by Safiyya Vankalwala

We have seen several changes to the Canadian Business Corporations Act (CBCA) over the last few years. The changes have been rolled out in stages, including requiring private corporations to maintain a register of Individuals with Significant Control (ISC). Prior to this change, federal companies had to maintain a shareholders register with names of its registered shareholders only — not its beneficial owners or individuals with direct or indirect control, discretion, or influence.

As of January 22, 2024, corporations, incorporated under the CBCA, must file information regarding their ISC with Corporations Canada, unless exempt. Those corporations exempt from the filing requirements will be required to file confirmation of their exemption. Non-compliance of the requirements may result in hefty fees and penalties for the corporation and/or its directors and officers. Further information, including what, when, and how to file, can be found on Corporation Canada’s website.

Some of the information filed will be publicly available. For those corporations that want to seek an exemption to have their ISC information publicly available, an application to the Director will be required.

Practice Management Tips

Clients are often unsure of their ongoing obligations when it comes to filing annual returns and amendments, maintaining updated register information, and issuance of further share certificates. There is often uncertainty as to who is responsible for this — the client or the lawyer.

Communication Avoids Confusion

Identifying who does what will protect you from liability exposure, an unhappy client, and possible reputational damage.

For example, if you acted for a client to file Articles of Incorporation and drafted the initial minute book documents, such as by-laws, resolutions, share certificates, ledgers and registers, does the client expect that you will advise them if they must register for a GST/HST account and when to start charging it? Does the client assume you will file future changes and update the minute book? Short of this expectation, does the client expect that you are obligated to let them know what future steps are required to keep the corporation compliant with the law?

To avoid confusion, use a well drafted retainer letter at the start of the lawyer-client relationship and a reporting/closing letter at the end of your services.

Retainer letter

The retainer letter should include reference to the following:

  • Identity of the lawyer and the client;
  • Scope of service (is your work to be limited in any way?);
  • Obligations of client;
  • Delegation of work;
  • Expected chronology;
  • Fee arrangement;
  • Billing format;
  • Rate changes;
  • Withdrawal or termination of services; and
  • Conflicts of interest.

Sample retainer letters can be found at practicePRO.ca.

Reporting/Closing

Consider including the following in your reporting letter:

  • What service(s) you were retained for;
  • Advice you gave and/or steps taken;
  • What service(s) was(were) completed;
  • If necessary, explanation as to why the representation is ending (e.g., firm is closing, termination of relationship initiated by you or the client);
  • Responsibility of the client (during the retainer and going forward);
  • Any important upcoming dates or deadlines;
  • Confirmation that client material has been returned or details of what has been returned and what client documents will be kept by you/your firm (including any storage or retrieval charges);
  • File retention policy of your firm; and
  • Any other unique or file specific circumstances or information worth noting in the reporting letter, such as specific instructions from the client.

We encourage you to view the CPD delivered by LAWPRO and TLA on December 7, 2023. This CPD focused on well-drafted retainer letters, managing effective communication, and termination of the lawyer-client relationship. The recorded video and written material is eligible for 1.5 Professionalism hours and the LAWPRO Risk Management Credit. It also includes a template closing letter provided by one of the guest speakers.

Categories: Corporate Law