Canadian Manufacturing

Top 10 legal risks for Canadian businesses in 2016

The list outlines key trends and regulatory changes law firm Borden Ladner Gervais LLP believes will increase risk



TORONTO— Law Firm Borden Ladner Gervais LLP (BLG) has released a thought leadership report forecasting the top 10 legal risks for business in 2016.

The list outlines key trends and regulatory changes the firm believes will have legal implications in the year ahead.

“We partner with our clients to assess the impact and to mitigate the risk of these legal considerations in a wide range of industry sectors,” said Sean Weir, national managing partner and CEO of BLG. “We best deliver value by advising our clients on business opportunities that may arise from these complex and evolving trends.”

Each item on BLG’s list of 10 legal risks for business in 2016 carries similar weight, and thus the list is not in any particular order:

Climate Change
Canada’s greenhouse gas regime is poised to be one of the country’s leading business challenges in 2016. From Paris to provincial legislatures, big changes are coming, with Canadian companies – and large carbon emitters across a range of industries – still determining what the impacts will be on their bottom lines.

Tax Authorities Leveraging Non-privileged Information
Canadian tax authorities continue to aggressively pursue taxpayer information, using the extensive powers granted to them under tax legislation. Sensitive communications with, and work product prepared by, accountants and other non-lawyers represent fertile ground for the Canada Revenue Agency. This was illustrated by the CRA’s success before the Federal Court of Canada in Minister of National Revenue v. BP Canada Energy Company in June 2015, in forcing disclosure of the taxpayer’s list of uncertain tax positions prepared for financial statement purposes, for use as an “audit roadmap.”

Privacy Class Actions are on the Rise in Canada
There is a new trend in Canada towards privacy class actions being launched following a cybersecurity breach or an improper disclosure of personal information. Indeed, privacy class actions triggered by data breaches are growing in Canada, with between twenty and thirty privacy class actions currently pending or already certified. These lawsuits follow either a cybersecurity or another similar data security breach, or the launch of a new privacy-sensitive product or marketing program.

Workplace Cyber-Sex and IT Security
2015 saw a number of high-profile cyber-sex security breaches. Most prominent was the Ashley Madison scandal, in which the personal details of about 37 million people were exposed. Many subscribers to the website had apparently signed up using their professional e-mail accounts. Other examples, such as Snapchat or Netflix, are less salacious, but may be equally disruptive and potentially dangerous to an employer’s interests: apart from the potential loss of reputation, such behaviour puts the integrity of the security systems implemented by employers at risk.

Combating Fraud in e-Payment Systems
The advent of mobile and digital wallets coupled with electronic payment methods and the ever-increasing growth in on-line payments have rendered e-payments ubiquitous and have increased the need to develop effective authentication protocols, technology, policies and procedures to mitigate and reduce the risk of fraud.

Regulatory Purgatory will Impact Business Decisions
Canada’s securities regulatory system has always been slow to effect harmonized changes. In 2016, we expect that certain initiatives which have taken a long time to enact will impact Canadian public companies. This is making it difficult for parties involved in hostile bid transactions, as bidders must comply with the existing takeover rules, while targets implement defensive tactics based on the proposed regime that is not yet in force and which may yet be subject to change.

Honesty is No Longer the Best Policy – It’s the Law in Contracts
In November 2014, the Supreme Court of Canada recognized a new duty for contracting parties: the “honest performance” of contractual obligations. Pursuant to this new duty, “parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of a contract”. With “honest performance” comes a new area of litigation and now businesses must actively consider whether they are discharging the new duty when performing under a contract. As claims for breaches continue to grow in Canadian courts, all businesses should be aware of their duty of good faith in the performance of their contractual obligations.

The Trans-Pacific Partnership and the CETA deal
In October 2015, Canada concluded negotiations with eleven other countries on the Trans-Pacific Partnership (TPP), which is considered to be the most
comprehensive trade agreement in existence. Taking into account the Comprehensive Economic and Trade Agreement (CETA) that Canada concluded with the European Union last year, the North American Free Trade Agreement, and a growing number of bilateral trade agreements, Canada is entering into a new era of unprecedented free trade. When these agreements are eventually ratified and implemented into Canadian law, they will affect the competitive landscape for agricultural, manufacturing and service industries throughout Canada.

Compliance
Market participants of every description should be increasingly concerned with regulatory compliance issues, since they affect not just the bottom line, but also one’s reputation, credibility and livelihood. Further, with the election of a new federal and two new provincial governments in Canada with mandates for change, regulated conduct is likely to come under increased scrutiny, whether in the securities, insurance, trade, financial, energy or other spheres of activity.

Canada’s Anti-Spam Law – Regulatory Enforcement Begins
Canada’s anti-spam law (CASL) created a regime of offences, enforcement mechanisms and potentially severe penalties that prohibit unsolicited or misleading commercial electronic messages, the unauthorized commercial installation and use of computer programs and other forms of online fraud. CASL creates an opt-in regime that limits the sending of electronic messages unless the recipient has given informed consent. CASL applies if a computer system in Canada is used to send or access a message, regardless of the location of the sender or recipient.

BLG is also planning a seminar for internal counsel on March 10 in Toronto, highlighting selected topics from the report.

This list contained only excerpts from BLG’s report. Read more in-depth about BLG’s top legal risks for 2016 with this link its website

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