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. As we have seen in other jurisdictions, it is expected that the Government of Saskatchewan will continue to implement new (and increasingly stricter) laws to restrict business operations and large gatherings of people. 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 (currently gatherings of more than 25 people in one room are prohibited), and leaving one’s home is strongly discouraged, holding an AGM in person is no longer feasible. 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. 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. 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. 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. 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. 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.

For more information, please contact:

 

Jon M. Ponath

306.933.1365

Email: j.ponath@rslaw.com

Government legislative authority to direct measures during COVID-19

Saskatchewan has declared a state of emergency over the COVID-19 pandemic. The province’s legislative authority to declare this state of emergency can be found under The Emergency Planning Act (the “Act”). Measures taken by the provincial government under the Act can include the introduction of an emergency plan, the control or prohibition of travel within the province and acquiring a resident’s property which is deemed necessary to prevent, combat or alleviate the effects of the emergency (with compensation). A provincial declaration of emergency and any subsequent orders will take precedence over municipal declarations and orders.

The Government of Saskatchewan has introduced amendments to The Saskatchewan Employment Act (“SEA”) and multiple Public Health Orders to combat COVID-19. First, the government has made sick leave under the SEA available to all employees, regardless of how long they have been employed. The government also introduced a new “public health emergency leave”, where employees may go on unpaid leave for the duration the public health orders relating to COVID-19 are in effect. Second, the Minister of Health and Chief Medical Health Officer have the authority to introduce Public Health Orders, pursuant to s. 38 and s. 45(2) of The Public Heath Act, 1994, to combat the transmission of COVID-19. As of March 30, 2020, some examples of such measures include the suspension of all schools and educational institutions and the prohibition of all public gatherings larger than 10 people (with some exceptions in settings where employees/patrons can maintain two-meter distances between one another). All non-essential businesses have been ordered to close and mandatory 14-day self-isolation has been introduced for those who have been diagnosed with COVID-19, have come in close contact with someone diagnosed with COVID-19 or someone who has travelled internationally. Visitation to care homes and hospitals have been restricted to family or individuals visiting for compassionate reasons. If a Saskatchewan resident or corporation contravenes one of the orders made pursuant to the Act, the provincial government has the power to fine that individual or business $2,000 or $10,000, respectively (see s. 16 of the Act). A full list of the Public Health Orders can be found at: https://www.saskatchewan.ca/government/health-care-administration-and-provider-resources/treatment-procedures-and-guidelines/emerging-public-health-issues/2019-novel-coronavirus/public-health-measures.

Federally, the Government of Canada has legislative power under the Quarantine Act and Emergencies Act to respond to the COVID-19 pandemic. The purpose of the Quarantine Act is to protect the public health by taking comprehensive measures to prevent the introduction and spread of communicable diseases. The Quarantine Act grants the power to direct and control international travellers or others at entry or departure points of the country who might have an infectious disease. As of March 26, 2020, the federal government declared mandatory 14-day isolation for any traveller returning to Canada under the Quarantine Act. Fines and jail time will be utilized for those who break the rules.

The Emergencies Act, previously known as the War Measures Act, grants the Government of Canada power to declare four types of emergencies: public welfare, public order, international and war emergencies. Section 8 of the Emergencies Act outlines the exceptional powers granted to the federal government in a public welfare emergency, which the COVID-19 pandemic would classify as. Such powers can include the prohibition of travel to, from or within the country, the evacuation of people, the requisition, use or disposition of a citizen’s property and the establishment of emergency shelters or hospitals. As of March 30, 2020, Prime Minister Justin Trudeau has not declared a public welfare emergency but has indicated that is it not off the table.

Brett Maerz published in Saskatchewan Advocate

Brett Maerz was published in the March edition of the Saskatchewan Advocate with her article “Summary Judgments, Personal Guarantees and the Court’s Attitude” that provides an overview of how Canadian Courts have treated summary judgment applications relating to personal guarantees.

The Saskatchewan Advocate is a quarterly publication of the Saskatchewan Trial Lawyers Association. Its purpose is to canvas new jurisprudence and trends in the law and provides practice tips and topics. The publication draws authors not only from Saskatchewan lawyers but from the bench, the medical profession, accountants, engineers, law professors and others.

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 (i.e. through applications such as Skype, Facetime, or Zoom) 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. 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.

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: m.alexandre@rslaw.com

Jared Epp

306.933.1326

Email: j.epp@rslaw.com

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