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		<title>Tick Tock: Supreme Court of Canada to consider “Time is of the Essence” Clauses</title>
		<link>https://www.sotosllp.com/2026/03/31/tick-tock-supreme-court-of-canada-to-consider-time-is-of-the-essence-clauses/</link>
		
		<dc:creator><![CDATA[mfareen]]></dc:creator>
		<pubDate>Tue, 31 Mar 2026 12:04:18 +0000</pubDate>
				<category><![CDATA[Sam Fata]]></category>
		<category><![CDATA[Corporate and Commercial]]></category>
		<category><![CDATA[Corporate Governance]]></category>
		<category><![CDATA[Featured Insight]]></category>
		<category><![CDATA[Insights]]></category>
		<category><![CDATA[Litigation]]></category>
		<guid isPermaLink="false">https://www.sotosllp.com/?p=25951</guid>

					<description><![CDATA[<p>by Sam Fata A “time is of the essence” (TOE) clause is a common contractual provision used in a wide range of commercial agreements. At its core, a TOE clause indicates that compliance with specified timelines is a material term of an agreement and that failure to meet those timelines, however minor or inconsequential, can [&#8230;]</p>
<p>The post <a href="https://www.sotosllp.com/2026/03/31/tick-tock-supreme-court-of-canada-to-consider-time-is-of-the-essence-clauses/">Tick Tock: Supreme Court of Canada to consider “Time is of the Essence” Clauses</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><strong>by <a href="https://www.sotosllp.com/team/sam-fata/">Sam Fata</a> </strong></p>
<p>A “time is of the essence” (TOE) clause is a common contractual provision used in a wide range of commercial agreements. At its core, a TOE clause indicates that compliance with specified timelines is a material term of an agreement and that failure to meet those timelines, however minor or inconsequential, can constitute a breach entitling the non-breaching party to terminate the contract. In transactions with clearly defined deadlines (such as a fixed closing date), a TOE clause demonstrates that performance within a stipulated timeframe is an essential term of the agreement.</p>
<p>Notwithstanding their widespread use, TOE clauses have frequently been the subject of commercial disputes, highlighting the persistent challenges associated with their interpretation and application. Most recently, the Supreme Court of Canada (SCC) granted leave to appeal the decision of the Court of Appeal of Newfoundland and Labrador in <a href="https://www.canlii.org/en/nl/nlca/doc/2025/2025nlca28/2025nlca28.html?resultId=78a0fea6af0b4f7db46d7220226fadb8&amp;searchId=2026-01-23T16:27:33:654/6896908ded574b7e995fa63a752ad774"><em>Nova Fish Farms Inc. v Cold Ocean Salmon Inc.</em></a>, highlighting the continued significance of TOE clauses in Canadian contract law.</p>
<p><strong>The Dispute: Nova Fish Farms Inc. v Cold Ocean Salmon Inc.</strong></p>
<p>In this dispute, Cold Ocean Salmon Inc. (the Seller) agreed to sell several trout farms to Nova Fish Farms Inc. (the Buyer) under an agreement of purchase and sale signed in February 2020 (the Agreement). The trout farms were on property leased from the provincial government and were licensed and regulated by both federal and provincial governments. As a result, the sale of the trout farms was conditional on government approval. The Agreement required each party to take the necessary steps to obtain government approval “as promptly as practicable” and that the parties use “commercially reasonable efforts” to obtain approval before closing. The Agreement contained a TOE clause.</p>
<p>Due to the COVID-19 pandemic, neither of the parties took any meaningful steps to obtain the necessary government approvals over the next 16 months. In June 2021, the Buyer submitted transfer applications to the government and received approval in October 2021. The Buyer then notified the Seller of the government approval and that the Buyer wished to proceed with closing. The Seller ultimately informed the Buyer that it did not intend to close, which led to the Buyer suing for specific performance.</p>
<p><strong>The Lower Court’s Decision</strong></p>
<p>The trial judge found that the Buyer had breached the Agreement by failing to take the necessary steps to obtain government approval “as promptly as practicable”. Although there were no set timelines in the Agreement to obtain the government approvals, the trial judge held that the 16-month period was not in the contemplation of the parties and that the TOE clause entitled the Seller to terminate the Agreement.</p>
<p><strong>The Court of Appeal’s Decision</strong></p>
<p>The Court of Appeal disagreed with the trial judge, holding that the TOE clause did not extend to obligations governed by indefinite time provisions (i.e., “as promptly as practicable”). Rather, the Court of Appeal observed that the cases cited by the parties where TOE clauses were enforced “involved precisely stipulated time limits”, such as a fixed or outside closing date.</p>
<p>The Court of Appeal placed particular emphasis on the need for certainty in commercial agreements. It explained that contracting parties utilize TOE clauses to provide clear consequences of a breach relating to timelines, most notably, that a failure to meet such timelines entitles the non-breaching party to terminate the contract. Extending a TOE clause to obligations without defined timelines, the Court of Appeal cautioned, would undermine this objective by introducing ambiguity as to both compliance and the point at which termination rights arise.</p>
<p><strong>Key Takeaways for Drafting and Strategy</strong></p>
<p>The <em>Nova Fish Farms Inc. v Cold Ocean Salmon Inc.</em> case underscores the nuanced application of TOE clauses in Canadian commercial contracts. While TOE clauses are designed to ensure timely performance of contractual obligations, their enforceability may be tied to the presence of clearly defined deadlines. Subject to further guidance from the SCC, the Court of Appeal’s decision suggests that where contractual obligations are expressed in indefinite terms, such as “as promptly as practicable,” a TOE clause may not automatically grant a party the right to terminate.</p>
<p>This case serves as a cautionary reminder to contracting parties of the importance of establishing clear and precise deadlines within their agreements, particularly where the timing of performance is intended to be of fundamental importance. Parties should also carefully assess whether the inclusion of a TOE clause is appropriate in the circumstances. Such clauses should not be adopted as a matter of course, and instead should be evaluated and tailored on a case-by-case basis to ensure alignment with the parties’ intentions.</p>
<p>For businesses navigating complex commercial agreements, the use and interpretation of “time is of the essence” clauses can have significant legal and financial consequences. Sotos LLP has extensive experience advising clients on contract drafting, risk management, and high-stakes commercial disputes. If you have questions about how these developments may impact your agreements or require strategic guidance, <a href="https://www.sotosllp.com/our-team/">our team</a> would be pleased to assist.</p>
<p>&nbsp;</p>
<p><strong>About the Author</strong><br />
<a href="https://www.sotosllp.com/team/sam-fata/">Sam Fata</a> is an associate in the corporate and commercial group at Sotos LLP. His practice focuses on corporate finance, mergers and acquisitions, securities, and commercial law. He advises clients across a wide range of industries, including technology, manufacturing, mining, agribusiness, entertainment, artificial intelligence, and consumer goods. Sam takes a client-focused approach, working closely with businesses to understand their objectives and deliver practical, tailored legal solutions. He can be reached at 416.530.0447 or <a href="mailto:sfata@sotos.ca">sfata@sotos.ca</a>.</p>
<p>The post <a href="https://www.sotosllp.com/2026/03/31/tick-tock-supreme-court-of-canada-to-consider-time-is-of-the-essence-clauses/">Tick Tock: Supreme Court of Canada to consider “Time is of the Essence” Clauses</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
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		<title>Conscious Compliance: The Role of Foreign Corporations in Canada&#8217;s Fight Against Modern Slavery</title>
		<link>https://www.sotosllp.com/2024/01/17/conscious-compliance-the-role-of-foreign-corporations-in-canadas-fight-against-modern-slavery/</link>
		
		<dc:creator><![CDATA[SotosLLP]]></dc:creator>
		<pubDate>Wed, 17 Jan 2024 15:23:26 +0000</pubDate>
				<category><![CDATA[Corporate and Commercial]]></category>
		<category><![CDATA[Corporate Governance]]></category>
		<category><![CDATA[Franchising]]></category>
		<category><![CDATA[John Sotos]]></category>
		<guid isPermaLink="false">https://www.sotosllp.com/?p=24032</guid>

					<description><![CDATA[<p>by John Sotos Franchisors and parent companies supplying goods for sale in Canada should begin to evaluate and address the ethical standards of their supply chains. Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff (the “Act”) will impose annual reporting obligations [&#8230;]</p>
<p>The post <a href="https://www.sotosllp.com/2024/01/17/conscious-compliance-the-role-of-foreign-corporations-in-canadas-fight-against-modern-slavery/">Conscious Compliance: The Role of Foreign Corporations in Canada&#8217;s Fight Against Modern Slavery</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>by <strong><a href="https://sotosllp.com/people/john-sotos/">John Sotos</a> </strong></p>
<p>Franchisors and parent companies supplying goods for sale in Canada should begin to evaluate and address the ethical standards of their supply chains. <a href="https://www.parl.ca/DocumentViewer/en/44-1/bill/S-211/third-reading" target="_blank" rel="noopener">Bill S-211</a>, <em>An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff</em> (the “<strong>Act</strong>”) will impose annual reporting obligations on Canadian businesses and their foreign parent companies to prove that they are preventing and reducing the risk of forced or child labour from being used at any step in their supply chain. The Act is expected to come into force on January 1<sup>st</sup>, 2024.</p>
<p><strong>Brief Overview of the Act</strong></p>
<p>This legislation applies to both private entities and government institutions. Those subject to its provisions will be obligated to provide annual reports to the Minister of Public Safety and Emergency Preparedness, due on May 31<sup>st</sup> each year, commencing in 2024. Of particular note, Section 11(3) specifies the mandatory contents of these reports:</p>
<ul>
<li>The entity’s structure, activities and supply chains;</li>
<li>Its policies and due diligence processes in relation to forced and child labour;</li>
<li>The parts of its business and supply chains that carry a risk of forced or child labour being used and the steps it has taken to assess and manage that risk;</li>
<li>Any measures taken to remediate any forced or child labour;</li>
<li>Any measures taken to remediate the loss of income to the most vulnerable families that result from its measures taken to eliminate the use of forced or child labour;</li>
<li>The training provided to employees on forced and child labour; and,</li>
<li>How the entity assesses its effectiveness in ensuring that forced and child labour are not being used in its business and supply chains.</li>
</ul>
<p><strong>Primary Aims of the Act</strong></p>
<p>The overarching objective of the Act is to prevent goods that have been produced in connection with forced or child labour from entering the Canadian marketplace. The Act will impose the following measures in order to achieve this objective:</p>
<ul>
<li><u>Supply Chain Transparency.</u> The reporting obligations require companies to disclose information about their supply chains, including the measures they have taken to ensure there is no forced or child labour present at any point.</li>
<li><u>Due Diligence</u>. Companies whose goods are sold in Canada will now have a legislated responsibility to mitigate any risks of human rights abuses within their supply chains. Documenting this due diligence process is of utmost importance.</li>
<li><u>Public Reporting.</u> The Act strives to provide Canadian consumers with an opportunity to make educated purchases that align with their ethical standards. Therefore, the reporting obligations require that the reports be published on a registry on the Public Safety Canada website, as well as in a prominent location on the reporting entity’s website.</li>
<li><u>Penalties for Non-Compliance</u>. Failure to comply with the required ethical standards may result in being found guilty of an offence punishable by summary conviction, as well as a fine of up to $250,000. This liability can also be extended to the Directors, Officers and agents of the company.</li>
</ul>
<p><strong>Impact on Subsidiaries and Franchise Systems Doing Business in Canada</strong></p>
<p>Many franchisors oblige their Canadian franchisees to source products from the franchisor or designated suppliers. Similarly, most parent companies directly supply their Canadian subsidiary retailers with the goods they are to sell. As a result, such franchisors and parent companies that meet the threshold of $40 million in revenue, $20 million in assets or the employment of an average of 250 employees, are required to ensure that their supply chain has not violated the Act by employing prohibited persons. In light of the Act’s enforcement, these processes may require significant restructuring, impacting not only Canadian incorporated companies but also entities exercising control over Canadian companies.<a href="#_ftn1" name="_ftnref1">[1]</a></p>
<p>Here’s how the Act will affect franchise systems and retail chains that operate in Canada: :</p>
<ul>
<li><u>Compliance Burden. </u>Companies that are deemed to control Canadian companies will be captured by the Act. There is no question that a parent-subsidiary relationship will be captured by this and for the purposes of the Act, franchisors that have mandatory supplier requirements in their franchise agreements will also likely be captured. Parent companies and franchisors both must ensure compliance prior to the first report in May 2024. The Act allows any controlling entity to submit a joint report with the Canadian company.</li>
</ul>
<ul>
<li><u>Brand Reputation. </u>The public reporting requirement will result in the public learning about a business system’s supply chain, which parent companies and franchisors consider proprietary and confidential. It will be important to keep this in mind when drafting the reports, to retain as much control over the franchise system’s brand perception as possible.</li>
</ul>
<ul>
<li><u>Competitive Advantage.</u> Many systems will find that it is difficult to comply with the Act without drastically changing their product or the price at which the product is sold. Striking a balance between offering ethically sourced products, while maintaining the product’s current price and quality will be attractive to consumers, and will be a new factor that sets brands apart.</li>
<li><u>Global Alignment</u>. Franchise systems and retail chains that currently operate in countries where similar legislation is already in place, as described in the following section, will find that they can adapt the Canadian arm of their business to align with those strategies. This will result in a more globally uniform strategy.</li>
</ul>
<p><strong>Following International Trends</strong></p>
<p>At the forefront, the Act is part of a broader global trend where countries are implementing legislation to combat modern slavery, human trafficking, and unethical labour practices in their supply chains. In doing so, Canada is joining the United Kingdom (UK), Australia, and the European Union (EU), which have already enacted or proposed similar measures. Franchise systems operating in any of these regions should already have processes in place that allow for compliance with ethical sourcing standards.</p>
<p>In 2015, the UK also enacted legislation entitled the <a href="https://www.legislation.gov.uk/ukpga/2015/30/contents/enacted" target="_blank" rel="noopener"><em>UK Modern Slavery Act</em></a>, to combat modern slavery in supply chains. The legislation was accompanied by a Guide entitled <a href="https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide/transparency-in-supply-chains-a-practical-guide" target="_blank" rel="noopener"><em>Transparency in Supply Chains: a practical guide</em></a><em>. </em>Given the absence of regulations at this time as to how the Act will apply to corporations doing business in Canada, the UK Guide can provide valuable insight.  Its appendices include examples on how to structure the reports, what should be included in the reports and the changes that should be made to internal operations to ensure due diligence.</p>
<p>The new Canadian legislation will broaden the scope of some existing regulations implemented in Europe. The Act introduces a stricter applicability threshold than legislation enacted in certain European countries, as it applies to companies doing business in Canada. This heightened criterion should warrant particular attention from smaller enterprises based in countries such as France and Germany.</p>
<p>As of January 2024, the German legislation exclusively pertains to companies with a workforce exceeding 1,000 employees in Germany. Similarly, the French legislation extends its reach to companies with more than 5,000 employees in France or 10,000 employees globally. For French and German companies falling below these employee thresholds but maintaining a presence in Canada, a comprehensive assessment of their supply chains is imperative.</p>
<p>In addition to the Canadian Act, the EU has proposed a regulation with the potential to impose the same applicability threshold of 250 employees, entitled “<a href="https://www.europarl.europa.eu/RegData/docs_autres_institutions/commission_europeenne/com/2022/0453/COM_COM(2022)0453_EN.pdf" target="_blank" rel="noopener"><em>Regulation of the European Parliament and of the Council on prohibiting products made with forced labour on the Union market</em></a><em>”</em>. In October 2023, a joint report on the proposed regulation between the Committee on the Internal Market and Consumer Protection (IMCO) and the Committee on the International Trade (INTA) was confirmed in the European Parliament as their position in the November trilogue negotiations. If adopted, the regulation will halt all import and export of goods manufactured through forced labour at the EU’s borders. The regulation is currently awaiting the parliament’s position in the first reading and may not be in force for a few years, but given their stringent similarities, adaptation to the Canadian Act can result in advanced preparedness.</p>
<p><strong>Preparing for Compliance</strong></p>
<p>Business systems have a range of strategic measures to choose from to proactively prepare for the impending reporting obligations, which are set to become due in May 2024. These actions will empower them to navigate the regulatory landscape effectively:</p>
<ul>
<li><u>Supply Chain Review. </u>Conduct a review of all supply chains and invest in due diligence procedures. This entails extending the scrutiny beyond immediate suppliers and delving deeper into the supply chain hierarchy to address potential issues. It will be important to be able to prove these steps have been taken through documentation.</li>
<li><u>Collaboration with Stakeholders.</u> Where appropriate, work with a local non-governmental organization or any other relevant stakeholder to establish effective strategies for addressing and rectifying any instances of forced labour. Genuine efforts to eradicate human rights violations within the supply chain will not only enhance ethical compliance but also demonstrate a commitment to responsible business practices.</li>
<li><u>Supplier Contract Termination.</u> Where it is not possible to directly address a human rights violation, explore how to terminate the supplier contract as soon as possible.</li>
<li><u>Integration of Ethical Business Practices.</u> Consider integrating ethical business operations into the brand’s image sooner rather than later. This proactive approach aligns the brand with evolving consumer preferences and demonstrates a commitment to responsible and sustainable operations.</li>
<li><u>Franchise Agreement Review. </u>Conduct a review of franchise agreements with Canadian franchisees to adjust any supplier provisions accordingly. Limiting the level of control over Canadian franchisee’s supply chain may assist in alleviating liability, should compliance become an issue.</li>
<li><u>Use existing resources.</u> It is important to note that tools currently exist to help socially-conscious consumers make informed purchasing decisions. As an example, KnowTheChain.com offers benchmarks and assessments evaluating and scoring companies on their efforts to address and combat forced labour. By following the structure of these reports, your company may gain a better understanding of what forced and child labour look like in today’s world.</li>
<li><u>Starting early</u>. By taking action on the above in advance of enactment, issues can be addressed earlier and more notice can be provided to third parties, if need be. This will also allow for further research to be conducted on entering agreements with suppliers who comply with the Act.</li>
</ul>
<p>Bill S-211 represents a significant step towards greater transparency and ethical sourcing within supply chains in Canada. While it imposes new obligations on companies selling imported goods, it also offers the opportunity for businesses to demonstrate their commitment to socially responsible business practices. However, the consequences of non-compliance are alarming, not only from a legal standpoint, but also in terms of business impact.</p>
<p>For large franchisors with foreign suppliers, especially from high-risk countries that are well known for using child labour, such as Brazil, China, Vietnam and others, the legislation will require a significant overhaul of their specific supply chains in order to ensure compliance and that the franchisor has robust policies to demonstrate as such. Maintaining transparency within franchisor-franchisee relationships will also be crucial, as franchisees will now have an additional business obligation starting in May 2024.</p>
<p>In the realm of large luxury brands collaborating with foreign manufacturers, there is a growing consumer concern for ethically produced goods both in Canada and across Europe. As reporting obligations loom, there is a potential revelation that some luxury brands employ similar sourcing methods as those associated with the production of “fast fashion” items. The ramifications of such exposure pose a significant threat to brand equity, erode customer trust, and diminish the overall value of a luxury brand. It is conducive for these brands to proactively address and rectify any indications of unethical sourcing well in advance of impending reporting obligations to safeguard their reputation and maintain the trust of their increasingly discerning clientele.</p>
<p><strong>How We Can Help</strong></p>
<p>At Sotos LLP, we understand the importance of adhering to strict legislation and can provide you with tailored solutions for successful compliance. As franchising experts, we can help you navigate the nuanced issues your system may face, while preserving your brand reputation and long-term business goals. Although these upcoming reporting obligations seem daunting, we can use them as a tool for enhancing your supply chain strategy with efficiency.</p>
<p><strong><a href="https://sotosllp.com/people/john-sotos/">John Sotos</a>, Sotos LLP</strong></p>
<p>John Sotos is the founding partner of Sotos LLP and a dean of the franchising, licensing and distribution bar. John has been recognized by<em> Chambers Canada, Canadian Legal LEXPERT Directory, Who’s Who Legal,</em> and <em>Best Lawyers in Canada</em> as a leading Canadian franchise law practitioner. John can be reached directly at <a href="tel:4169779806">416.977.9806</a> or <a href="mailto:jsotos@sotos.ca">jsotos@sotos.ca</a> if you would like to discuss this or any other topic relating to the operation of your business.</p>
<hr />
<p><a href="#_ftnref1" name="_ftn1">[1]</a> <em>Ac</em>t at section 9<strong>: </strong>This Part applies to any entity</p>
<ul>
<li style="list-style-type: none;">
<ul>
<li><strong>(a) </strong>producing, selling or distributing goods in Canada or elsewhere;</li>
<li><strong>(b) </strong>importing into Canada goods produced outside Canada; or</li>
<li><strong>(c) </strong>controlling an entity engaged in any activity described in paragraph (a) or (b).</li>
</ul>
</li>
</ul>
<p>The post <a href="https://www.sotosllp.com/2024/01/17/conscious-compliance-the-role-of-foreign-corporations-in-canadas-fight-against-modern-slavery/">Conscious Compliance: The Role of Foreign Corporations in Canada&#8217;s Fight Against Modern Slavery</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
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		<title>Important Updates on Federal and Ontario Corporate Compliance Requirements</title>
		<link>https://www.sotosllp.com/2023/12/14/important-updates-on-federal-and-ontario-corporate-compliance-requirements/</link>
		
		<dc:creator><![CDATA[lhuxtable]]></dc:creator>
		<pubDate>Thu, 14 Dec 2023 19:42:17 +0000</pubDate>
				<category><![CDATA[Corporate and Commercial]]></category>
		<category><![CDATA[Corporate Governance]]></category>
		<category><![CDATA[John Yiokaris]]></category>
		<guid isPermaLink="false">https://www.sotosllp.com/?p=24002</guid>

					<description><![CDATA[<p>We want to bring your attention to imminent changes in federal corporate compliance requirements mandated by the Canadian Business Corporations Act (the “CBCA”). Additionally, there have been two recent updates to Ontario corporate compliance requirements outlined in the Ontario Business Corporations Act (the “OBCA”) that we believe warrant your attention. Effective January 22, 2024, every privately held corporation registered [&#8230;]</p>
<p>The post <a href="https://www.sotosllp.com/2023/12/14/important-updates-on-federal-and-ontario-corporate-compliance-requirements/">Important Updates on Federal and Ontario Corporate Compliance Requirements</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
]]></description>
										<content:encoded><![CDATA[<div>We want to bring your attention to imminent changes in federal corporate compliance requirements mandated by the <em>Canadian Business Corporations Act</em> (the “<strong>CBCA</strong>”). Additionally, there have been two recent updates to Ontario corporate compliance requirements outlined in the <em>Ontario Business Corporations Act</em> (the “<strong>OBCA</strong>”) that we believe warrant your attention.</div>
<ul>
<li>Effective January 22, 2024, every privately held corporation registered under the CBCA <strong>must prepare and maintain a register of individuals with significant control over the corporation</strong> (“<strong>ISC Register</strong>”) and file that information with Corporations Canada. Federal private corporations should begin to review existing corporate records and procedures to prepare for the new information reporting requirements.</li>
</ul>
<ul>
<li>Effective January 1, 2023, every privately held corporation registered under the OBCA <strong>must prepare and maintain an ISC Register</strong>. Ontario private corporations should begin to review existing corporate records and procedures to prepare for the new information reporting requirements.</li>
</ul>
<ul>
<li>Effective October 19, 2021, Ontario-registered corporations <strong>must file their mandatory annual returns using the Ontario Business Registry</strong> (“<strong>OBR</strong>”). They can no longer file their annual returns through the Canada Revenue Agency using their corporate accountant.</li>
</ul>
<div>Read on for essential details that may impact your corporate obligations.</div>
<hr />
<div></div>
<ol>
<li><strong>Meeting the New Individuals with Significant Control Disclosure Requirements</strong></li>
</ol>
<div><strong>Who is an “Individual with Significant Control”?</strong><br />
The reporting obligations under the CBCA are largely the same as those already required under the OBCA. In both cases, an individual will be deemed to have significant control over a corporation where he or she (either individually or jointly with one or more other individuals) holds interests or rights in respect of either (i) shares that carry 25% or more of the voting rights of the corporation’s shares, or (ii) 25% or more of the corporation’s outstanding shares measured by fair market value.  The types of interests or rights held by such an individual can include:</div>
<ul>
<li>Registered shareholdings;</li>
<li>Beneficial ownership;</li>
<li>Direct or indirect control over shares;</li>
<li>Direct or indirect influence that, if exercised, would result in control-in-fact of the corporation; and</li>
<li>Interests or rights prescribed by regulations under the CBCA or OBCA, as applicable.</li>
</ul>
<div>The register must set out:</div>
<ol>
<li>The name and date of birth of each individual with significant control;</li>
<li>The country (or countries) where the individual with significant control of the corporation is considered a resident for income tax purposes;</li>
<li>The address for service of each individual with significant control of the corporation;
<ol>
<li>In the context of federal corporations, due to proposed legislation under Bill C-42 that would make some personal information from the register public,<u> a preferred address for service should be provided. If no address for service is provided, Corporate Canada may make the individual&#8217;s residential address public in its place.</u></li>
</ol>
</li>
<li>The day on which each individual became or ceased to be an individual with significant control;</li>
<li>A description of how each individual qualifies as an individual with significant control including, as applicable, a description of their interests and rights in respect of the corporation’s shares; and</li>
<li>A description of the steps that the corporation has taken during its financial year to ensure that:
<ol>
<li>It has identified all individuals with significant control over the corporation; and</li>
<li>The information in the register is accurate, complete, and current.</li>
</ol>
</li>
</ol>
<div>
<p>Regulations under the CBCA and OBCA may, in the future, add to the information that is required to be set out.</p>
<p><strong>How Often Must You Update Your ISC Register?</strong><br />
In addition to initially preparing and maintaining its ISC Register, both corporations registered under the CBCA and OBCA must take reasonable steps at least once during each of their financial years, and within 15 days of becoming aware of any information that is required to be contained in the ISC Register, and upon incorporation and after amalgamation or continuance, to ensure that they have identified all the individuals with significant control over the corporation and that the information in the ISC Register is accurate, complete and up to date.</p>
<p><strong>How Often Must You File Your ISC Register with Corporations Canada?</strong><br />
CBCA corporations must file their ISC information with Corporations Canada annually (at the same time as filing their annual return) and within 15 days of a change in their ISC register. There is no requirement for OBCA corporations to file their ISC Registers with Corporations Canada.</p>
<p><strong>What are the Repercussions of Non-Compliance?</strong><br />
Both corporations registered under the CBCA and OBCA that, without reasonable cause, contravenes the requirement to maintain an ISC Register is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000. A corporation that, without reasonable cause, contravenes the requirement to respond to a request for disclosure of its ISC Register for law enforcement, tax or regulatory purposes is guilty of an offence and on conviction is liable to a fine of not more than $5,000.</p>
<p>Directors or officers of a corporation who knowingly authorize, permit or acquiesce in a corporation’s failure to maintain an ISC Register, to the recording of false or misleading information in an ISC Register, or provide any person or entity false or misleading information relating to an ISC Register, is considered to have committed an offence. Similarly, shareholders who knowingly contravene their obligation to reply accurately and completely to a request for information from a corporation commit an offence. Upon conviction of such offences, directors, officers and shareholders are liable to a fine not exceeding $200,000 or to imprisonment for a term not exceeding six months, or both.</p>
</div>
<ol>
<li value="2"><strong>Meeting the New Annual Filing Requirements</strong></li>
</ol>
<div>A corporation may elect to file its annual return directly or through an intermediary. If filing directly, the corporation must register with the new Ontario Business Registry by providing an official email address. The corporation should then receive a corporate access key via regular mail delivered to the registered office address on file.<br />
Stay informed and ensure your company remains in compliance by familiarizing yourself with these developments.<strong>Help Along the Way</strong><br />
Proactive measures are necessary to prepare for these changes. Understanding the individuals who have your shareholders are ISCs, maintaining accurate records, and regularly updating the ISC Register are pivotal to avoid compliance penalties.Given the substantial impact of these changes, seeking expert advice can greatly assist in navigating the transition and ensuring adherence to the new regulations. Our team is here to offer our expertise to help you facilitate this process effectively.Should you have any questions or require assistance in aligning your corporation with these impending changes, please do not hesitate to reach out to our team of experts. Stay informed, stay compliant, and stay ahead in this constantly evolving corporate landscape.</div>
<div></div>
<div>
<p><strong><a href="https://sotosllp.com/people/john-yiokaris/">John Yiokaris</a>, Sotos LLP</strong></p>
<p>John Yiokaris is a partner with Sotos LLP in Toronto, Canada’s leading franchise law firm. He has been recognized by <em>Chambers Canada</em>, <em>LEXPERT</em>, <em>Who’s Who Legal</em>, <em>Lexology</em>, and <em>Best Lawyers in Canada</em> as a leading Canadian franchise law practitioner. John can be reached directly at 416.977.3998 or <a href="mailto:jyiokaris@sotos.ca">jyiokaris@sotos.ca</a>.</p>
</div>
<p>The post <a href="https://www.sotosllp.com/2023/12/14/important-updates-on-federal-and-ontario-corporate-compliance-requirements/">Important Updates on Federal and Ontario Corporate Compliance Requirements</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
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		<title>What&#8217;s The Deal With Greenwashing?</title>
		<link>https://www.sotosllp.com/2023/01/16/whats-the-deal-with-greenwashing/</link>
		
		<dc:creator><![CDATA[SotosLLP]]></dc:creator>
		<pubDate>Mon, 16 Jan 2023 14:55:01 +0000</pubDate>
				<category><![CDATA[Corporate and Commercial]]></category>
		<category><![CDATA[Corporate Governance]]></category>
		<category><![CDATA[John Sotos]]></category>
		<category><![CDATA[Marketing and Advertising]]></category>
		<guid isPermaLink="false">https://sotosllp.com/?p=23321</guid>

					<description><![CDATA[<p>The current political climate has led to a stampede of companies, including a large number of Franchises, promoting that “going green” pedigree.  As scientists and politicians debate the impact or existence of global warming, green industry practices enjoy favourable public sentiment, largely dependent on supportive government policies, leading to ever-increasing profitability. [1] As with any [&#8230;]</p>
<p>The post <a href="https://www.sotosllp.com/2023/01/16/whats-the-deal-with-greenwashing/">What&#8217;s The Deal With Greenwashing?</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>The current political climate has led to a stampede of companies, including a large number of Franchises, promoting that “going green” pedigree.  As scientists and politicians debate the impact or existence of global warming, green industry practices enjoy favourable public sentiment, largely dependent on supportive government policies, leading to ever-increasing profitability. <span style="font-size: 8pt;"><a href="#_ftn1" name="_ftnref1">[1]</a> </span>As with any pioneering activity, it is not surprising that there is no widely accepted definition as to what constitutes “going green”.  Accordingly, many commercial practices have been criticized of being nothing more than “greenwashing.”  This article will analyze what exactly greenwashing is, how Canadian regulatory bodies are attempting to combat it, and provide commentary on how greenwashing/ the regulations surrounding it may impact franchisors and franchisees.</p>
<p><strong><u>What is Greenwashing? </u></strong></p>
<p>Greenwashing is when a company promotes its products or services as being environmentally conscious for marketing purposes, while in practice they are not actually taking any notable sustainability efforts.<span style="font-size: 8pt;"><a href="#_ftn2" name="_ftnref2">[2]</a> </span>It is essentially a situation where an organization spends more time and money on marketing itself as environmentally friendly than on actually minimizing its environmental impact.  It is a deceitful marketing gimmick which misleads consumers who prefer to buy goods and services from environmentally conscious brands. This issue of greenwashing is quickly becoming a priority for enforcement agencies, notably Canada’s Competition Bureau. (<strong>“Bureau”</strong>)</p>
<p>Greenwashing is problematic not only because it is ethically wrong and illegal but because it has created a situation where many consumers do not actually believe companies when they make claims about their sustainability practices.  This has created a world where companies big and small are afraid to tell society what they are doing to combat environmental issues for the fear people will say their actions are not enough, or people just will not believe them.</p>
<p><strong><u>Why does Greenwashing occur?</u></strong></p>
<p>Greenwashing can occur for a variety of reasons. One of these reasons stems from the fact that many CEOs and Corporate Boards are not as engaged with sustainability strategies as they should be.  While 90 percent of corporate executives think sustainability is important, only 60 percent of companies have a sustainability strategy.<span style="font-size: 8pt;"><a href="#_ftn3" name="_ftnref3">[3]</a> </span> Fewer still have anyone in a leadership role responsible for this activity.  Often, companies adopt the sustainability bandwagon but do not support their marketing with leadership and budgets.</p>
<p><strong><u>How is Greenwashing Challenged? </u></strong></p>
<p>Aside from Consumer and Competitor activities, greenwashing has become an increased priority for enforcement agencies in Canada, notably the Bureau.  One of the very few areas where the Bureau has been effective has been in its pursuit of misleading advertising claims by investigating and prosecuting deceptive marketing practices, to ensure consumers receive truthful information allowing them to make informed buying decisions.<span style="font-size: 8pt;"><a href="#_ftn4" name="_ftnref4">[4]</a></span>  The <em>Competition Act </em>prohibits businesses from making a materially false/misleading representation to the public in order to promote the supply or use of a product/service or a business interest.  In assessing whether a representation is deemed to be “material,” the Bureau looks to see if the representation could influence consumer behaviour, such as influencing them to buy or use the advertised products or services.<span style="font-size: 8pt;"><a href="#_ftn5" name="_ftnref5">[5]</a></span></p>
<p>The Bureau has sent a clear message to the business community that it has a significant role to play in Canada’s transition to a greener economy and in achieving growth goals, and that greenwashing is a high enforcement priority.  As a result, while the Bureau may not have the resources to deal with every potentially offside advertisement, businesses can expect to see increased scrutiny and higher risks in potentially misleading claims.</p>
<p><strong><u>Past Examples of Bureau Greenwashing Enforcement </u></strong></p>
<p><em><u>Keurig Canada:</u></em></p>
<p>In 2019, Ecojustice, Canada’s largest environmental law charity, applied to the Bureau triggering an inquiry regarding claims made by Keurig Canada (“<strong>Keurig”</strong>) that its coffee pods are recyclable.  Keurig had just modified their single use coffee pods to be made from a recyclable plastic, a modification that presumably would have involved significant cost increases regarding their technological and manufacturing processes.  To market this positive performance change, Keurig promotes via its website, social media, and on its packaging that their single-use coffee pods were recyclable, when consumers followed the instructions to move the metallic lid and empty the pod.<span style="font-size: 8pt;"><a href="#_ftn6" name="_ftnref6">[6]</a></span></p>
<p>The Bureau investigated these claims and determined Keurig’s assertions regarding the recyclability of its single-use coffee pods were false or misleading in municipalities that did not accept them for recycling.  The Bureau found that, outside the provinces of British Columbia and Quebec, K-Cup pods are currently not widely accepted in municipal recycling programs.<span style="font-size: 8pt;"><a href="#_ftn7" name="_ftnref7">[7]</a></span> In other words, the Bureau found that these claims were false or misleading because they claimed to have more environmental truth benefits than they had.  The Bureau also concluded that Keurig’s claims about the steps involved to prepare the pods for recycling are false or misleading in certain municipalities. Keurig’s claims gave the impression that consumers can prepare the pods for recycling by simply peeling the lid off and emptying out the coffee grounds, but some local recycling programs require additional steps to recycle the pods.  Keurig voluntarily settled this claim for $3 million. <span style="font-size: 8pt;"><a href="#_ftn8" name="_ftnref8">[8]</a> </span>Additionally, at least one class action has been commenced against Keurig, with respect to its K-Cup or Keurig Coffee machines since Keurig began making these false misrepresentations on April 15, 2016.<span style="font-size: 8pt;"><a href="#_ftn9" name="_ftnref9">[9]</a></span></p>
<p><em><u>Royal Bank of Canada: </u></em></p>
<p>In October 2022, the Bureau decided to investigate charges of misleading advertising against the Royal Bank of Canada (“<strong>RBC”</strong>).  The claim accuses RBC of touting its commitments to climate action while continuing to finance fossil fuel development.  It is an inquiry by the Bureau “seeking to determine the facts relating to allegations that RBC has contravened the Competition Act by making false or misleading environmental representations.<span style="font-size: 8pt;"><a href="#_ftn10" name="_ftnref10">[10]</a>” The inquiry and investigation by the Bureau are still underway.</span></p>
<p><strong><u>Other Sustainability Legislation: </u></strong></p>
<p><em>The Consumer Packing and Labelling Act</em> contains prohibitions against making false or misleading representations.<span style="font-size: 8pt;"><a href="#_ftn11" name="_ftnref11">[11]</a> </span><em>The Trademark Act</em> carries a prohibition against making materially false and misleading statements about the character, quality, quantity, composition, origin, production or performance of goods and services.<span style="font-size: 8pt;"><a href="#_ftn12" name="_ftnref12">[12]</a></span> The Canadian Advertising Standards Code states that Advertisements must not contain inaccurate, deceptive, or otherwise misleading claims, statements, illustrations or representations.  All representations must be supported by competent and reliable evidence.<span style="font-size: 8pt;"><a href="#_ftn13" name="_ftnref13">[13]</a></span></p>
<p><strong><u>Key Takeaways: </u></strong></p>
<p>Companies, including franchisors and franchisees should not refrain from enhancing their products and services that are consistent with sustainability.  In doing so, however, they must exercise caution in the scope and scale of their marketing activities.  Businesses making environmental claims should avoid bold, broad statements, and instead ensure they make claims which are specific and accurate. The following best practices should be followed, as highlighted by the Bureau.<span style="font-size: 8pt;"><a href="#_ftn14" name="_ftnref14">[14]</a></span></p>
<ul>
<li>Make sure your claims are truthful and are not misleading;</li>
<li>Make sure they are specific claims that are substantiated and verifiable;</li>
<li>Make sure they are not claims that either result in a misrepresentation, or an extreme exaggeration of the environmental benefits of your product; and</li>
<li>Do not imply your product is endorsed by a third-party environmental organization if it is not.</li>
</ul>
<p>At Sotos LLP, we advise franchisors and franchisees on all aspects of their business including their sustainability strategies. We would be happy to provide tailored advice on the applicable regulations and codes in place in the jurisdictions you are operating in and how they apply to your products or services.</p>
<p><strong><a href="https://sotosllp.com/people/john-sotos/">John Sotos</a>, Sotos LLP</strong></p>
<p>John Sotos is the founding partner of Sotos LLP and a dean of the franchising, licensing and distribution bar. John has been recognized by Chambers Canada, Canadian Legal LEXPERT Directory, Who’s Who Legal, and Best Lawyers in Canada as a leading Canadian franchise law practitioner. John can be reached directly at <a href="tel:4169779806">416.977.9806</a> or <a href="mailto:jsotos@sotos.ca">jsotos@sotos.ca</a> if you would like to discuss this or any other topic relating to the operation of your business.</p>
<p><strong>Don Houston, Sotos LLP</strong></p>
<p>Don is one of our articling students for the 2022-2023 term.</p>
<hr />
<p><span style="font-size: 8pt;"><a href="#_ftnref1" name="_ftn1">[1]</a> “Green Industry Analysis 2020- Costs &amp; Trends” <em>Franchise Help </em>2020, Online: https://www.franchisehelp.com/industry-reports/green-industry-analysis-2020-cost-trends/</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref2" name="_ftn2">[2]</a> Carlyann Edwards, “What is Greenwashing” <em>Business News Daily, </em>August 5<sup>th</sup> 2022. Online: https://www.businessnewsdaily.com/10946-greenwashing.html</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref3" name="_ftn3">[3]</a>      Talal Rafi, “Why Sustainability is Crucial for Corporate Strategy,” <em>Race to Resilience. </em>June 16<sup>th</sup>, 2022. Online: https://climatechampions.unfccc.int/why-sustainability-is-crucial-for-corporate-strategy/#:~:text=90%25%20of%20executives%20believe%20sustainability,consumer%20demand%2C%20and%20regulatory%20requirements.</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref4" name="_ftn4">[4]</a>     “Misleading Representations and Deceptive Marketing Practices” <em>Government of Canada. </em>Online: https://ised-isde.canada.ca/site/competition-bureau-canada/en/deceptive-marketing-practices/types-deceptive-marketing-practices/misleading-representations-and-deceptive-marketing-practices</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref5" name="_ftn5">[5]</a> “False or Misleading Representations” <em>Government of Canada. </em>Online: https://ised-isde.canada.ca/site/competition-bureau-canada/en/deceptive-marketing-practices/types-deceptive-marketing-practices/false-or-misleading-representations</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref6" name="_ftn6">[6]</a> Mia Rabson, “Keurig to pay $3 million fine for false, misleading claims on recycling of its K-CUPSs” <em>Toronto Star. </em>January 6<sup>th</sup>, 2022. Online: https://www.thestar.com/politics/2022/01/06/keurig-to-pay-3-million-fine-for-false-misleading-claims-on-recycling-of-its-k-cups.html</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref7" name="_ftn7">[7]</a> “Keurig to pay $3 million penalty to settle Competition Bureau’s concerns over coffee pod recycling claims” <em>Government of Canada. </em>January, 6<sup>th</sup> 2022. Online: https://www.canada.ca/en/competition-bureau/news/2022/01/keurig-canada-to-pay-3-million-penalty-to-settle-competition-bureaus-concerns-over-coffee-pod-recycling-claims.html</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref8" name="_ftn8">[8]</a> <em>Ibid</em></span><br />
<span style="font-size: 8pt;"><a href="#_ftnref9" name="_ftn9">[9]</a> “Keurig K- Cups” <em>Sotos Class Actions</em>. Online: https://www.sotosclassactions.com/cases/keurig-k-cups/</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref10" name="_ftn10">[10]</a> James Bradshaw, “Competition Bureau launches inquiry into RBC’s green advertising” <em>The Globe and Mail.</em> October 11<sup>th</sup>, 2022. Online: https://www.theglobeandmail.com/business/article-rbc-green-advertising-competition-bureau/</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref11" name="_ftn11">[11]</a> <em>Consumer Packaging and Labelling Act, </em>R.S.C., 1985, c. C-38</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref12" name="_ftn12">[12]</a> <em>Trademarks Act</em>, R.S.C., 1985, C. T-13</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref13" name="_ftn13">[13]</a> <em>The Canadian Code of Advertising Standards</em>, Ad Standards. 1963. Online: https://adstandards.ca/code/the-code-online/</span><br />
<span style="font-size: 8pt;"><a href="#_ftnref14" name="_ftn14">[14]</a> “Environmental Claims and Greenwashing” <em>Government of Canada. </em>Online: https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/publications/environmental-claims-and-greenwashing</span></p>
<p>The post <a href="https://www.sotosllp.com/2023/01/16/whats-the-deal-with-greenwashing/">What&#8217;s The Deal With Greenwashing?</a> appeared first on <a href="https://www.sotosllp.com">Sotos LLP</a>.</p>
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