Copyright Notice to Readers Letter to Subscribers
Introduction
The Authors
Editorial: Advisory Board Contributing Authors Acknowledgements Users' Guide
Part A Breaking Through the Financing Barriers
Part B Exploring Your Financing Options
Part C Preparing a Winning Financing Proposal
Part D Successfully Dealing With Issues
Part E Restructuring and Insolvency
Part F Special Circumstances
Part G Unique Industries
Part H Overview of International Financing
Part I Legal Matters
Chapter 46 Governance 46.1 The Purpose and Function of the Board 46.1.1 The Role of the Board 46.1.2 Key Elements of Board of Directors' Duties in Canada 46.1.3 Board of Advisors 46.1.4 Inside vs. Outside Directors 46.1.5 Status of Females as Directors 46.1.6 Failure of Boards 46.1.7 Changing the Profile of Shareholders 46.1.8 The Impact of Regulators 46.2 Finding Directors 46.2.1 The Selection Process 46.2.2 Searching for Qualified Directors 46.2.3 Evaluation of the Prospective Director 46.2.4 Orientation and Communicating Information 46.3 Functioning of the Board 46.3.1 Key Personnel and Positions 46.3.2 Board Meetings 46.3.3 The Agenda 46.3.4 Remuneration and Compensation 46.3.5 Assessment of the Board 46.4 Directors' Liability 46.4.1 Indemnification Insurance 46.4.2 Directors' Conduct 46.4.3 Defensive Practices for Individual Directors 46.4.4 Statutory Liability 46.5 Audit Committee 46.5.1 Evolution of the Role 46.5.2 Independence 46.5.3 Sample Charter for Audit Committee 46.5.4 Audit Committee Performance Support System 46.6 Other Governance Committees 46.6.1 Corporate Governance and Nominating Committee 46.6.2 Environmental Committee 46.6.3 Compensation and Resource Committee 46.6.4 Pension Committee 46.6.5 Other Committees 46.7 A Credible Board 46.8 Toronto Stock Exchange Report on Corporate Governance: The First Cornerstone 46.8.1 Overview 46.8.2 Corporate Governance Guidelines 46.8.2.1 Role of the Board of Directors 46.8.2.2 Independence of the Board of Directors 46.8.2.3 Role of the Chief Executive Officer and Management 46.8.2.4 Unrelated Directors 46.8.2.5 Nominating Committees and Peer Review 46.8.2.6 Corporate Governance Committee 46.8.2.7 Size of the Board of Directors 46.8.3 Directors' Liability 46.8.4 Role of the Shareholders 46.9 Sarbanes-Oxley Act 46.9.1 Highlights of the Sarbanes-Oxley Act of 2002 46.10 SOX North: Canada Follows in the Footsteps of the Sarbanes-Oxley Act 46.10.1 Highlights of Multilateral Instrument 52-109 Certification of Disclosure in Companies' Annual and Interim Filings 46.10.2 Highlights of the previously proposed Multilateral Instrument 52-111 Reporting on Internal Control over Financial Reporting Chapter 47 Security in Finance 47.1 Promissory Notes 47.1.1 Nature and Effect 47.1.2 Commercial Uses of Promissory Notes 47.1.3 Documentation 47.1.4 Statute Considerations 47.2 Fixed Charges and Floating Charges 47.2.1 Nature and Effect 47.2.2 Documentation 47.2.3 Statute Considerations 47.3 Banker's Acceptances 47.3.1 Nature and Effect 47.3.2 Documentation 47.3.3 Statute Considerations 47.4 Chattel Mortgages 47.4.1 Nature and Effect 47.4.2 Documentation 47.4.3 Statute Considerations 47.5 Conditional Sales Agreement 47.5.1 Nature and Effect 47.5.2 Documentation 47.5.3 Statute Considerations 47.6 Security Agreements 47.6.1 Nature and Effect 47.6.2 Documentation 47.6.3 Statute Considerations 47.7 Assignments of Book Debts 47.7.1 Nature and Effect 47.7.2 Documentation 47.7.3 Statute Considerations 47.8 Section 427 of the Bank Act 47.8.1 Nature and Effect 47.8.2 Documentation 47.8.3 Statute Considerations 47.9 Real Estate Mortgages 47.9.1 Nature and Effect 47.9.2 Documentation 47.9.3 Statute Considerations 47.10 Bonds and Debentures 47.10.1 Nature and Effect 47.10.2 Documentation 47.10.3 Statute Considerations 47.11 Trust Deeds and Trust Indentures 47.11.1 Nature and Effect 47.11.2 Documentation 47.11.3 Statutory Considerations 47.12 Shares 47.12.1 Nature and Effect 47.12.2 Documentation 47.12.3 Statute Considerations 47.13 Pledges / Hypothecations of Shares 47.13.1 Nature and Effect 47.13.2 Documentation 47.13.3 Statute Considerations 47.14 Shareholders' Loans 47.14.1 Nature and Effect 47.14.2 Documentation 47.14.3 Statute Considerations 47.15 Assignment and Postponement of Claims 47.15.1 Nature and Effect 47.15.2 Documentation 47.15.3 Statute Considerations 47.16 Guarantees 47.16.1 Nature and Effect 47.16.2 Documentation 47.16.3 Statute Considerations 47.17 Consignments 47.17.1 Nature and Effect 47.17.2 Documentation 47.17.3 Statute Considerations Chapter 48 Statutes Related to Finance 48.1 Canada Access to Information Act and Privacy Act 48.1.1 What Business Information is Protected? 48.1.2 Procedure for Protection of Confidential Information 48.1.3 Designation of Confidential Information 48.1.4 Response to the Access to Information Act: The Defence 48.1.5 Response to the Access to Information Act: The Offence 48.1.6 Other Resources on This Topic 48.2 Provincial Freedom of Information and Protection of Privacy Legislation 48.2.1 Overview 48.2.2 Ontario Freedom of Information and Protection of Privacy Act 48.3 Lobbying Act 48.3.1 General Overview 48.3.2 Provisions of the Lobbying Act 48.3.3 Registration Procedure 48.3.4 Using the Lobbyists Registry 48.4 Investment Canada Act 48.4.1 Introduction 48.4.2 Applicability of the Legislation 48.4.2.1 Non-Canadians 48.4.2.2 Exempt Transactions 48.4.3 Forms Used to Submit Information 48.4.4 Notification 48.4.4.1 Transactions Subject to Notification 48.4.4.2 Notification Procedure 48.4.5 Review Process 48.4.5.1 Transactions Subject to Review 48.4.5.2 General Prohibition 48.4.5.3 Application Procedure 48.4.5.4 The Decision 48.4.6 Canada-U.S. Free Trade Agreement 48.4.7 Review for World Trade Organization Members 48.4.8 Other Resources on This Topic 48.5 Proceeds of Crime (Money Laundering) and Terrorist Financing Act 48.5.1 Introduction 48.5.1.1 Further Amendments to the Act: Bill C-25 48.5.2 Records 48.5.3 Financial Transactions and Reports Analysis Centre of Canada 48.5.4 Other Provisions of the Financial Transactions and Reports Analysis Centre of Canada 48.5.5 Responsibilities for Financial Industry Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act 48.5.5.1 Verification of Identity of Individuals 48.5.5.2 Compliance 48.5.6 Registration Requirements 48.5.7 Expanded Client Identification Requirements 48.5.8 Reporting of Attempted Suspicious Transactions 48.5.9 Foreign Subsidiaries 48.5.10 Expanded Information Sharing 48.5.11 Penalties 48.5.12 Electronic Funds Transfers 48.6 Corruption of Foreign Public Officials Act 48.6.1 Amendments in June 2013 48.7 Ontario Bulk Sales Act 48.7.1 Trust for Creditors 48.7.2 Stock in Bulk 48.7.3 Application of the Bulk Sales Act 48.7.4 The Bulk Sale Trustee 48.7.5 Custody and Distribution of Purchase Price 48.7.6 Right to Attack Bulk Sale 48.7.7 Restrictions Upon the Right to Attack Bulk Sale 48.8 Settlement of International Investment Disputes Act 48.9 Extractive Sector Transparency Measures Act Chapter 49 Tax Issues 49.1 Interest and Financing Expenses 49.1.1 Definition of Interest for the Purposes of the Act 49.1.2 Deductibility of Interest for Tax Purposes 49.1.3 Participation Loans 49.1.4 Financing Costs 49.1.5 Discounts, Premiums and Bonuses 49.2 Income Tax Folios 49.2.1 Introduction of Income Tax Folios 49.3 Investment Tax Credits: Research and Development 49.3.1 Qualified Expenditures 49.3.2 Qualification for Investment Tax Credits 49.3.3 Investment Tax Credit Refunds 49.3.4 Issues in Calculating the Claim 49.3.4.1 The Proxy Method Versus the Conventional Overhead Method 49.3.4.2 Deduction for Supplies 49.3.4.3 Recording Time on Projects 49.3.5 Provincial Research Tax Incentives 49.3.5.1 Quebec Research Tax Incentives 49.3.5.2 Ontario Research and Development Tax Credit 49.3.6 Legislation Changes 49.4 After-Tax Financing with Preferred Shares 49.5 Personal Guarantees 49.5.1 Income Tax Issues 49.5.2 Shareholder Guarantees 49.5.3 Non-Shareholder Personal Guarantees 49.6 Changes to Small Business Taxes for Private Corporations Chapter 50 Intellectual Property 50.1 Overview of Intellectual Property 50.2 Patents 50.2.1 Steps in Obtaining a Canadian Patent 50.2.2 Patent Protection Outside Canada 50.2.3 Patent Marking and Patent Pending 50.2.4 Types of Fees 50.2.5 Additional Information 50.3 Trade-Marks 50.3.1 Trade-Mark Application 50.3.2 Summary of Steps in Registering a Trade-Mark 50.3.3 Non-Use of Trade-Mark 50.3.4 Additional Information 50.4 Industrial Designs 50.4.1 The Registration Process 50.4.2 Registration Marks 50.4.3 Enforcing Rights 50.4.4 Additional Information 50.5 Copyrights 50.5.1 Registration of Copyright 50.5.2 Assignments and Licences 50.5.3 Royalties and Tariffs 50.5.4 Collectives 50.5.5 Copyright Modernization Act 50.5.6 Additional Information Chapter 51 Shareholder Agreements 51.1 Purpose and Scope 51.1.1 Types of Shareholders 51.1.2 The Shareholder Agreement 51.2 Types of Shareholder Agreements 51.3 Unanimous Shareholder Agreement 51.3.1 Shareholders and the Unanimous Shareholder Agreement 51.3.2 Lenders and the Unanimous Shareholder Agreement 51.4 Fiduciary Obligations and Other Considerations 51.5 Typical Detailed Provisions of a Shareholder Agreement 51.6 Buyout Options 51.7 Valuation of Shares 51.8 Other Sources of Information Chapter 52 Other Legal Matters 52.1 Mortgage Foreclosure or Power of Sale 52.1.1 Foreclosure 52.1.2 Power of Sale 52.2 Personal Property Security Legislation Financing Statement / Claim for Lien 52.3 Criminal Interest Rate 52.3.1 Example of Criminal Interest Rate Issues 52.3.2 Leading Case: William E. Thomson Associates Inc. v. Carpenter 52.4 Security: Trade Creditors 52.4.1 Consignment Agreements 52.4.2 Purchase Money Security Interest 52.4.3 Special Approach: Quebec 52.4.4 Protection for Unpaid Suppliers Under the Bankruptcy and Insolvency Act 52.4.5 Leading Case: Priority Under Purchase Money Security Interest 52.5 An RRSP as Loan Collateral 52.6 Events of Default 52.7 Leases and Financing 52.7.1 The Lease as Security 52.7.2 Dealing with Landlord on Realization 52.7.3 Priority over Landlord's Distress Rights 52.7.4 Commercial Leases Under the Bankruptcy and Insolvency Act 52.7.5 Negotiating with the Landlord Landlord Letter 52.7.6 Leading Case: Landlord's Right to Distrain v. Secured Creditor's Right to Asset 52.8 Enforceability of Guarantees Under Lending Agreements 52.8.1 Leading Case: Guarantor Contracting Out of Equitable Defence 52.9 Documenting Shareholder Loans 52.10 Modernization of Business Law in Ontario 52.10.1 Making Ontario a Leading Jurisdiction for Business 52.10.1.1 Business Corporations Act Changes 52.10.1.2 Limited Partnerships 52.10.1.3 Unlimited Liability Corporations, Limited Liability Partnerships and Limited Liability Corporations 52.10.2 Updating Legislation Dealing with Commercial Activity, Including the Personal Property Security Act 52.10.2.1 Eliminating Some Quirks of Ontario's Personal Property Security Act 52.10.2.2 Repealing the Bulk Sales Act 52.10.2.3 Repealing Duplicative Preference and Fraudulent Conveyance Legislation 52.10.3 Creating an Environment with More Certainty and Efficiency to Support Market Activity and Small Business Growth 52.10.3.1 Making Franchise Law Compliance Simpler 52.10.3.2 Simplifying Business Registration Requirements 52.10.4 Conclusion Part J Tools for Dealing with Finance
Appendix I Historical Evolution of Finance
Appendix II Economic Forecast: North American Outlook Appendix III Glossary Appendix IV Acronyms Appendix V Case Studies
Appendix VI Credit Rating Systems and Agencies
Appendix VII Standard Industrial Classification (NAICS)
Appendix VIII Consumer Price Index
Appendix IX ISO 9000
Appendix X Leading Legal Cases
Appendix XI Sharwood Report Bibliography
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