Canada has now been dealing with the effects of the COVID-19 pandemic for over two months, and in that time, businesses have faced a host of difficulties, from a loss of business to employee layoffs, paying rent, and even difficulty in completing mandatory tasks while following provincial and federal health guidelines to lower the risk of infection. In response to these challenges, the federal and provincial governments have undertaken recent initiatives aimed at providing assistance and relief to businesses in Canada.
Provincial Legislative Amendments
Businesses are required to perform certain duties in order to maintain compliance with the law. In particular, formalities such as annual meetings, the execution of legal documents and more must be carried out in accordance with various Acts, within the prescribed time frames. All of these prove challenging in the face of restrictions limiting the number of people who can be in a room together, and more importantly, may pose a threat to the physical safety of those who are present. In response, the provincial government implemented the COVID-19 Response and Reforms to Modernize Ontario Act, 2020, which came into force earlier this month. This legislation, in part, aims to make carrying on business in the province easier by amending certain sections of the Corporations Act, the Business Corporations Act, the Co-operative Corporations Act and the Condominium Act, 1998.
In particular, the following changes have been implemented:
Deferral of Annual Meetings
Ontario businesses are normally required to hold an annual shareholder meeting within 18 months of incorporation, and then annually, within 15 months of the previous meeting. The new rules now permit businesses to defer these meetings during the period of emergency. Going forward, annual meetings can be deferred to within 90 days of the period of emergency being terminated in Ontario. This is retroactive to the start of the emergency period on March 17th.
Meeting via Electronic Means
The OBCA normally holds that annual shareholder and director meetings may be held electronically unless there is language to the contrary contained in the company’s by-laws or articles. The new legislation permits companies to override any contrary language during the period of emergency and hold meetings (and votes) via electronic means rather than in person.
Electronic Execution and Filing of Documents
Businesses will now be permitted to execute and file mandatory documents with the provincial government via electronic means, negating the need to meet in person to sign paperwork. This is similar to provisions that were recently introduced to enable the remote execution of Wills and other estate documents.
According to Lisa Thompson, Minister of Government and Consumer Services, these changes will allow companies to move forward with their obligations while keeping individuals safe and promoting a flattening of the curve throughout the province:
“The COVID-19 outbreak has forced change upon everyone in order to adhere to public health measures and to flatten the curve. The reality is, we must balance the need to practice physical distancing with the need to conduct business each and every day. These legislative changes will provide corporations with an opportunity to rethink how they operate in the new normal and be more efficient in the future.”
Canada Emergency Commercial Rent Assistance (CECRA) Program
One of the primary challenges faced by businesses across the country is rent, which is often one of the largest monthly expenses for any business. During the current economic downturn, several businesses are faced with challenges in meeting this obligation while also struggling to pay employees and meet other financial liabilities. In response, the federal government created the CECRA to encourage businesses and commercial landlords to find mutual rent reduction arrangements during this period of emergency.
The fundamentals of the program work as follows:
- In order to be eligible for the benefit, a commercial landlord and tenant must first enter into an agreement to reduce the tenant’s gross rent by at least 75% during April, May and June;
- To make up for the reduction, the federal and provincial governments will extend a forgivable loan to the landlord covering 50% of the gross rent, with the landlord and tenant being responsible to cover the remaining 50%;
- The reduction of rent must be final, and not simply a deferral; the landlord may not attempt to recover the remainder of the rent from the tenant down the road;
- The property owner must agree to an eviction moratorium during the applicable period; and
- The loan will be forgiven so long as the landlord complies with the terms and conditions of the program.
More details about the program can be found here.
The skilled business lawyers at GLG LLP in Toronto regularly assist corporate clients with a variety of issues, including the configuration and structure of a venture in a way that is most beneficial to those involved. Further, we advise and represent corporate clients on related matters including commercial real estate ventures and litigation if necessary. If you are a business owner with concerns related to your obligations and responsibilities in light of COVID-19, we can help. Call 416-272-7557 or complete the online form to arrange a consultation with one of our lawyers today.