Having a strong legal team that focuses on M&A transactions is essential (https://open.spotify.com/episode/2LKUE9a33zP5vixfybMypD?si=K75OevURSSu1Z7M2g38uzw), but that team extends further than the M&A lawyers themselves. Working with a team that can provide a full range of services (or who also can integrate well with specialized legal counsel where required or existing advisors, such as chartered business valuators and accountants) can help ensure that a transaction remains on track and closes smoothly. Below are a few examples of how in our experience at FREEDIN & ROWELL that integration plays out over the course of an M&A transaction:

1. Employment – All M&A transactions have an element of employment law to address. Be it preparing new or revised offers of employment, ensuring that offers of employment are being made on the same or substantially similar terms as employees currently enjoy, termination matters or addressing labour items, lawyers who focus only on these areas can help to provide tailored advice and solutions to manage the transition process effectively.
   
   
2. Intellectual Property – Intellectual property matters often arise during transactions. Be it ensuring that moral rights are appropriately with the target business, conducting Canadian, US or initial intellectual property title searches to ensure that the target business inventories and retains its assets or ensuring that sufficient licensing is addressed, strong intellectual property lawyers can help address these items early to ensure a smooth closing process.
   
   
3. Pre-Closing Reorganization – Often vendors undertake a pre-closing reorganization of their corporate structure to ensure optimal tax treatment of sale proceeds. Lawyers that are able to quickly maneuver to review, advise and implement such structures, working closely with the client’s advisors, can ensure that closing is kept well on track.
   
   
4. Real Estate / Leasing / Secured Lending – Often real property is involved as part of a transaction either as an asset of the target business or a leasehold from which the target business operates. Real estate counsel can help ensure that those interests are protected to ensure business continuity post-closing, by transferring title to real property not being retained post-closing, negotiating with landlords, drafting leases for a lease back of property by the purchaser from the vendor post-closing as well as addressing lending requirements, be it on behalf of the purchaser with their secured acquisition financing or addressing bank subordination requirements on behalf of the vendor, in a specialized way that helps to keep closing expectations aligned.

The examples above are but a few of the ways that our M&A team integrates well with the full team at the firm to ensure that the transaction is well managed. The M&A lawyer is similar to a quarterback on a transaction – addressing the key legal steps and materials required to effect the acquisition or sale of a business – while involving such specialists as required to get the transaction closed for you, the client. If you have any questions regarding this or any aspect of your business, please do not hesitate to get in touch with me at 905.276.0431 or kfernandes@freedinrowell.com. We are here to help.

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Why CASL Compliance Matters for SMBs

Many SMBs rely heavily on digital marketing, i.e., emails, text messages, and social media, to connect with customers. However, CASL imposes strict requirements on sending commercial electronic messages (CEMs). A misstep, such as failing to obtain proper consent or using deceptive marketing tactics, can result in fines up to $10 million per violation. More importantly, non-compliance can erode trust, making it harder for businesses to build strong customer relationships.

Understanding CASL and implementing best practices will not only keep your business legally compliant but also help establish credibility and improve customer engagement.

DOs: Best Practices for SMBs

1. Obtain Express or Implied Consent
   SMBs should always get clear permission before sending marketing messages. Express consent requires an opt-in mechanism, either written or verbal, where customers knowingly agree to receive messages. Implied consent can be inferred to an existing business relationship. Implied consent applies only in limited situations, such as when a customer has made a purchase within the last two years. Additionally, SMBs should be mindful of the time limits on implied consents which may range from 6 months to 2 years following the last transaction between the customer and the business.
2. Clearly Identify Your Business
   Customers need to know who is contacting them. Each CEM must include the sender’s name, business name, mailing address, and a valid contact method such as an email, phone number, or website.
3. Include a Simple Unsubscribe Option
   SMBs must ensure that every marketing email or message contains a clear, prominently displayed and functional unsubscribe link. The unsubscribe link or alternative mechanism must be accessible to the recipient for 60 days following receipt of the CEM containing it, and requests to unsubscribe must be honored within 10 business days, without requiring additional steps from the recipient.
4. Keep Records of Consent
   Document all instances of consent, including when and how customers opted in. Proper record-keeping is crucial in case your business ever faces a CASL compliance investigation.
5. Ensure Transparency in Marketing Messages
   SMBs must avoid misleading subject lines or deceptive messaging. CASL prohibits false representations in any marketing content, meaning messages should accurately reflect their purpose.

DON’Ts: Mistakes That Can Cost SMBs

1. Don’t Assume Implied Consent Covers Everything
   Relying too much on implied consent is risky and time-limited. If a customer hasn’t purchased from you in over two years, you need fresh consent before sending promotional emails.
2. Don’t Use Pre-Checked Consent Boxes
   Customers must actively opt in to receive messages. Using pre-checked boxes or automatic subscriptions violates CASL and could result in penalties.
3. Don’t Ignore Third-Party Marketing Services
   If your business uses an external agency for email marketing, ensure they follow CASL regulations, including proper identification of your business. SMBs are legally responsible for messages sent on their behalf.
4. Don’t Hide Your Identity
   Some businesses try to mask their identity to avoid spam filters. This is illegal under CASL. Always be transparent about who is sending the message by including the sender’s name, your business name and contact information.
5. Don’t Assume CASL Enforcement Won’t Affect SMBs
   While larger companies have received some of the biggest fines, small businesses are not exempt from CASL enforcement. Regulators target all businesses that violate the law, regardless of size.

How SMBs Can Stay Ahead

CASL compliance isn’t just about avoiding fines, it’s about fostering customer trust and engagement. SMBs that follow CASL’s best practices will benefit from a stronger reputation, higher customer retention, and more effective marketing campaigns. By implementing the right policies now, small and medium-sized businesses can avoid legal troubles and build sustainable, long-term relationships with their customers.

If you have any questions about Canada’s anti-spam legislation, or need guidance tailoring your marketing practices to meet regulatory standards, please contact Layla Makhzoumi (lmakhzoumi@freedinrowell.com) or Jonfranco Monaco (jmonaco@freedinrowell.com).

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With the above shift and changes to the Business Corporations Act (Ontario) and related corporate disclosure legislation, Ontario corporations must ensure their records are maintained and current.  To be compliant with disclosure and record keeping requirements (largely contained in Part XI of the Business Corporations Act (Ontario)), Ontario corporations (even if privately held) are required to file the separate OAR, complete an “individuals with significant control” register (“Transparency Register”) and keep their minute books up-to-date.

Below is a brief overview of steps in the annual maintenance process:

• Annual Meeting: Ontario corporations are required to approve certain transactions/business conducted on an annual basis; this can be completed either at a formal meeting of the shareholders and directors respectively.  or by way of written resolutions. Most privately held corporations fall under the latter option. The business to be transacted includes the following:
  • approving the financial statements of the corporation for the most recent fiscal year end;
  • appointing the corporation’s accountant/auditor (as the case may be);
  • waiving shareholder(s) audit rights;
  • authorizing payments of management bonuses (if any); and
  • declaring dividends (if any).

Properly recording this information ensures the affairs of the corporation are accurately reflected and documented.

• Transparency Register: Ontario corporations are required to maintain a register of shareholdings, tracing back to the individuals with significant control, and kept and maintained in the minute book of the corporation. For more information on Transparency Register requirements, you can view the article by Matthew Czerwinski here: New Requirements for the New Year: Transparency Register for Ontario Corporations – FREEDIN & ROWELL LLP.

• Real Property Register: Ontario corporations are required to maintain a register of their ownership interests (applicable to ownership interests in real property which are located in the Province of Ontario) and (a) identify each property; and (b) show the date the corporation acquired the property and, if applicable, the date the corporation disposed of it, together with retaining supporting documents, including: (i) a copy of any deeds, transfers or similar documents that contain any of the following with respect to each property listed in the register: the municipal address (if any), the registry or land titles division and the property identifier number, the legal description, and the assessment roll number (if any). This Real Property Register is required to be reviewed on a regular basis.

• OAR: Ontario corporations are required to file the OAR on an annual basis, as described and noted above.

Similar to Ontario corporations, the annual corporate return filing has been in place for federal corporations (governed by the Canada Business Corporations Act) for several years. Federal corporations should take special care to file their corporate returns on an annual basis to avoid the risk of administrative dissolution by Corporations Canada.

FREEDIN & ROWELL offers assistance to business owners in maintaining their corporate records, filing OARs, and complying with record-keeping requirements as part of our corporate compliance work. If you have any questions regarding corporate compliance requirements, or any aspect of your business, please contact Kevin Fernandes at kfernandes@freedinrowell.com.

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The ESCE are time limited and are a part of the OSC TestLab program which is designed for testing capital market innovations and regulatory approaches to foster growth, innovation and business models in a controlled environment. In addition to the ESCE, the OSC also approved an extension of the Self-Certified Investor Prospectus Exemption. To alleviate the burdens that early-stage businesses face in Ontario, the exemptions seek to increase access to raising capital in fair and efficient means while upholding robust investor protection mechanisms. The ESCE are described below:

• Early-Stage Businesses Registration Exemptions – Ontario Instrument 32-509 – This exemption allows eligible early-stage businesses in Ontario to be able to conduct certain marketing activities while raising capital. To qualify as an eligible business, an issuer, amongst other requirements, must: (a) have its head office and operations in Ontario; (b) be in the developmental stages of its business; (c) have fewer than 100 employees; (d) have a primary purpose that is not investing in real estate, mortgages, other businesses, or other assets; and (e) not hold, invest in, or trade crypto assets. The OSC recognizes that some early-stage businesses may wish to raise money themselves or use a dealer. As a result, in addition to the previous requirements, early-stage businesses must also notify the OSC of their intent to use the dealer registration exemption to distribute their securities. If a business issues securities without a dealer, then the business must deliver to the OSC a completed Form 32-509F1 and the aggregate amount of funds that can be raised is $3,000,000 from selling eligible securities. For more information on this exemption including definitions, reporting requirements, and relevant forms: Ontario Instrument 32-509 Early-Stage Business Registration Exemption (Interim Class Order) (osc.ca).

• Not-for-Profit Angel Investor Group Registration Exemptions – Ontario Instrument 32-508 – Angel investor groups play a critical role in capital raising by bringing together sophisticated investors and early-stage businesses. This exemption will allow the groups to introduce Ontario early-stage businesses seeking capital to their members; make information regarding the businesses available to their members; facilitate their members’ due diligence in the businesses; hold regular meetings for the businesses to present their business to their members; keep their members up-to-date on the business; and provide educational resources. To be exempt from the dealer registration requirement (among other criteria) an angel investor group must: (a) be primarily organized for not-for-profit purposes; (b) operate from, and have its head office in, Ontario; (c) not have more than 500 members, each of whom is an accredited or self-certified investor; and (d) not be registered under any securities legislation. This exemption also entails a transaction-based compensation restriction as angel investor groups must limit their compensation to a maximum of 5% of the value of the invested securities. For more information on this exemption including definitions, reporting requirements, and relevant forms: Ontario Instrument 32-508 Not-for-profit Angel Investor Group Registration Exemption (Interim Class Order) (osc.ca).

• Extension of the Self-Certified Prospectus Exemption – OSC Rule 45-508 Extension to Ontario Instrument 45-507 Self-Certified Investor Prospectus and Ontario Instrument 45-509 Report of Distributions – This initiative is an extension of Ontario Instrument 45-507 which allows individuals who may not meet the definition of an accredited investor to invest in early-stage companies on a prospectus-exempt basis. Once investors have been deemed qualified, the aggregate investments across all securities for a single investor is a maximum of $30,000. Further, in an attempt to reduce the regulatory burden of quick reporting and fee payments, the OSC no longer applies them to distributions an issuer makes of their own securities. To qualify, an issuer must complete and deliver Form 45-509F1 within 30 days of the end of the reporting period an issuer relied on Ontario Instrument 45-507. For more information on these exemption including definitions, reporting requirements, and relevant forms: OSC Rule 45-508 Extension to Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption; Ontario Instrument 45-509 Report of Distributions under the Self-Certified Investor Prospectus Exemption (Interim Class Order) (osc.ca).

These initiatives mark the beginning of a more investor-friendly ecosystem in the startup space in Ontario. The ESCE facilitate access for small businesses to raise capital and make it easier for investors to seek investment opportunities. For more information on certain of the pre-existing prospectus exemptions please see our previous article: https://www.freedinrowell.com/osc-raising-capital-exempt-market/.

We at FREEDIN & ROWELL are experienced at drafting the appropriate legal documentation required to effect the sale, trade, or distribution of securities through an exempt distribution, in a cost-effective manner that enhances value for you, the client. If you have any questions regarding this or any aspect of your business, please do not hesitate to get in touch with me at 905.276.0431 or kfernandes@freedinrowell.com. We are here to help.

The post Empowering Early-Stage Ventures: Innovative Exemptions for Raising Capital in Ontario appeared first on FREEDIN & ROWELL LLP.

An increasingly popular method of addressing the risk allocation issue has been representations and warranties insurance (“RWI”), which gives Purchasers the ability to claim against an insurance policy if there has been a demonstrable breach by a Vendor of the representations and warranties in a purchase agreement. RWI facilitates easier negotiation of representations and warranties and considerably reduces the parties’ risk in M&A transactions.

Traditionally, RWI has almost exclusively been used on large transactions because insurance companies charge a minimum premium that makes the cost unaffordable on smaller transactions. However, new simplified RWI policies (“SRWI”) specifically designed for lower mid-market transactions (from $250,000 in purchase price and up) are increasing the uptake in the market for RWI.

SRWI products may not be right for all transactions, but it does allow for a Vendor to, in many senses, “walk-away” after closing and give a Purchaser certainty and comfort on the state of the target company going forward. SRWI is so much cheaper than the traditional RWI product because it does not require an underwriting call and has a simplified diligence process for the insurers – resulting in a policy cost in the thousands or tens of thousands, rather than hundreds of thousands of dollars.

In practical terms, SWRI may help a Purchaser stand out during a competitive M&A bid process and may help a Vendor achieve the certainty of exit (onto the next phase of their lives) they intended when agreeing to sell their business. This tends to result in a simplified negotiation and closing process for both parties, predictable closing proceeds for Vendors and an insurer to turn to in the event of a claim post-closing. Given these benefits, together with the popularity of RWI south of the border, interest in SRWI continues to grow even as early as the marketing document, term sheet or letter of intent stage.

SRWI may be a valuable tool in the parties’ toolkits to get deals done, reduce transaction risk and build momentum between the parties for a productive ongoing relationship.

The post De-Risking Small – Medium M&A Transactions appeared first on FREEDIN & ROWELL LLP.

However, with recent economic pressures, particularly in the housing and grocery sectors, consumers do not always seem to experience these advantages. Such circumstances have, historically, prompted government intervention. In this article, we provide an overview of Canada’s competition regulatory framework and explore the significance of Bill C-56, a novel legislative initiative designed to boost competition in the Canadian economy for both businesses and consumers.

The Competition Act establishes the legislative framework empowering the Competition Bureau, a federal agency, to investigate and address activities hindering competition, such as price-fixing, market power abuse, and deceptive marketing practices. The Competition Bureau and the Competition Act are pivotal in ensuring fair and competitive markets in Canada.

The Competition Bureau has broad powers under the Competition Act to investigate and prevent anti-competitive behaviour, as well as to bring enforcement matters before the Competition Tribunal. Recently, the federal government introduced proposed legislation known as Bill C-56, the Affordable Housing and Groceries Act, aiming to amend both the Excise Tax Act and the Competition Act to enhance competition and lower grocery prices in Canada. This bill proposes three significant developments:

1. Introduction of Formal Market Investigation Powers: Bill C-56 proposes the introduction of formal market investigation powers, allowing the Minister of Innovation, Science and Industry (a federal cabinet minister) to direct the Commissioner of Competition (of the Competition Bureau) to inquire into the state of competition in any market or industry if it is deemed in the public interest, based on that inquire being completed within an 18 month period. This market inquiry power provides the Competition Bureau with enhanced authority to compel the production of otherwise unobtainable information.
2. Removal of the Efficiencies Defence in Mergers:  The efficiencies defence, which comes from Section 96 of the Competition Act, allows an otherwise anti-competitive merger to proceed if the economic efficiency gains outweigh the merger’s anti-competitive effects. This defense has long been a contentious issue within Canada’s competition regime. Bill C-56 definitively addresses this by repealing Section 96 and removing the defence, though it’s important to note that this removal applies only to mergers.
3. Empower the Competition Tribunal to Block Non-Competitor Collaborations: Prior to Bill C-56, the Competition Tribunal (“the Tribunal“) could issue prohibition orders to prevent anti-competitive agreements between competitors that would substantially weaken competition. Bill C-56 broadens this power, allowing the Tribunal to issue prohibition orders not only for agreements between competitors but also for agreements between non-competitors that would have anti-competitive effects in Canadian markets.

Bill C-56 has the potential to be a game-changer for businesses of all sizes in Canada. With its formal market investigation powers, the removal of the efficiencies defence in mergers, and an empowered Competition Tribunal, this bill is a potent tool capable of leveling the competitive playing field.

While it may appear targeted to a select few industries, Bill C-56 extends beyond affordable groceries and housing; it aims to foster an environment where innovation, efficiency, and choice thrive, benefiting not only businesses but all Canadians. However, as with any legislative step, the implementation phase is key. This includes the interaction between the Minister of Innovation, Science and Industry and the Competition Bureau, as well as how the Competition Tribunal will interpret its new powers. At this stage, no particular industry can be certain about where these powers will be focused or what impact they will have on Canadian and international supply chain, retailer and regulatory dynamics.

Written by: Kevin Fernandes and Jonfranco Monaco

The post Bill C-56 Amendments to the Competition Act appeared first on FREEDIN & ROWELL LLP.

Vendor Financing: Often a vendor may agree to finance the difference in perceived value by entering into a vendor financing arrangement, which can help close the goodwill gap and act as a capital buffer for the purchaser. Under a vendor financing arrangement, the vendor and purchaser enter into a loan agreement, where that loan is subordinated to bank financing, and the details of which (i.e. repayment period, interest rate, and loan amount) are negotiated between the parties. The benefit of this arrangement is the vendor has a continued interest in the business to ensure the loan is repaid, thus keeping their goodwill close to the business, and for both parties, the necessary capital is available to close the deal.

Retaining Equity: An equity roll serves as another method by which a purchaser and vendor can address a difference of opinion over the valuation of a business. Particularly in cases which require lender financing, an equity roll, where the vendor retains equity in the business being sold, is sometimes perceived by lenders (and purchasers) as a way to reduce the risk of a loss of goodwill by keeping the vendor involved with the business. Consequently, this arrangement allows the purchaser to be more flexible with regard to price/valuation. It also provides the vendor with a true up mechanism on value, and potential up-side in the event the business demonstrates strong performance.

Earn-Out: An earn-out mechanism is a practical strategy that allows a vendor to bet on the future success of the business and be compensated accordingly within the confines of the measurable targets for the business to achieve. An earn-out can be a win-win for both parties if the targets are reached with pre-determined risk that if the targets are not reached, the vendor will not receive additional compensation. The main benefit of an earn-out is that it is a low-risk strategy for a purchaser but a high-risk, high-reward strategy for a vendor that aligns the parties around the continued success of the business.

The above process can be simplified by engaging a mergers and acquisitions firm, including the services of a chartered business valuator. This is a typical method to produce an independent valuation of the business. When structuring a transaction, objective professionals can help close the gap between concepts of value of the vendor and purchaser, as well as provide real-time data and market information as it relates to industry and market trends. Such professionals may implement a number of methods to value the business including earnings-based, market-based, and asset-based methods. Hiring a professional can be a reliable strategy for small to medium-sized private businesses to resolve vendor and purchaser valuation disputes.

Finding common ground on the valuation of a business between a vendor and purchaser can make or break a deal. The above strategies are ways to achieve common ground on the valuation of the business and may help to move the parties toward the ultimate goal of closing the deal.

We at FREEDIN & ROWELL, LLP are experienced at drafting the appropriate legal documentation to structure the purchase or sale of the business. If you have any questions regarding this or any aspect of your business, please do not hesitate to get in touch with us at 905.276.0431 or kfernandes@freedinrowell.com. We are here to help. 

The post Bridging a Valuation Gap in M&A Transactions appeared first on FREEDIN & ROWELL LLP.

The Transparency Register is similar to existing requirements for federal corporations and those in other Canadian provinces. The new amendments aim to increase transparency concerning corporate ownership and provide law enforcement and regulatory authorities with information to prevent and detect tax evasion, money laundering and other illegal activities.

Who is an ISC?

Under the OBCA, a person is considered an ISC if the individual:

1. is the registered or beneficial owner of, or has direct or indirect control or direction over:

• any number of shares that carry 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares; or

• any number of shares equal to 25% or more of all of the corporation’s outstanding shares measured by fair market value.

2. has any direct or indirect influence that, if exercised, would result in control in fact of the corporation; or

3. is an individual to whom prescribed circumstances apply (this allows for future regulations to provide further classes or groups of ISCs)

Additionally, two or more individuals may qualify as an ISC if: (i) an ownership interest or right in shares meeting the above threshold is held jointly by those individuals; (ii) a right in shares is exercised jointly or in concert by those individuals; or (iii) the individuals holding the ownership interests or rights are “related persons”, as defined in the OBCA (such as spouses and children).

What is included in a Transparency Register?

The Transparency Register must be held at the registered office of the corporation or another place designated by the director elsewhere in Ontario, and contain the following information:

1. the name, date of birth, last known address of each ISC;
2. the jurisdiction of tax residence for each ISC;
3. the day each ISC became or ceased to be an ISC; 
4. a description of how each person qualifies as an ISC; and
5. a description of the steps taken to identify ISCs and confirm the information in such register is accurate, complete and current.

The director(s) and/or officer(s) of a corporation must review and update (as may be necessary) the Transparency Register at least once per fiscal year. Further, the director(s) and/or officer(s) of a corporation must update its Transparency Register within 15 days of becoming aware of any information required to be in the Transparency Register.

Who can access a Transparency Register?

Unlike other corporate information, the OBCA amendments do not require the Transparency Register be filed with the ministry, nor require disclosure to shareholders or creditors. However, the new requirements permit the following persons to request access to the Transparency Register:

1. the Minister, and its authorized representatives for compliance purposes;
2. law enforcement, for the “purpose of conducting an investigation into an offence under a law of Ontario or Canada”, or to provide information to a law enforcement agency outside of Ontario for a similar purpose;
3. tax authorities, for the “purpose of administering or enforcing a law of Ontario or Canada that provides for the imposition or collection of a tax, royalty or duty”, or to provide information to officials of another jurisdiction for a similar purposes; and
4. designated regulatory authorities (including but not limited to, the Ontario Securities Commission (OSC), Financial Services Regulatory Authority of Ontario (FSRA) and Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)) for the “purpose of administering or enforcing a law for which the regulatory body is responsible”, or assisting other agencies with similar mandates.

What are the Penalties for Non-Compliance?

There are significant penalties for a corporation that, without reasonable cause, fails to comply with the new provisions under the OBCA to prepare and maintain a Transparency Register, respond to inquiries, or meet disclosure requirements. The corporation may be liable for a fine of up to $5,000.00 and fines of up to $200,000.00 and/or six months improvement can be imposed on directors, officers and shareholders who knowingly fail (or cause the corporation to fail) to comply with the Transparency Register requirements.

Next Steps for Ontario Private Corporations

To ensure compliance with these new requirements, Ontario private corporations should: (i) review their existing shareholder register, (ii) identity their ISCs (if any), (iii) gather and record the necessary information on each ISC, and (iv) develop a process to ensure their Transparency Register is accurate, complete, and current.

If you have any questions regarding the new ownership transparency requirements, or any aspect of your business, please do not hesitate to get in touch with me at 905-276-0416 or mczerwinski@freedinrowell.com. FREEDIN & ROWELL is here to assist.

The post New Requirements for the New Year: Transparency Register for Ontario Corporations appeared first on FREEDIN & ROWELL LLP.

Prohibited Items

1. The first group of items targeted are checkout bags, cutlery, foodservice ware, stir sticks and straws.
2. The second group of items targeted are ring carriers.
3. The final group of items are flexible straws packaged with beverage containers.

For greater certainty, these items are defined in s.1 of the SUPPR with technical specifications that include design and chemical composition. Section 1 of SUPPR is also supplemented by additional Technical Guidelines with additional chemical composition, manufacturing and technical terminology. In order to have any item listed designated as reusable/multiuse, the Government has provided a testing scheme which must be conducted using an accredited laboratory under ISO/IEC Standards.

Timeframe for Bans

On December 20, 2022, both the manufacturing and importing of any of the prohibited items from the first group for sale in Canada became illegal. On December 20, 2025 it will be illegal to both manufacture or import single use plastics for export. On June 20, 2023, it will become illegal to manufacture plastic ring carriers for the purposes of sale in Canada. On June 20, 2024, it will become illegal to sell these in Canada and on December 20, 2025 it will be illegal to manufacture, sell and export plastic ring carriers.

Lastly, there is no ban on the manufacturing of flexible plastic straws during 2023. However, In June 2024 it will be illegal to sell flexible plastic straws packaged with drinks with a ban on exportation coming in December 20, 2025 just as it has for the other groups of items with some exceptions.

Exceptions for Flexible Straws

Flexible plastic straws will have some flexibility, in how they are treated. For example, Individuals will be able to sell flexible plastic straws in non-commercial, industrial and institutional settings. Additionally, businesses will be permitted to sell plastic straws to other businesses in packages of twenty (20) or more. Businesses may also sell to individuals in packs of twenty (20) or more but cannot be on display or accessible without the assistance of an employee. Lastly, there is an exception for healthcare providers such as hospitals who will require them for patient care.  

Compliance

In order to ensure compliance with each ban phase, the SUPPR requires strict record keeping requirements. These requirements impose different restrictions for persons that manufactures single use plastics for the purpose of exporting or those who import single use plastics for the purpose of exporting them. These requirements include but are not limited to, recording pertinent dates, quantity and trade names of the plastics. Persons will be required to keep these record at their principle place of business in Canada for five (5) years. If these records are move they must notify the Minister of the Environment within thirty (30) days of the new civic address.

This article was written with the assistance of our articling student Adam Nangini.

The post Single Use Plastics Prohibition Regulations SOR/2022-138 appeared first on FREEDIN & ROWELL LLP.

• Family – A potential ownership successor may be right under the current owner’s nose… in their own family. For family operated businesses unique drivers motivate a transition to the next generation, be it the continuation of the family legacy or to allow for a certain degree of retained control/influence post-closing. A number of strategies exist to assist with that transition, be it on a tax efficient estate freeze to a family member(s) or by structuring favourable deal terms to ease with the transition to the purchaser (such as a reduction in the sale price from market).

• Management – A management buyout is another typical structure that business owners use where they transition ownership to the existing management of the business. Often these types of transactions are structured on more favourable deal terms to ease with the transition to the purchaser (such as deferred payment of the purchase price). Those in existing management positions typically know the most about the business (certainly more than a third party), require limited time for due diligence and tend to be friendly parties to work with, which is favourable to structuring a deal that will close. Management (in addition to family) may also be in a position to assume existing business debt and service it over the long term through ongoing operations, more so than a third party purchaser.

• Industry Associates – Those that operate businesses in related, up/downstream or directly competitive industries may have existing relationships with the owner and accordingly may be a strategic fit for a sale. While the due diligence process may be more robust than the first process, the existing relationship between the parties may lead negotiations toward being amicable and more reasonable than those with a third party purchaser. There can be strategic reasons for these types of transactions and can help the seller feel comfortable about who will manage the business post-closing as well as provide the seller with a transition period out of active operations.

• Market Based Process – Transaction brokers can be an invaluable resource to assist an owner with both identifying and targeting a strategic purchaser, unbeknownst to the owner, that may be a strong fit with the existing business and who may pay an increased purchase price in consideration for that value. Working with a broker can assist with identifying market trends and opportunities for positioning the business for sale in a way that best reflects its value in the market. Business brokers are also familiar with deal making and accordingly are well suited to support an owner with the transaction process and transition period dynamics.

Determining which of the above processes might be most appropriate is highly case specific. However, a strong starting point is a third party valuation which can both identify strengths as well as areas for improvement. The valuation can also help with setting a yardstick for the seller’s expectations regarding price. There are a number of strategies to bridge potential gaps in perceived value between a purchaser and a seller (such as an earn-out), but setting the starting point with impartial data helps set a sturdy foundation for negotiations.

We at FREEDIN & ROWELL are experienced at drafting the appropriate legal documentation required to effect the acquisition or sale of a business, in a cost effective manner than enhances value for you, the client. We work in a team-based manner together with your valuator, accountant and broker. If you have any questions regarding this or any aspect of your business, please do not hesitate to get in touch with me at 905.276.0431 or kfernandes@freedinrowell.com. We are here to help.

The post Looking to Transition Your Business? Great! Now, Where to Look? appeared first on FREEDIN & ROWELL LLP.