Canadian Lawyer InHouse

7 CANADIANLAWYERMAG.COM/INHOUSE SEPTEMBER 2015 A roundup of legal department news and trends News Roundup Legal panel aims to update Ontario's business laws I n an effort to make Ontario a more com- petitive business jurisdiction, a panel of legal experts has made recommenda- tions to review outdated business legislation in the province. On July 9, the province released a report prepared by a panel of in-house, law firm lawyers, and law professors appointed by the minister of government and consumer ser - vices to consider reform of Ontario's corpo- rate and commercial legislation. The report makes recommendations in five areas: • Establishing a process to keep corporate and commercial law current. • Making Ontario a jurisdiction of choice for business. • Supporting greater market certainty and confidence in market transactions. • Modernizing laws relating to secured lending and other commercial activity. • Facilitating market activity and promoting small-business growth through greater certainty, clarity, and efficiency in busi - ness legislation. Panel member Carol Hansell of Hansell LLP would like to see a complete revamp of the Ontario Business Corporations Act. "I think the important thing, too, is to make sure there is a process to have all the statutes, but especially the [Ontario Busi - ness Corporations Act], updated regularly," she says. Hansell also believes the Limited Part- nerships Act should be revised to make On- tario more attractive for business by reduc- ing the risk of unlimited liability faced by limited partners in Ontario. "Typically, when we're structuring some- thing and we want to use a limited partner- ship, people go to Manitoba or B.C. and we end up having to hire an agent to do that because their act is better. There isn't any reason why our statute can't be updated," says Hansell. Other priorities identified for the Ontario Business Corporations Act include: • Facilitating electronic meetings and com - munications. • Greater certainty about the standards to which directors and officers are held, the liabilities they're exposed to, and the de - fences and protections available to them. • Determining how to make the rights and remedies to which registered holders are entitled available to the ultimate investor in the shares of a corporation. "We said investors would be more com - fortable in this jurisdiction if they knew they were going to have all the rights they should have as registered shareholders. That's a positive thing for the capital mar- kets," says Hansell. A review of the Personal Property Secu- rity Act is also at the top of the list and one Ken Fredeen, general counsel at Deloitte LLP, says needs serious attention. The report recommends a review of the act that would involve "taking account of legislative and case law developments in Canada, the United States, and elsewhere, and identifying opportunities for harmoni - zation with the other provinces." Deloitte was hired as a consultant to the review and Fredeen was asked to be on the steering committee. He recommended a number of general counsel be part of the panel as they have experience working with Ontario's business laws. "If all you're getting is external lawyers, you're going to get one side of the fence. General counsel deal with this stuff all the time and they will bring a different perspec - tive," he says. The other general counsel members on the panel include Gordon Davies of Open- Text Corp. and Sheila Murray of CI Finan- cial Corp. Fredeen says he was also interested in the broader issue of making sure Ontario stays competitive. "The less bureaucracy you have, the quick - er things can happen. The easier these laws are to adapt to the changing business envi- ronment, the better for everyone," he says. The report also recommends updating the Arthur Wishart Act that deals with franchise disclosure to create more disclo - sure certainty for users. The act hasn't been updated since it came into force 15 years ago. "It would create greater certainty between the franchisor and franchisee. In a world where increasingly that's how business is done, I think it's an imperative," says Fredeen. The panel heard from a number of business law experts who provided input, including Andraya Frith, chairwoman of Osler Hoskin & Harcourt LLP's national franchise and distribution practice group, who says there needs to be greater certainty in the Arthur Wishart Act. Frith says it's becoming increasingly challenging to comply with the franchise legislation in Ontario and have confidence a franchise disclosure document is compliant. That's because of trends in case law and the way the language in the act has been interpreted, particularly around what she calls the "open-ended concept of all other material facts" needing to be disclosed. "Ontario is one of the only franchise stat - utes in the world that has that very open- ended and highly subjective standard of having to disclose all other material facts," says Frith. That means the days of providing a generic disclosure document to a candidate and updating it annually or when there is a material development are over. "Where the courts are saying the franchisees need site-specific information about their particular franchise, there is some compounding effect of the need to have a highly customized disclosure document that increases the cost significantly for any franchisor for each site and each candidate," she says. "There's also no guidance in the legislation as to what that information ought to include." There's also no provision in the act for electronic delivery of documents. The minister of government and con - sumer services is seeking input until Oct. 16, 2015. IH KEN FREDEEN

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