liabilities of the corporation itself, not its directors, officers, or shareholders. This also means that the individuals controlling and/or operating a corporation are typically not personally responsible for its debts.
Whether your corporation’s dispute involves employment contracts, shareholder agreements, business dissolutions, loans, compliance matters, or intellectual property claims, the competent lawyers at Inch Hammond can assist you in protecting the interests of your corporation. We can also advise you of possible personal exposure in situations where the limited liability of a corporation may not apply.
If you are seeking to register a new corporation or are looking for legal advice with a dispute with your existing corporation, reach out to us to learn more about commercial litigation risks and how best to manage them. Let us mind your business.
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]]>The post The Remedy of Distraint for Commercial Landlords appeared first on Inch Hammond Business Lawyers.
]]>The Residential Tenancies Act, 2006, S.O. 2006, c. 17, explicitly abolishes distress in a residential context, and creates an offence for violations by landlords. There is no such abolition for commercial tenancies, but landlords should note that there are some restrictions.
First, a commercial landlord can only recover a maximum of the previous three months of rent, following the Superior Court case of Canada (Attorney General) v Community Expansion Inc., 2005 CanLII 50266 (ONSC). This rule does not apply where rent is required to be paid less than four times a year, but even then, a landlord can only distrain for a maximum of the previous year’s rent. Additionally, if a commercial tenant has filed for bankruptcy, other creditors may have priority over the landlord’s interest.
A landlord also cannot distrain against any property of the tenant that is not located on the leased premises at the time of the distress (see section 47 of the Commercial Tenancies Act, RSO 1990, c. L. 7). Moreover, perishable goods, as well as goods in common areas where premises are shared with other tenants, are generally exempt from distress. A subtenant’s property can also be exempt.
The law in respect of distraint can be complex with numerous pitfalls. Upon distraining on a tenant’s property, a commercial landlord could always end up facing a tenant’s court challenge disputing the distress as wrongful. Given the prudence a commercial landlord must exercise before, during, and after the distraint process, commercial landlords should consult an experienced lawyer prior to exercising any remedies for a tenant’s failure to pay rent. The lawyers at Inch Hammond are available to talk with you.
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]]>The post What Property Can a Lien be Registered Against? appeared first on Inch Hammond Business Lawyers.
]]>This broad definition that covers most construction activities, and could include the installation of equipment that is deemed “essential” to the use of the property. Note that the definition may not necessarily cover small repairs or preventative maintenance.
The Construction Act is best known for its provisions on liens. Any party that adds value to a property through services and materials may legally have a lien interest in that property by virtue of the value they added. While the lien technically exists at law at this point, the Construction Act sets out requirements for contractors to properly register the lien if they are unpaid any amount under their contract, and to properly commence action in court under that lien as valid security. Though a lien technically exists as soon as a contractor applies its services and/or materials, it is effectively meaningless unless registered on title with the commencement of a corresponding action in court.
Given the broad definition of “improvement” under the Act, it does not take much for a lien to arise. Most properties are potentially subject to liens registered on title with one major exception: government property. Still, a lien may still attach to property in which the government has an interest, but the lien will not be enforceable against the government’s particular interest.
If the party contracting for the work is a tenant, then any potential lien is only against the leasehold interest, except that a small portion of a landlord’s interest may be affected if the lease itself accounts for the improvements.
It is important to note that even if it is a contractor that fails to pay one of its subcontractors, that unpaid subcontractor still has a lien against the property though the owner/tenant was not responsible for the non-payment.
Facing a lien against your property or seeking to register one as an unpaid contractor are never as simple as they may seem. At Inch Hammond, one of our lawyers may be able to assist.
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]]>The post Problems with Shareholder Benefits appeared first on Inch Hammond Business Lawyers.
]]>When the Canada Revenue Agency audits a closely-held private company, they pay particular attention to transactions involving the shareholders or their families. They are looking for transactions that lack a business purpose. For example, a company paying a shareholder’s or their family member’s personal expenses will attract the attention of the CRA. Additionally, the CRA or an opposing party in a litigation will be interested to look behind formerly company property ending up as a personal asset of a shareholder or member of their family.
There is not necessarily something wrong with having your company pay personal expenses. Sometimes this might be convenient or even normal. The issue is whether or not those transactions are properly recorded in the accounting records of the company and properly accounted for on the company’s tax return and the individual shareholder’s personal tax return. It is a benefit for the individual, effectively a form of income.
It can be particularly challenging for closely-held corporations to clearly separate business matters for personal matters, both financially and otherwise. The good news is that with proper understanding of what transactions and relationships are appropriate between a business and its shareholders and their family members, as well as knowledge of and assistance with the best ways to document these transactions, you can ensure that your closely-held companies are compliant an not attracting a greater tax burden than is truly necessary.
If you have questions or concerns regarding shareholder benefits, contact one of our lawyers at Inch Hammond.
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]]>The post Employment Contracts appeared first on Inch Hammond Business Lawyers.
]]>There are a few particularly important provisions that employers might want in an employment contract, which have to be committed to writing. The first and most obvious are the terms respecting termination. While the Employment Standards Act establishes minimum requirements for employers when terminating an employee, the common law may ask more of an employer. A contract can potentially limit the employer’s obligations under common law, while ensuring compliance with the Employment Standards Act.
Additionally, although non-competition clauses are now null and void in Ontario in most circumstances, an employer may be able to partially restrict a departing employee with a non-solicitation clause, provided it is appropriately limited and clearly defined.
Lastly, certain businesses like software companies should seek to define intellectual property rights as between the employer and employee and do so in a manner that is compliant with the law.
The lawyers at Inch Hammond are available to assist you with your employment contracts.
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]]>The post What to do When Your Business Partnership Sours appeared first on Inch Hammond Business Lawyers.
]]>A partnership can go bad for many reasons. Regardless of the issue, it’s critical for both you and your business partner to move forward in a way that mitigates damages.
Stay civil
You have a history with your partner, and getting nasty isn’t going to help either of you. Communicate only when you feel calm, and keep your business’s best interests at the forefront of discussion. Set specific times to have important conversations. When having these discussions, do your best to remain flexible, collaborative and reasonable. It’s okay to disagree, but you should listen to each other’s input.
You should also remain professional by leaving your employees and consumers out of any drama. You should never make them feel like they need to choose sides. This issue is between you and your partner.
Identify next steps
You should determine how you want to move forward as soon as possible. Think about what will make you happiest down the line. Is it doing everything in your power to work things out with your business partner? Is it accepting a buyout or buying your partner out? Are there other options?
These are crucial questions that you should tackle right away. If you have an exit agreement in place, it’s time to review that document.
Seek assistance
If you decide to move forward with a split, consult with a professional about your next steps. A lawyer who specializes in business law can help you understand your business’s financial situation, business agreement and how the split will affect you. They can guide you through the entire separation – making sure that your interests are protected.
It’s hard making big decisions about your business. It’s even harder making decisions about what to do when your business partnership goes south. Try to stay calm, and remember that you don’t have to go it alone.
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]]>The post How to Avoid Contract Disputes appeared first on Inch Hammond Business Lawyers.
]]>A bad contract with loopholes can lead to logistical problems—or worse—costly litigation. Your business requires astute care in setting up agreements to avoid potentially negative consequences later on. Here are six tips to doing contracts right – and avoiding contract disputes down the road:
Contracts are legal documents and should be handled with great consideration. Proper preparation and maintenance can help you avoid costly problems in the future.
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]]>The post Incorporating a Business on a First Nations Reserve appeared first on Inch Hammond Business Lawyers.
]]>Starting a business is a daunting, but exciting time that will almost certainly require some form of legal advice. Each person undertaking this process will have different needs and concerns. First Nations entrepreneurs might find that they require legal counsel that understand their unique business needs, and the distinct legal questions they might have.
One such question that many First Nations business owners have to consider at the start of setting up their business is where they should situate its Registered Office or corporate headquarters. Should it be situated on-reserve?
This is an important consideration as setting your registered office on-reserve has tax implications, including those specifically applicable to certain First Nations peoples who are registered under Indigenous Services Canada.
If you plan to incorporate your business on-reserve, there are certain tax exemptions that could apply to your business that you might be interested in. However, there are also additional regulatory processes to be followed. Depending on the size of the business and where you plan on situating it, you may have to undertake zoning applications, or land designation if you wish to lease the land from your community’s Band Council.
Adding to the complexity is that these government-mandated processes can intersect with band policies and community by-laws. For example, if the land you are considering has not been designated yet, you may not be able to start your business for some time. The land designation process is complex and takes time, planning, and research to complete. Thus, choosing undesignated land might unduly delay your commercial ventures and prevent your business from getting off the ground quickly.
In addition, determining the location of the business is only the beginning.
Once all regulatory processes have been followed, setting up the minutiae of the business can be equally complicated. You may wish to apply for permits or licences depending on the products and services you’re offering. You likely have to set up a corporate bank account, and perhaps apply for insurance.
Working with one of our lawyers who are experienced in First Nations business law could greatly simplify these tasks, while also ensuring that you are starting your business from a solid foundation. This would free up your valuable time to focus on growing your business.
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]]>The post Is Voluntary Business Bankruptcy Right for You and Your Business? appeared first on Inch Hammond Business Lawyers.
]]>With the emergence of Covid-19 and its variants, followed by gathering restrictions and lockdowns, and increasing costs such as higher minimum wage, it has become increasingly difficult for businesses to keep up with the bills. Many businesses are now being forced to consider bankruptcy.
Generally, businesses can go bankrupt in one of three ways, the most common way is voluntarily. This is called a Voluntary Assignment, or an Assignment in Bankruptcy. A business can choose voluntary bankruptcy when it meets certain insolvency thresholds. Under the Bankruptcy and Insolvency Act (BIA), a business is considered to be insolvent when it is unable to meet its financial obligations as they become due or if its debts exceeds the value of its assets. Insolvency is not bankruptcy; insolvency is a requirement for bankruptcy. Insolvency is a financial state, while bankruptcy is a legal state.
The owner of a sole proprietorship or a partnership is not considered to be legally separate from the business. Therefore, the owner’s personal assets are included in the bankruptcy and could be sold to satisfy business debts. Additionally, the bankruptcy will appear on the owner’s personal credit report, affecting the owner’s credit rating and score.
In a two-person partnership, if one individual declares bankruptcy, the partnership can no longer exist. If the partnership includes more than two partners and one declares personal bankruptcy, the partnership may continue to operate if there is an agreement.
Unlike sole proprietorships and partnerships, corporations are legal entities separate from their owners. Therefore, the corporation is responsible for its own debts. It can go bankrupt without involving the personal assets of its shareholders, directors, officers and employees. However, a shareholder or director may face personal liability for the corporation’s debts if they for instance gave a personal guarantee. In certain cases, directors can also be held personally liable in certain circumstances for a corporation’s unpaid wages and HST obligations. Where such may be the case, it is best to seek legal advice.
Each situation is different, so if you are considering a voluntary bankruptcy for you and your business, you should consider talking with a lawyer. At Inch Hammond, one of our lawyers may be able to assist.
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]]>The post Legalized Recreational Cannabis: Weed at Work appeared first on Inch Hammond Business Lawyers.
]]>As an employer, you may have asked yourself some of these complicated but necessary questions:
These are all valid questions.
First, an employer’s responsibilities include ensuring the health and safety of all employees at work. This means workplace health and safety policies and procedures are to be reviewed and amended to address recreational cannabis use in the workplace.
Second, however, an employer also obligations to accommodate employees with medical conditions under Ontario’s Human Rights Code (“Code”). The accommodation obligations under the Code may in certain cases require the employer to accommodate an employee’s medical needs where doing so does not present an undue hardship. To determine how to meet these obligations, it is best to seek legal advice from a lawyer experienced with and knowledgeable about the Code. The legalization of cannabis is federally regulated but each province or territory has their own supporting legislation. Ontario, for instance, has strict rules in place to ensure safe workplaces under the Occupational Health and Safety Act (OHSA). It is important that your policies satisfy federal requirements, as well as any additional provincial or territorial requirements. For employers with employees in more than one province or territory, this could get complex.
It is essential that employers understand what legalized recreational cannabis means for the workplace. For guidance navigating this unprecedented area or for legal assistance reviewing and amending your workplace health and safety and employment policies, talk with a lawyer. An employment lawyer can be helpful in ensuring your policies are accommodating to your employees while maintaining a safe work environment. The lawyers at Inch Hammond are available to talk with you.
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