Importance of the Press

On March 26, 2020, the Government of Saskatchewan further limited the businesses that can continue to operate in the province as a result of COVID-19.  Among the “critical services” that are to be maintained are local and national media.

Journalists across our province are continuing to provide up-to-date and important information to citizens. They continue to attend press conferences, ask our leaders important questions, try to digest and disseminate important health-related information and disabuse individuals of potentially dangerous misinformation.

Having reliable and professional information broadcast to a wide audience (through newspapers, television and social media) is incredibly important for our public officials to provide updates on this crisis. Dr. Theresa Tam, Canada’s Chief Public Health Officer, and Dr. Saqib Shahab, Saskatchewan’s Chief Medical Health Officer, have, through the media, imparted daily updates on the medical risks and transmission of the virus. Our political leaders have warned residents through daily press briefings on the importance of social distancing to attempt to flatten the curve.

In addition to providing important health information, the media has provided messages of hope and resilience. Media organizations have covered:

  1. The outpouring of support for marginalized youth in Saskatoon: https://thestarphoenix.com/news/local-news/the-helpers-in-saskatoon-an-outpouring-of-support-for-youth/
  2. Families working out together at home while practicing social distancing: https://saskatoon.ctvnews.ca/more-saskatoon-families-working-out-together-at-home-during-isolation-physical-distancing-1.4870362 and
  3. Veterinarians assisting pets from outside of their clinics: https://www.cbc.ca/news/canada/saskatchewan/sask-curbside-veterinary-medicine-animal-health-covid-19-1.5511951.

In recent years, the media has been vilified in some corners.  However, it is at times like these, that the importance of the press is highlighted.  We see journalists, every day, digesting quickly changing information, trying to weed out “fake news” and doing so at potential personal peril as they attend briefings and track down stories.  The media has proven itself to be a “critical service” to the public.

For more information, please contact:

 

Sean M. Sinclair

306.933.1367

Email: s.sinclair

Corporate Governance during the COVID-19 Pandemic

Local authorities continue to encourage people to refrain from gathering in large groups and to practice social distancing. In this landscape, corporations should consider alternative means of holding director and annual shareholder meetings in the coming months.

This article addresses the legislation applicable to corporations incorporated under The Business Corporations Act (Saskatchewan) (the “Act”). While corporations incorporated under federal or other provincial statutes are subject to similar rules, the specific incorporating statute should be carefully reviewed in each case. In addition, directors should bear in mind that there is no one-size-fits-all approach, and it is recommended that directors consult with legal counsel to determine the best approach for their corporation to ensure the safety of all parties. 

Shareholder/Member meetings

Typically, annual general meetings of the shareholders (“AGM”) often involve a number of shareholders meeting in a physical location within Saskatchewan. Given that meetings over a certain number of attendees is now prohibited in Saskatchewan and leaving one’s home is generally discouraged, holding an AGM in person is no longer feasible in many circumstances. It is also important to remember that unless the required number of shareholders are present at a meeting, there will be no quorum reached and decisions cannot be made.

Given the current environment, what options are available to corporations?

1. Postpone the AGM

Under the Act, the directors of Saskatchewan corporations are required to call an AGM not later than 18 months after the corporation comes into existence and subsequently not later than 15 months after holding the last preceding AGM. Depending on the timing of incorporation and/or the last AGM, it may be possible to postpone the AGM to a later date. While it is uncertain how long the prohibitions on public gatherings may last, postponing the AGM by a few months may be worth considering.

2. Virtual AGM

A virtual AGM would take place over a virtual platform which would allow people to attend via telephone or videoconference. The Act allows shareholders of a corporation to attend a meeting of shareholders by means of telephone or other communication facilities as long as all participants are able to communicate adequately together. Directors contemplating holding a virtual AGM should consider the following:

 

  1. 1a. Corporate articles, by-laws, and unanimous shareholders’ agreements (“USA”): directors will need to review the corporate articles, by-laws, and USAs to determine whether these documents prohibit a virtual meeting. Directors should also consider any procedural matters contemplated within the by-laws or USA, including notice requirements, taking votes, and quorum requirements.

     

  2. 2b. Method of holding meeting: the directors will need to find some kind of technology or service that will allow for adequate communication between all shareholders and other attendees of the AGM. If the parties are not able to communicate to each other, the validity of the meeting could be challenged.

     

  3. 3c. Business of the meeting: if the agenda contains contentious matters, it is often preferable to deal with such matters in-person rather than in a virtual AGM. If a virtual AGM is to be convened, directors should consider the agenda and entertain the possibility of deferring any contentious business to a later date.

     

  4. 4d. Voting: generally, voting at a meeting of shareholders is done by a show of hands. In the event that some attendees are not visible in a virtual AGM (making the counting of hands impossible) directors will have to determine how votes will be tallied in a fair and reliable manner.

     

  5. 5e. Notice: in addition to providing the information required by the Act, by-laws, and/or any USA, a notice to the shareholders should contain detailed instructions on how to attend the virtual meeting.

Director Meetings

Similar to AGMs, meetings of the board of directors of a corporation are traditionally held in-person at a location in Saskatchewan. However, the Act also allows directors to attend a meeting of directors by means of telephone or other communication facilities that allow all attendees to hear each other.

While the considerations discussed above are relevant in determining whether a director meeting should be postponed or held in a virtual forum, the directors must be sure to review the corporate articles, by-laws, and any USAs. These documents may dictate when and where meetings of directors must be held, and other related procedural aspects.

Considerations for Non-Profit Corporations and Condominium Corporations

In May, 2020, the Saskatchewan Government introduced regulations which permitted non-profit corporations (incorporated under The Non-profit Corporations Act, 1995) and condominium corporations (constituted under The Condominium Property Act, 1993) to allow such corporations to hold annual general meetings of the members/owners through telephonic, electronic or other communication facility as long as all participants to the meeting are able to adequately communicate with each other. Likewise, meetings of directors of these corporations are generally permitted to hold virtual meetings as long as all directors consent. Accordingly, the considerations discussed above are relevant to these kinds of corporations. As always, it is important to remember that these rules are subject to the bylaws of the non-profit corporation or the condo corporation.  

For more information, please contact:

 

Jon M. Ponath

306.933.1365

Email: [email protected]

Witnessing of Legal Documents

If you have ever been involved with a legal matter such as a transaction involving real property, the granting of a power of attorney, or execution of a Will, you may be aware that certain legal documents require the personal attendance of a lawyer to witness its execution. The COVID-19 pandemic presents obvious challenges for lawyers and clients to comply with the legal requirement to have a lawyer physically meet with his/her client to witness the signing of a document.

On March 26, 2020, the Government of Saskatchewan enacted emergency regulations to enable lawyers to execute and witness certain documents by video conferencing (through applications such as Skype, Facetime, or Zoom, for example) to allow lawyers to assist clients while maintaining social distancing so as not to put clients, staff or lawyers at risk. These emergency regulations apply to real estate transaction documents that must be filed with the Land Titles Registry, Powers of Attorney, and affidavits and other sworn documents. While certain strict procedural steps must be followed,  our lawyers are committed and remain available to help you in getting important documents signed and witnessed to ensure they will be legally valid in accordance with the emergency provisions that have been put in force by the government.

These emergency regulations do not apply to the signing of Wills and Health Care Directives. The Government of Saskatchewan enacted additional regulations on April 16, 2020 that address the virtual witnessing of Wills. However, these regulations impose additional procedural steps that must be carefully followed. Please contact us for further information and advice respecting getting properly executed estate planning documents in place. Our office is committed to finding practical solutions to ensuring Wills and other estate planning documents can be witnessed in a safe manner. To this end, Robertson Stromberg has commenced several initiatives relating to workplace hygiene, monitoring lawyers’ and employees’ health, and following all Health Canada, CDC, and SaskHealth recommendations to maintain the safety of its clients who are required to meet with our lawyers.

For more information, please contact:

 

Jon M. Ponath

306.933.1365

Email: [email protected]

Suspension of Non-Essential Operations of the Court of Queen’s Bench

The Chief Justice of the Court of Queen’s Bench announced today that the court is suspending all non-essential operations. As a result, most court applications, pre-trial conferences and trials scheduled before May 31, 2020 in the Court of Queen’s Bench are postponed without a firm date when they will be heard.

The new directive will be posted to the Court of Queen’s Bench website at https://sasklawcourts.ca/index.php/home/resources/covid-court-update.

What Does this Mean for your Court Case?

Unless your matter is urgent or an emergency, your case will not be proceeding until the Court re-commences its normal operations. The court directive provides examples of what constitutes an emergency or urgent matter, but they include:

Civil Cases

  1. Applications dealing with public health and safety;
  2. Preservation orders;
  3. Injunctions where there is significant urgency;
  4. Other cases where a judge has made a determination that the matter is urgent and can proceed.

Family Law

  1. Cases involving the safety of a child or parent, including applications for restraining orders;
  2. Wrongful retention or removal of a child;
  3. Dire financial need.

These are non-exhaustive and there is a different set of rules for child protection and criminal matters set out in the directive.

Realistically, this means that virtually all hearings are cancelled for the next few months. There is still the ability though to apply to the court in emergent situations to apply to return a child or to get an injunction/preservation order to ensure that assets are not dissipated while we wait for the court to lift these restrictions.

Pre-trial conferences and trials are going to be delayed significantly by virtue of this directive. Scheduling will re-commence in or around May, 2020, but there will be a backlog of cases caused by this interruption.

Conclusion

Everyone will have to be patient until this public health emergency is controlled. The Court is doing its part to protect the safety of judges, members of the public and lawyers. Importantly though, the Court has made arrangements to be available should there be an emergency situation.

Please reach out to a member of our team if you have any questions about this new court directive or whether your case is an “urgency or emergency” case that can still proceed.

Cash Flow Concerns: How to Collect Payment in the Midst of COVID-19

Introduction

Over the past year much of the focus of the Saskatchewan construction industry has been on the impact that new prompt payment legislation will have on the timeliness of payment on construction projects. Cash flow is never far from the mind of any prudent business owner. However, a focus and concern with cash flow is perhaps never more evident than now, given the global, and increasingly local, rescheduling and shutdown of various construction projects.

In considering your ability to collect on outstanding invoices, it is critical that the payment terms of your contract be reviewed. Although contract terms, like force majeure, may justify a suspension of work or an adjustment to schedule, they do not necessarily suspend or modify a party’s payment obligations. Rather, the exact contract language needs to be reviewed. Absent specific contractual language excusing a party’s payment obligations, payments are still required to be made.

However, what is legally required, and what will, in practice, actually happen are, of course, two different things. A contractual right to be paid, though important, may not change the fact that certain companies will either not be able to pay or will, in an act of self-preservation, simply choose not to pay. In these types of circumstances, a few different collection options should be considered:

  1. Register a lien. Although a lien may not result in immediate payment, it provides security, in the event the project fails or is not completed, for future payment. It also ensures, in the event a future progress draw is made, that enough funds are withheld to satisfy the lien claim in the future. Although it is best practice to ensure a lien is registered in Saskatchewan within 40 days of substantial completion, liens can still be registered after this date and, in many circumstances, will remain enforceable.
  2. Determine whether or not a project is secured by a labour and material bond. Labour and material bonds are secured by insurance companies. As companies cease meeting their obligations, the ability to receive payment from an insurance company under a bond may, in certain cases, represent the best option available to collect payment. As labour and material bonds have predetermined pay-out amounts, it is important to submit your claim for payment as soon as possible. All L&M bonds have cap limits, and after the insurance company has paid out the amount of the bond, additional claims cannot be processed.
  3. Determine whether or not the project is secured by a performance bond. Although a performance bond is often put in place for the benefit of the owner, in the event a general contractor defaults, the ability of an owner to rely upon insurance to complete a project may be beneficial, given the possibility of the insurer using existing subcontractors to complete the work.

  4. File a lawsuit. Although lawsuits typically do not lead to quick payment, if your claim for payment is not defended, you may have the ability to register and then enforce a judgment. As judgments, once registered, exist for 10 years, this also may give your company a long-term option to satisfy a debt.

  5. Be mindful of trust obligations in the lien legislation. Saskatchewan’s lien legislation imposes trust obligations on project financing, and on funds paid between the owner, contractor and subcontractors. During times of cash flow crisis, it may be tempting for parties to pay money out of the project chain. This may result in a breach of trust obligations under the lien legislation, and could lead to personal liability for directors and officers as well. The lien legislation provides lien claimants a right to certain information from the owner, so use these tools to find out what’s happening in the project payment chain.

Like any situation, the best approach depends on your particular circumstance. However, all options should be explored given the uncertainty that is COVID-19.

For more information, please contact:

Misty M. Alexandre

306.933.1352

Email: [email protected]

Jared Epp

306.933.1326

Email: [email protected]

Whether it’s personal or business, we handle cases ranging from wills to overseeing complex business deals, and everything in between. Our success comes as a result of our collective effort. Combining the experience of your lawyer together with the resources of our team, you can put your trust in us to handle your case with confidence.

Month: March 2020