An entrepreneur who invests time and energy raising the funds necessary to launch a startup, usually from family and friends (love money), will necessarily want their startup to grow exponentially. Achieving exponential growth requires always more capital, and so the entrepreneur will need to find additional sources of financing. One of these could be venture capital financing. For an entrepreneur, going this route may seem daunting, but if well prepared, it can also be a very wise choice. Here are the steps to take in order to succeed in a round of venture capital financing and get the most leverage out of this type of financing. What is venture capital? Venture capital is a non-guaranteed equity investment, made with an investment horizon of typically five to ten years, with a view to realizing an exponential gain and participating in the strategic decisions of the startup in which the capital is invested. Investors who provide venture capital do not undertake to play a passive role—quite the opposite! Entrepreneurs who opt for such financing must be prepared to exchange ideas with investors and justify certain decisions they intend to make as managers. On the flip side, they’ll also benefit from their investors’ advice and networks. Application for financial assistance Once you’ve grasped how venture capital works and resolved to resort to it, you’re ready to launch a round of financing with one or more potential investors. Our advice: don’t wait until you really need the funds to take this step. As soon as your startup takes off, get into networking mode! Meet with dozens of investors and present your vision, team and business plan. Investors will be more interested in your vision, talent and the growth potential of your business than in its current results, and they will probably be as much interested in these aspects as they are in your business plan. And if things don’t immediately go your way, don’t give up! Often all it takes is for one investor to bet on you for others to follow. Letter of intent If the ?nancing round is well received, investors will con?rm their interest by submitting a letter of intent. A letter of intent states an investor’s intention to invest under certain conditions, but it doesn’t constitute a binding undertaking. It will set out the terms and conditions of the proposed investment (form of investment, subscription price, etc.) which, while not binding on the investor, are nonetheless binding on the company once it has accepted them. Once an entrepreneur has accepted a letter of intent, it may be very dif?cult to get the investor to waive the rights granted in their favor by the letter. Due diligence Once the letter of intent is agreed to, the investor will conduct a due diligence review on the company. A due diligence investigation allows an investor to better assess the legal, ?nancial and other risks associated with a startup and validate certain statements or assumptions stated in the company’s business plan. In a due diligence review, the following will usually be scrutinized, among others : Accounting and corporate records Material contracts Intellectual property (patents, trademarks, etc.) Disputes involving the company Environmental aspects Negotiation of final agreements Generally speaking, in venture capital ?nancing, two main acts key documents will con?rm the terms of the agreement between the company and the investor: a subscription agreement and a shareholders’ agreement. A subscription agreement is a document similar to a share purchase agreement, except that it isn’t concluded with a shareholder but with the company itself. It speci?es the form of the subscription (common shares, preferred shares, subscription rights, etc.) and contains numerous representations and warranties on the part of the company for the bene?t of the investor, as well as an undertaking to indemnify the investor should one of the representations or warranties prove to be false and cause a loss for the investor to suffer prejudice. A shareholders’ agreement is a document signed by all the shareholders of a company and the company itself. Typically, such an agreement determines who will sit on the board of directors and how it will operate. It contains a number of clauses that govern the issuance and transfer of the company’s shares and grants the investor a right of oversigh —and often even veto power—over certain decisions. Closing Once the ?nal agreements are negotiated, closing can take place. At the closing, the parties will sign all relevant documents agreements and certi?cates, including the subscription agreement and shareholders’ agreement, and deliver the documents required to meet all conditions. The parties will also sign the subscription agreement and shareholders’ agreement. The company’s lawyers will provide a legal notice opinion to con?rm to the investors that the securities subscribed to are validly issued, that the company has the legal capacity to enter into all the agreements prepared by the investor’s legal counsel, that the agreements have been duly approved, and that the signatory has the authority to sign the agreements and bind the company. A forewarned entrepreneur is forearmed! You now understand that for an entrepreneur, the secret of a successful ?nancing round lies in being properly prepared, being realistic about investors’ expectations and requirements, and having a large dose of con?dence in the business. If you’ve started to solicit ?nancing from potential investors or are planning to do so soon, there’s still time to get legal advice to avoid unpleasant surprises at a critical moment.
- Québec, 1990
André Paquette is a partner in the Business law group. His practice encompasses numerous areas of corporate law and focuses primarily on mergers and acquisitions, business financing, and corporate structuring, including non-share capital corporations and not-for-profit organizations.
Drawing on his extensive expertise, experience, and business acumen, Mr. Paquette advises and assists Canadian and foreign companies in the legal aspects of sales and acquisitions of businesses and other strategic commercial transactions and operations, helping them to achieve their objectives while adopting a risk management strategy in line with their specific circumstances.
- Advise the buyer in the acquisition of a Canadian manufacturer of precision machined parts for the aircraft industry
- Advise Hachette Distribution Services (Canada) in the acquisition of a Québec food products distributor
- Member of the legal team that advised the buyer in the acquisition of the Montréal Canadiens and the Bell Centre
- Advise the buyer in the acquisition of a shareholder’s interest in a software development firm
- Advise a research and development centre in successive funding rounds and various agreements with strategic partners
- Legal counsel in the context of acquisitions and reorganizations in the financial services industry
- Advise L’Aréna des Canadiens Inc. in the acquisition of Spectra, promoter of the Montréal International Jazz Festival, the Francofolies de Montréal, and the Montréal en lumières festival
- Advise GDI Integrated Facility Services, a Canadian leader in facility services, in its first expansion into the United States and various acquisitions in Canada
- Advise Lagardère Services in the reorganization of its retail operations and the distribution of printed materials in Canada
Professional and community activities
- Former chair of the Finance committee of the Château Ramezay
- The Best Lawyers in Canada in the field of Mergers and Acquisitions Law, 2022
- B.C.L. and LL.B., McGill University, 1989
Boards and Professional Affiliations
- American Bar Association, business law section
CONTENTS Requirements for ITC and ITR claims: A judgment of the Court of Québec sets the record straight Restrictive covenants transactional context vs. employment context Patrimony protection and transmission liquidator of a succession: what do you do? The Bagtech case, or the impact of a unanimous shareholder agreement on the status of canadian-controlled private corporation REQUIREMENTS FOR ITC AND ITR CLAIMS: A JUDGMENT OF THE COURT OF QUÉBEC SETS THE RECORD STRAIGHTPhilippe Asselin and Jean-Philippe LatreilleIn the past few years, the Agence du revenu du Québec (“ARQ”) has acted aggressively towards any taxpayers whom it suspects of being involved in a “false invoicing scheme”. However, a crack seems to have appeared in the position generally held by the ARQ on this issue as a result of a recent decision by the Court of Québec in the case of Système intérieur GPBR Inc.The facts of this case are typical of files of this nature: a building contractor was denied input tax refunds (“ITRs”) it had claimed on the grounds that it did not meet the legal requirements for obtaining them, and because some of its subcontractors turned out to be “suppliers of false invoices”.Firstly, the Court noted in its judgment that certain documentary requirements set out in the law and regulations must be complied with in order to validly claim ITRs, including, among other things, the obligation to obtain the name of the supplier or intermediary, or the name under which it is doing business, the QST registration number assigned to the supplier or intermediary, the date of the invoice, a sufficient description to identify each supply, etc.The ARQ maintained that only the names of the suppliers of services having actually performed the work for which ITRs were claimed could appear on the invoices. This argument was dismissed by the Court because the regulatory provisions expressly provide that the name of an intermediary may appear thereon.In addition, the ARQ claimed that a taxpayer wishing to claim ITRs was subject to numerous additional obligations, in addition to complying with the prescribed regulatory requirements. For example, according to the ARQ, the taxpayer had to confirm the legal existence of the subcontractors in the Enterprise Register of Quebec, verify the validity of their license issued by the Régie du bâtiment du Québec, or obtain data from the Commission de la construction du Québec and the Commission de la santé et de la sécurité du travail du Québec on the subcontractors’ workforce.The Court did not accept this claim by the ARQ. Indeed, taxpayers have a right to strictly rely on the statutory provisions in conducting their tax affairs, and it is not the courts’ role to create new rules in this area. Therefore, the courts must not impose requirements relating to ITR claims that are not provided for in the legislation or regulations.Thus, the Court concluded that the taxpayer had proven its right to the ITRs claimed because it had met the documentary requirements, the services billed for had been truly rendered, and its right had not been affected by the fact that some of its subcontractors subsequently turned out to be “suppliers of false invoices”. On this last point, the Court indicated that the ARQ had adduced no evidence of collusion by the taxpayer with its subcontractors with a view to benefit from this “scheme”. The ARQ has already announced its decision to appeal this case, noting that it does not intend to change the way in which it handles matters of “false invoices”. It therefore appears that the ARQ does not seem to have heard the plea for caution by the Court, which, moreover, noted that a “conviction by association” can have disastrous consequences for a business and its principals. However, this does not mean that taxpayers should necessarily refrain from contesting GST or QST assessments issued by the ARQ in similar circumstances.RESTRICTIVE COVENANTS TRANSACTIONAL CONTEXT VS. EMPLOYMENT CONTEXT André PaquetteWhy are non-competition or non-solicitation covenants added to contracts? The purpose of inserting so-called “restrictive” covenants in a contract is generally the desire to protect a company’s goodwill either upon the termination of an employment relationship, the termination of a business relationship, or the acquisition of a business. Clearly, the parties’ bargaining power will vary depending on the context: an employee’s bargaining power is usually less and warrants different treatment from the treatment applying to a businessman or woman negotiating the sale of his or her business. In addition, where a business is the subject of an acquisition transaction, the goal of maintaining smooth business operations is a strong factor supporting rules of interpretation that favour the preservation of the goodwill of the business. It is therefore no coincidence that the rules applying to such covenants will depend on the nature of the contract involved.The Supreme Court of Canada reminded us of this, among other things, in the recent case of Payette v. Guay inc.1 rendered on September 12, 2013.In that case, restrictive covenants had been inserted in a contract for the sale of assets pursuant to which Guay Inc. (“Guay”), a company operating a crane leasing business, had acquired the assets of certain companies controlled by a Mr. Yannick Payette (“Payette”) and his partner, in October 2004, for an amount of $26 million. A clause had also been inserted into the contract providing for transitional services by Payette as a consultant for a maximum period of six (6) months following the closing of the transaction, with the option of concluding an employment contract at a later date. Both the transitional services and the employment contract were subsequently implemented.However, everything changed on August 3, 2009 when Guay dismissed Payette, who joined a firm in competition with Guay, bringing several of Guay’s employees with him!The Supreme Court first considered the nature of the rules applicable to restrictive covenants contained in a contract for the sale of assets: was it a transactional context or an employment context?Indeed, the Civil Code of Québec (“C.C.Q.”) is not insensitive to the reality faced by employees since it provides, in article 2095, that an employer may not invoke a non-competition clause contained in an employment contract if it has dismissed the employee without a serious reason. The C.C.Q. is however silent on the issue with respect to restrictive covenants in a commercial context.In this case, the Court could not dissociate the restrictive covenants from the contract for the sale of the assets, even in the context of the termination of Payette’s employment, which triggered its application. According to the Court, the reason why the restrictive covenants were agreed upon was the sale of the business and not the employment relationship which followed the closing of the transaction. The result: Payette was not afforded the protection of article 2095 C.C.Q. as an employee of Guay.The Court therefore interpreted the restrictive covenants in accordance with commercial law and concluded that the dismissal of Payette, whether done with or without sufficient cause, had no effect on the enforceability of the restrictive clause.________________________________1 2013 SCC 45.PATRIMONY PROTECTION AND TRANSMISSION LIQUIDATOR OF A SUCCESSION: WHAT DO YOU DO? Marie-Claude ArmstrongYou learn that you have been appointed as liquidator of the succession of a relative or client pursuant to his or her will, or according to the wishes of a majority of his or her heirs.You can accept or refuse the office of liquidator.If you refuse to act as liquidator, you are required to execute a document to this effect and inform the successors (the persons who may receive the succession, but have not yet officially accepted it) thereof.If you accept to act as liquidator, the appointment must be published in the register of personal and movable real rights to publicize the fact that you act as liquidator in order for the beneficiaries and creditors of the deceased or the succession to know who to contact for anything related to the patrimony of the deceased person (article 777 C.C.Q.).Prior to the transmission of the bequeathed property and the partition of the succession, you are required to perform various administrative duties, including the following: Will search in the registry of the Chambre des notaires du Québec and the registry of the Barreau du Québec Acceptance of the office of liquidator Will probate and communication thereof to the heirs Obtaining letters of verification (when immovables included in the succession are located in jurisdictions outside Quebec) Payment of the deceased’s debts Payment of the funeral arrangements Collection of revenues and debts Closing the deceased’s bank accounts and transfer of the balances to the account of the succession Identification of the investments and transfer in the name of the succession Continuance of lawsuits (as plaintiff, defendant or impleaded party) Payment of instalments to tax authorities Preparation of an inventory of the property of the succession Submission of an annual account Alienation of the assets (limited power of disposal in certain cases) Preparation and filing of the federal and provincial tax returns of the deceased and eventually of the succession Partition of the family patrimony and the matrimonial regime Clearance or distribution certificate (to be obtained from tax authorities) Publication of a notice of closure of the inventory An holograph will or a will made in the presence of two witnesses must be probated by the Court. A notarial will does not have to probated by the Superior Court of Quebec. Will search certificates must be obtained from the Chambre des notaires du Québec and the Barreau du Québec in all cases.As liquidator, you are required to render an annual account of your administration and a final account at the time of the final distribution of the succession. Any discretionary power, as wide as it can be, does not authorize you to act in a partial manner or to place yourself in a situation of conflict of interests.It is generally appropriate for the liquidator to have a law professional, an accountant and a tax expert assist him or her when the nature of the property or certain succession issues justify it. The liquidator should also refrain from giving legal, accounting or tax advice to the heirs. He or she should rather encourage them to consult independent experts of their choice.THE BAGTECH CASE, OR THE IMPACT OF A UNANIMOUS SHAREHOLDER AGREEMENT ON THE STATUS OF CANADIAN-CONTROLLED PRIVATE CORPORATIONMartin BédardA recent decision of the Federal Court of Appeal in Canada v. Bioartificial Gel Technologies (Bagtech) Inc. (“Bagtech”) has shed new light on the criteria that applies to the concept of control of a corporation and to the effect of a unanimous shareholder agreement (“USA”) in assessing a corporation’s status as a Canadian-controlled private corporation (“CCPC”) under the Income Tax Act (“ITA”).In that case, Bagtech sought to qualify as a CCPC in order to obtain an additional tax credit of 15% on its research and development expenses, and to make it eligible for a refundable tax credit. In fact, the majority of Bagtech’s shareholders were not residents of Canada.However, the ITA requires that, in order for a corporation to claim the status of a CCPC, a test of de jure control must be met, namely, the ability to elect a majority of the corporation’s directors. Thus, if each share belonging to non-residents or listed companies were held by one and the same person (the “particular person”), where a corporation is under the de jure control of this person, it would be disqualified.However, in the case of Bagtech, a USA stipulated that the majority of the directors were to be elected by resident Canadian shareholders.At first instance, the court found that the particular person was deemed to be a party to the USA, a conclusion which was not called into question on appeal. Then, the Federal Court of Appeal, relying on the decision of the Supreme Court in Duha Printers (Western) Ltd. v. Canada, held that once a shareholders’ agreement qualifies as a USA, all the clauses restricting the power to elect the board of directors are relevant for purposes of determining de jure control of the corporation. As a result, thanks to its USA, Bagtech was able to qualify as a CCPC, even though the majority of its shareholders were non-residents.Thus, unless legislative measures are introduced to counter the effect of the Bagtech decision, it is possible for a corporation held by a majority of non-residents or a listed company to adopt a USA that would enable it to qualify as a CCPC. By doing so, such a corporation can obtain a number of tax benefits, including the small business deduction, enhanced research and development expenses and credits, and access to the capital gains deduction for Canadian shareholders.
CONTENTS The Pros and Cons of Arbitration Clauses in Commercial Contracts Pirating and Using Software Without a Licence: The BSA | The Software Alliance Case Interprovincial Taxation: The Importance of Severing Residential Ties on Departure Security Under Section 427 of the Bank Act: Do the Rights of a Bank Rank Ahead of Those of the Holder of a Retention Right? THE PROS AND CONS OF ARBITRATION CLAUSES IN COMMERCIAL CONTRACTSCatherine Méthot and André PaquetteArbitration clauses are increasingly finding their way into commercial contracts. However, the fact that arbitration is a frequently chosen path nowadays does not necessarily mean that it is always the best solution. One must know its advantages and disadvantages and be wary of standard clauses which may be ill-adapted to one’s situation.Generally, the main advantages and disadvantages of arbitration clauses which are most often mentioned are the following:Advantages: (i) simplified procedure; (ii) less documentation to file; (iii) obtaining a decision is quicker than in the context of the judicial process; (iv) generally reduced costs compared to the judicial process; (v) absence of a right to appeal; and (vi) the confidentiality of the process and the decision, subject to an application for homologation of the arbitral award or a recourse to cancel the decision.Disadvantages : (i) the absence of a right to appeal, with some exceptions; (ii) the risk of the arbitration clause being ill-adapted to your particular situation; (iii) costs beyond the expectations of the parties, particularly when three arbitrators are appointed, some authors even maintaining that in such a case, arbitrators’ fees are sometimes almost multiplied by four because of the delays caused by time management and communications between three arbitrators;(iv) the impossibility to access items of evidence in the hands of opposing party outside of the judicial process; and (v) the exclusion of this decision from case law while the issue in dispute may constitute an important law issue.Before inserting an arbitration clause in a contract, one must assess these advantages and disadvantages and, if arbitration is chosen, the terms of the clause must be adapted, particularly with respect to following items : (i) things and situations covered under the clause; (ii) applicable law, making sure to verify whether such law limits or prohibits arbitration (for example, section 11.1 of the Consumer Protection Act,1 which prohibits stipulations whereby the consumer is obliged to refer a dispute to arbitration or restrict his right to go before a court, particularly by prohibiting him from bringing a class action or being a member of a group exercising such a remedy); (iii) the opportunity to provide for a right to appeal; (iv) the confidentiality of the arbitration process (subject to an application for homologation or a recourse for cancelling the decision); (v) the arbitration process (number of arbitrators, rules for submitting evidence, etc.); and (vi) the opportunity to provide for mediation meetings prior to arbitration.In all cases, the objective sought should be to ensure that in the event a dispute occurs, your interest will be better served by arbitration rather than the judicial process. If such is not the case, avoid inserting an arbitration clause in your contract._________________________________________1 C. P-40.1.PIRATING AND USING SOFTWARE WITHOUT A LICENCE: THE BSA | THE SOFTWARE ALLIANCE CASEBruno VerdonThe claims of the BSA | the Software Alliance (the “BSA”) against Quebec and Canadian businesses seem to be increasingly frequent.The BSA is a U.S.-based non-profit organization operating in more than 80 countries. Its members include companies such as Adobe, Apple, IBM and Microsoft.According to the information it publishes on its website, the BSA particularly fights copyright infringement when software has been installed by users without acquiring the necessary licence. It would appear that most investigations of the BSA target businesses and are conducted further to calls on its anti-piracy line or anonymous reporting via its website. Most reports come from current or former employees. In principle, after receiving information alleging software infringement, the BSA contacts the business to investigate the matter further and invites it to negotiate a settlement where it concludes that there is actual infringement. If a settlement cannot be reached, the BSA assigns the file to its attorneys and ultimately, if they cannot negotiate a settlement, the case goes to court.In Quebec and elsewhere in Canada, the BSA bases its claims for use of software without a licence on the provisions of the Copyright Act.1 this Act particularly provides that “When a person infringes copyright, the person is liable to pay such damages to the owner of the copyright as the owner has suffered due to the infringement and, in addition to those damages, such part of the profits that the infringer has made from the infringement and that were not taken into account in calculating the damages as the court considers just.”2In addition, since the Act to amend the Copyright Act,3 assented to on June 29, 2012, came into force, the holder of the infringed copyright may elect to claim, instead of damages and profits made by the person who infringed the copyright in question, an award of statutory damages which are not less than $500 and not more than $20,000 per violation if the infringements are for commercial purposes and not less than $100 and not more than $5,000 in the case of violations for non-commercial purposes.4Therefore, since 2012, a business which uses software without having acquired the required licences is liable to a claim of not less than $500 and not more than $20,000 per licence which it failed to acquire.In the case of Adobe Systems Incorporated et al. c. Thompson (Appletree Solutions),5 the Federal Court was called upon to apply this new provision of the Copyright Act. the Court noted that in awarding statutory damages, the following must be taken into account: (1) the good or bad faith of defendant, (2) the conduct of the parties before and during the proceedings; and (3) the need to deter other infringements of the copyright in question.Having concluded that proof had been made of the intention of the defendant to infringe and that severe deterrent measures were warranted, the Federal Court issued an injunctive order to prevent defendant from continuing to violate copyrights. On the issue of damages, the Court declared:“ I find no reason not to award maximum statutory damages in the amount of $340,000, being $20,000 per work infringed for each of the three Plaintiffs.”Proof the (1) the good or bad faith of defendant, (2) the conduct of the parties before and during the proceedings; and (3) the need to deter other infringements of the copyright in question being easier to make than that of the damages, it is anticipated that the BSA and its members will not hesitate in invoking the statutory damages provided for in this new provision of the Act in support of their claims.As these statutory damages can be well beyond the value of each non-acquired licence, it goes without saying that a negotiated settlement of the claim will constitute a preferred approach.The BSA usually publishes on its website the settlement agreements entered into with businesses.However, nothing prevents the parties from agreeing that the settlement of the claim and the settlement terms will be kept confidential, which will avoid he business concerned having its name associated with the settlement of a BSA claim._________________________________________1 R.S.C. (1895) c. C-42.2 Ibid., sec. 35.3 S.C. 2012, ch. 20.4 Ibid., sec. 38.1.5 2012 CF 1219 (CanLII).INTERPROVINCIAL TAXATION: THE IMPORTANCE OF SEVERING RESIDENTIAL TIES ON DEPARTUREJean-Philippe LatreilleThe place of residence of an individual is a fundamental tax concept which determines, among other things, his liability for provincial income tax. under the Taxation Act,1 an individual is subject to tax for a given year if he resides in Quebec on December 31 of that year. the tax base then consists of the individual’s income from all sources, except for business income from a Canadian establishment situated outside Quebec.The fact that an individual moves from a province to another usually results in a change of his place of residence for provincial tax purposes. However, it may happen that some residential ties with the province of origin remain, with unanticipated and unwanted results, as shown by a recent decision of the Court of Quebec in the case of Perron c. L’Agence du revenu du Québec.2In that case, the taxpayer was challenging assessments made by revenu Québec for taxation years 2005 to 2007, arguing that he was a resident of Alberta during the relevant period. the taxpayer, an engineer, had held various positions in Quebec prior to moving in Alberta in May 2005 after finding permanent employment there. From that time on, the taxpayer had rented a dwelling unit in Alberta and had purchased furniture for it. He also had opened a bank account and became a member of the Association of Professional engineers and Geoscientists of Alberta.However, the taxpayer had retained several residential ties with Quebec during years 2005 to 2007, particularly the following:a) His spouse, to whom he was married since 1985, and his son had continued residing in Quebec despite the departure of the taxpayer for Alberta. the taxpayer was neither divorced or separated under a judgment or a written agreement. b) the taxpayer had remained co-owner with his spouse of the family residence located in Beauport. c) the taxpayer had continued to provide for the financial needs of his son and to assume certain maintenance expenses of the residence located in Quebec. d) the taxpayer had stayed in Quebec every three months for periods of four or five days. When doing so, he was staying at his residence in Beauport. e) the taxpayer had retained his Quebec driver’s licence and maintained is eligibility to the Quebec health insurance regime. f) the taxpayer had remained a member of the Ordre des ingénieurs du Québec. g) the taxpayer had continued to use the postal address of his Beauport residence, particularly with respect to his credit cards. h) the taxpayer was the owner of a vehicle registered in Quebec, which he had given to his son in 2009. The Court determined that the taxpayer had provided prima facie evidence that his tax residence was located in Alberta during years 2005 to 2007, particularly by establishing the permanent nature of his position in Alberta and the low frequency of his visits in Quebec. the tax authorities thus had the burden to prove that the residence of the taxpayer had remained in Quebec.After reviewing the case law, the Court concluded that revenu Québec had established, by preponderance of evidence, that the taxpayer had retained his tax residence in Quebec during the disputed period by reason of the absence of severance of residential ties with Quebec.The judge particularly noted the absence of evidence corroborating the separation between the taxpayer and his spouse. According to the Court, several factors rather indicated that the spousal link was maintained between them. In addition, the taxpayer failed to establish sufficient connection to Alberta, except for his employment.This decision of the Court of Quebec, which was not appealed, underlines the importance of severing all residential ties with Quebec when moving to another province, particularly if the tax regime of the other province is less onerous. the place of residence is a complex issue which has to be decided according to the legislation in force and applicable case law. Any individual who maintains a more or less important presence in more than one province would be well-advised to consult a professional in this respect._________________________________________1 RLRQ RSQ?, c. I-3.2 2013 QCCQ 3271.SECURITY UNDER SECTION 427 OF THE BANK ACT: DO THE RIGHTS OF A BANK RANK AHEAD OF THOSE OF THE HOLDER OF A RETENTION RIGHT?Mathieu Thibault, Étienne Guertin and Jean LegaultFor financing its activities, a Quebec-based business may grant to a Canadian chartered bank a security under 427 of the Bank Act. This security interest allows the bank to exercise its rights on the borrower’s inventories as well as on the debts resulting from their sale while avoiding the formalities and notices which would otherwise be required under the Civil Code of Québec upon the exercise of a hypothecary remedy.1For its part, article 2293 of the Civil Code of Québec allows the holder of a retention right to retain the stored property until the depositor has, among other things, paid him the agreed upon compensation.In the Levinoff-Colbex, s.e.c. (Séquestre de) et RSM Richter inc.,2 the Superior Court had to decide whether the rights of National Bank of Canada (“NBC”) resulting from a security granted to it under the Bank Act, a federal statute, ranked ahead of the retention right relied upon by another creditor under the Civil Code of Québec following the failure of the debtor to meet its contractual commitments respecting the payment of the storage and refrigeration costs of its inventories.According to the Superior Court, the rights of a creditor under section 427 of the Bank Act may be described as a sui generis ownership right, according to the wording used by the Court of Appeal in the case of Banque Canadienne Nationale v. Lefaivre.3However, this sui generis ownership right does not constitute a true ownership right within the meaning of the Quebec civil law on property covered by such security interest. Section 427 and following of the Bank Act rather establish a security interest regime focused on ownership and confer on the bank which holds such security interest rights as a secured creditor and not as an owner of the property covered by such security interest.In this context, NBC could not be bound by the retention right created in favour of another creditor. In fact, the determination of the priority of these rights did not derive from holding an ownership right within the meaning of civil law: the NBC was rather a secured creditor of the debtor.The priority of creditors’ rights must be determined by applying and interpreting the Bank Act in accordance with the doctrine of paramountcy and the judgment issued by the Supreme Court of Canada in the case of Bank of Montreal v. Innovation Credit Union.4Since section 428 of the Bank Act contains an express provision resolving this priority conflict, one has simply to apply the rule provided in this section whereby the rights of the BNC had “priority over all rights subsequently acquired in, on or in respect of that property” covered by the security interest._________________________________________1 Banque de Montréal v. Hall,  1 S.C.R.2 2013 QCCS 1489. It must be noted that an appeal of this judgment has been filed with the Court of Appeal under number 500-09-023539-133.3  B.R. 83, at page 88, referring to Landry Pulpwood Co. v. Banque Canadienne Nationale,  S.C.R. 605, page 615.4  3 S.C.R.3
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Lavery is pleased to announce that 67 of its lawyers have been recognized as leaders in their respective fields of expertise by The Best Lawyers in Canada 2023. The following lawyers also received the Lawyer of the Year award in the 2023 edition of The Best Lawyers in Canada: René Branchaud : Natural Resources Law Chantal Desjardins : Intellectual Property Law Bernard Larocque : Legal Malpractice Law Patrick A. Molinari : Health Care Law Consult the complete list of Lavery's lawyers and their fields of expertise: Josianne Beaudry : Mergers and Acquisitions Law / Mining Law Laurence Bich-Carrière : Class Action Litigation / Corporate and Commercial Litigation / Product Liability Law Dominic Boivert : Insurance Law (Ones To Watch) Luc R. Borduas : Corporate Law / Mergers and Acquisitions Law Daniel Bouchard : Environmental Law Laurence Bourgeois-Hatto : Workers' Compensation Law René Branchaud : Mining Law / Natural Resources Law / Securities Law Étienne Brassard : Equipment Finance Law / Mergers and Acquisitions Law / Real Estate Law Jules Brière : Aboriginal Law / Indigenous Practice / Administrative and Public Law / Health Care Law Myriam Brixi : Class Action Litigation Benoit Brouillette : Labour and Employment Law Richard Burgos : Mergers and Acquisitions Law / Corporate Law Marie-Claude Cantin : Insurance Law / Construction Law Brittany Carson : Labour and Employment Law Eugene Czolij : Corporate and Commercial Litigation France Camille De Mers : Mergers and Acquisitions Law (Ones To Watch) Chantal Desjardins : Intellectual Property Law Jean-Sébastien Desroches : Corporate Law / Mergers and Acquisitions Law Raymond Doray : Privacy and Data Security Law / Administrative and Public Law / Defamation and Media Law Christian Dumoulin : Mergers and Acquisitions Law Alain Y. Dussault : Intellectual Property Law Isabelle Duval : Family Law Chloé Fauchon : Municipal Law (Ones To Watch) Philippe Frère : Administrative and Public Law Simon Gagné : Labour and Employment Law Nicolas Gagnon : Construction Law Richard Gaudreault : Labour and Employment Law Danielle Gauthier : Labour and Employment Law Julie Gauvreau : Intellectual Property Law Michel Gélinas : Labour and Employment Law Caroline Harnois : Family Law / Family Law Mediation / Trusts and Estates Marie-Josée Hétu : Labour and Employment Law Alain Heyne : Banking and Finance Law Édith Jacques : Energy Law / Corporate Law Pierre Marc Johnson, Ad. E. : International Arbitration Marie-Hélène Jolicoeur : Labour and Employment Law Isabelle Jomphe : Intellectual Property Law Guillaume Laberge : Administrative and Public Law Jonathan Lacoste-Jobin : Insurance Law Awatif Lakhdar : Family Law Bernard Larocque : Professional Malpractice Law / Class Action Litigation / Insurance Law / Legal Malpractice Law Myriam Lavallée : Labour and Employment Law Guy Lavoie : Labour and Employment Law / Workers' Compensation Law Jean Legault : Banking and Finance Law / Insolvency and Financial Restructuring Law Carl Lessard : Workers' Compensation Law / Labour and Employment Law Josiane L'Heureux : Labour and Employment Law Despina Mandilaras : Construction Law / Corporate and Commercial Litigation (Ones To Watch) Hugh Mansfield : Intellectual Property Law Zeïneb Mellouli : Labour and Employment Law Patrick A. Molinari : Health Care Law André Paquette : Mergers and Acquisitions Law Luc Pariseau : Tax Law Ariane Pasquier : Labour and Employment Law Jacques Paul-Hus : Mergers and Acquisitions Law Hubert Pepin : Labour and Employment Law Martin Pichette : Insurance Law / Professional Malpractice Law Élisabeth Pinard : Family Law François Renaud : Banking and Finance Law / Structured Finance Law Judith Rochette : Insurance Law / Professional Malpractice Law Ian Rose FCIArb : Director and Officer Liability Practice / Insurance Law Chantal Saint-Onge : Corporate and Commercial Litigation (Ones To Watch) Éric Thibaudeau : Workers' Compensation Law André Vautour : Corporate Governance Practice / Corporate Law / Information Technology Law / Intellectual Property Law / Technology Law Bruno Verdon : Corporate and Commercial Litigation Sébastien Vézina : Mergers and Acquisitions Law Yanick Vlasak : Corporate and Commercial Litigation Jonathan Warin : Insolvency and Financial Restructuring Law These recognitions are further demonstration of the expertise and quality of legal services that characterize Lavery’s professionals.
Lavery is pleased to announce that 68 of its lawyers have been recognized as leaders in their respective fields of expertise by The Best Lawyers in Canada 2022. Lawyer of the Year The following lawyers also received the Lawyer of the Year award in the 2022 edition of The Best Lawyers in Canada: Caroline Harnois: Family Law Mediation Bernard Larocque: Professional Malpractice Law Consult the complete list of Lavery's lawyers and their fields of expertise: Josianne Beaudry : Mining Law / Mergers and Acquisitions Law Dominique Bélisle : Energy Law Laurence Bich-Carrière : Class Action Litigation René Branchaud : Mining Law / Natural Resources Law / Securities Law Étienne Brassard : Mergers and Acquisitions Law / Real Estate Law / Equipment Finance Law Dominic Boisvert: Insurance Law (Ones To Watch) Luc R. Borduas : Corporate Law Daniel Bouchard : Environmental Law Jules Brière : Administrative and Public Law / Health Care Law Myriam Brixi : Class Action Litigation Benoit Brouillette : Labour and Employment Law Richard Burgos : Corporate Law / Mergers and Acquisitions Law Marie-Claude Cantin : Construction Law / Insurance Law Charles Ceelen-Brasseur : Corporate Law (Ones To Watch) Eugène Czolij : Corporate and Commercial Litigation / Insolvency and Financial Restructuring Law Chantal Desjardins : Intellectual Property Law Jean-Sébastien Desroches : Corporate Law / Mergers and Acquisitions Law Michel Desrosiers : Labour and Employment Law Raymond Doray, Ad. E : Administrative and Public Law / Defamation and Media Law / Privacy and Data Security Law Christian Dumoulin : Mergers and Acquisitions Law Alain Y. Dussault : Intellectual Property Law Isabelle Duval : Family Law Chloé Fauchon: Municipal Law (Ones To Watch) Philippe Frère : Administrative and Public Law Simon Gagné : Labour and Employment Law Nicolas Gagnon : Construction Law Richard Gaudreault : Labour and Employment Law Danielle Gauthier : Labour and Employment Law Julie Gauvreau : Intellectual Property Law Michel Gélinas : Labour and Employment Law Caroline Harnois : Family Law / Family Law Mediation / Trusts and Estates Marie-Josée Hétu : Labour and Employment Law Alain Heyne : Banking and Finance Law Édith Jacques : Corporate Law / Energy Law Pierre Marc Johnson, Ad. E., G.O.Q., MSRC : International Arbitration Marie-Hélène Jolicoeur : Labour and Employment Law Isabelle Jomphe : Intellectual Property Law Guillaume Laberge: Administrative and Public Law Jonathan Lacoste-Jobin: Insurance Law Awatif Lakhdar: Family Law Bernard Larocque: Class Action Litigation / Insurance Law / Professional Malpractice Law Myriam Lavallée: Labour and Employment Law Guy Lavoie: Labour and Employment Law / Workers’ Compensation Law Jean Legault: Banking and Finance Law / Insolvency and Financial Restructuring Law Carl Lessard: Labour and Employment Law / Workers' Compensation Law Josiane L'Heureux: Labour and Employment Law Hugh Mansfield : Intellectual Property Law Zeïneb Mellouli : Labour and Employment Law Patrick A. Molinari, Ad.E., MSRC : Health Care Law André Paquette: Mergers and Acquisitions Law Luc Pariseau : Tax Law Jacques Paul-Hus : Mergers & Acquisitions Law Ariane Pasquier : Labour and Employment Law Hubert Pepin : Labour and Employment Law Martin Pichette : Insurance Law / Professional Malpractice Law Élisabeth Pinard : Family Law François Renaud : Banking and Finance Law Marc Rochefort : Securities Law Judith Rochette : Professional Malpractice Law Ian Rose : Director and Officer Liability Practice / Insurance Law Éric Thibaudeau: Workers' Compensation Law Philippe Tremblay : Construction Law / Corporate and Commercial Litigation Jean-Philippe Turgeon : Franchise Law André Vautour : Corporate Law / Energy Law / Information Technology Law / Intellectual Property Law / Private Funds Law / Technology Law Bruno Verdon : Corporate and Commercial Litigation Sébastien Vézina : Mergers and Acquisitions Law Yanick Vlasak : Corporate and Commercial Litigation Jonathan Warin : Insolvency and Financial Restructuring Law
On June 26, 2018, the QFL Solidarity Fund announced a $70 million investment in EBI, a leading Quebec and Canadian firm active in the integrated residual materials sector, including the collection and transport of waste matter, recyclables and residual materials, the transformation, recovery and disposal of residual materials as well as the production of natural gas. A Lavery client for the past two decades, EBI has been represented by the firm in connection with every legal aspect of this investment initiative. The Lavery team, spearheaded by André Paquette, with the assistance of Jacques Paul-Hus, was composed of Nadia Hanine (Mergers & Acquisitions), Éric Gélinas (Taxation), Pierre Denis (Financial Services), Audrey-Julie Dallaire (Environment), Carolle Vaudry and Isabelle Normand (Corporate).
On October 28, 2015, André Paquette, a partner and member of the Business Law Group, presented a conference entitled “Vous envisagez acheter un bloc d’affaires? Parlons de gestion de risques!” (“Thinking of buying a block of business? Let’s talk risk management!”) at the Symposium sur la conformité au Québec 2015 (Quebec 2015 Compliance Symposium) organized by Freedom 55 Financial and held at Centre Mont-Royal in Montreal. Mr. Paquette’s presentation reviewed the block of business acquisition process and the main legal, tax and ethical issues the buyer must take into account and discussedpossible solutions to adequately manage risksinvolved.