Canadian Legal System & Business Protection: A BUS2010 Analysis

This essay analyzes the Canadian legal system's role in protecting businesses, focusing on how the Canadian Business Act and other regulations govern corporate operations. It discusses the benefits of incorporation, such as protection of personal liability and tax advantages, and outlines the regulations businesses must adhere to, including those related to human resources, marketing, and health and safety. The essay also explores how Canadian Business Law protects assets during financial distress, covering bankruptcy and insolvency proceedings, and examines key legal issues impacting Canadian businesses, such as climate change, privacy class actions, and IT security. Furthermore, it highlights the influence of international trade agreements like CETA and the Trans-Pacific Partnership on Canadian industries. Overall, the essay demonstrates the comprehensive nature of the Canadian legal framework in supporting and safeguarding businesses through various policies, agreements, and treaties.

Running head: CORPORATIONS LAW
CASE STUDY ANALYSIS
Name of the Student:
Name of the University:
Author Note:

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Answer:
Introduction:
The operations of businesses in Canada are controlled by the Canadian Company law
provided such business or corporation is formed under either provincial or federal authority. The
Canadian Business Act governs the corporations or businesses which are federal incorporated1.
The territories and provinces of Canada have laws that allow and govern the working and
operations of the corporations located within their jurisdictional areas. The corporations can be
incorporated federally or provincially depends on several business factors like scope and others.
Discussion:
Before the Confederation, the Canadian companies were organized by means of several
methods for instance, by contract like partnership or unincorporated company, by royal charter
as seen in case of Hudson's Bay Company, by UK Act of Parliament as applicable to the Canada
Company, by the Act under local legislation or created as a joint-stock company without any
limited liability. Prior to 1862, limited liability was regarded as an exception that is granted to
some companies by any special Act or royal charter. After Companies Act 18622 was introduced
in the UK company law, the Canadian colonies also enacted legislation in this regard.
On Confederation, section 92(11) of the Constitution Act of 18673 granted jurisdictions on
‘Incorporation of Companies with Provincial Objects’. In 1881, in the case of The Citizens
Insurance Company of Canada and The Queen Insurance Company v Parsons4, it was decided
1 Canada Business Corporations Act R.S.C., 1985, c. C-44.
2 The Companies Act 1862.
3 The Constitution Act, 1867.
4 The Citizens Insurance Company of Canada and The Queen Insurance Company v Parsons [1881] UKPC 49.

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that Canadian Parliament had the power to incorporate companies with better scope. In the case
of The John Deere Plow Company Limited v Theodore F. Wharton and others5, it was decided
that provincial states would not be interfering with a company federally incorporated by
permitting them to get locally registered for conducting business. In another case of The
Bonanza Creek Gold Mining Company Limited v The King and another [1916]6 on appeal from
made from Canada, after overruling decision of Bonanza Creek Gold Mining Co. v. The King7 it
was decided that operation of the company was not limited to the provinces as long it was
registered or licensed to operate in some different jurisdiction. Presently, Canada Business
Corporations Act generally states provisions for creation of company by articles of
incorporation.
When a company undergoes incorporation, under Canadian Business law, several
benefits are there. Firstly, the benefit is the protection of personal liability. It is the foremost
reason for incorporating a company. In such case, if a suit is instituted against a company or
judgment is given against the company, the director of the company cannot be held liable; his
personal assets cannot be seized. Secondly, another benefit is potential tax benefits. More types
of tax options are available to corporations than available to any partnerships or proprietorships.
Several plans in relation to pensions, stock marketing or profit sharing are available to the
owners belonging to the corporations. For instance, in most of the cases, a corporation can
deduct the premiums of health and life insurances from the salary of the employees decreasing
their tax burden.
5 The John Deere Plow Company Limited v Theodore F. Wharton and others [1914] UKPC 27, [1915] AC 330.
6 The Bonanza Creek Gold Mining Company Limited v The King and another [1916] UKPC 11, [1916] 1 AC 566.
7 Bonanza Creek Gold Mining Co. v. The King 1915 CanLII 63, 50 SCR 534.

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Apart from these, in order to operate and manage a business properly, there lie few rules
which must be followed by every business. Apart from these, certain standards and regulations
are required to be met to increase the credibility and efficiency of the business. These standards
and regulations vary with industries and often particular for certain business activities. They are
as follows;
1) Regulated activities of business:
These include:
o registering the business,
o understanding the regulations of human resources like hiring of employees, standard of
working of the labours, wages, remunerations,
o regulations related to marketing, sales and advertising which are needed to attract new
customers to grow the business,
o getting acquainted with the anti spam law of Canada,
o understanding the privacy of the business,
o following the regulations related to health and safety,
o Following the exporting, importing as well as environmental regulations and
o Considering the building codes and standards related to it.
2) Regulations of different types of businesses:
It is of no doubt that several types of industries are there and they are regulated in
different forms. To effectively control these varieties of businesses, there are some key
responsibilities that must be followed in those industries;

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CORPORATIONS LAW
o Understanding the essentials required to practice a particular type of business in Canada,
o Referring to the federal, territorial or provincial and municipal licenses and permits that
are essential for starting of a business or managing it,
o Considering the regulations that are applicable to the business if it is related to the agri
food and agricultural industry.
o Learning about the key regulations, licenses and permits applicable to the small
businesses in relation to financial services field.
o Getting acquainted with the national building codes which include codes in relation to
energy efficiency, plumbing, construction and safety of fire.
Moreover, Canadian Business Law protects assets from the effect of financial disaster.
When a business turns into insolvency or bankruptcy or when the money lender has reasons to
believe that the business is under serious financial crisis, the money lender can take his action to
reduce such losses. These lenders take help from the insolvency attorneys to ensure that they are
working as per laws and to secure their rights such that the principal is held liable personally for
any problems. A principal of any business may have strong reasons for turning the business into
bankruptcy or may convince the money lender to place the business or company into
receivership by the following means as per the Canadian Business Law; by acting in time, the
assets of the business may be disposed off to repay the loans of the creditors such that the
personal guarantees and assets are encroached upon, or by winding up of the company. The
principal instead of allowing winding up, may ask a professional to allow liquidation such that
the creditors are paid off according to the security and priorities of the creditors. Moreover, the
principal also has the option to refer to a professional to liquidate the business such that the

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creditors will have knowledge about the funds such that it had been paid out properly and further
a report will be given to the creditors such that no funds were taken by the principal.
In addition to these, as per the Canadian Business Law, even an insolvent company can
be saved by using the provisions of the Bankruptcy and Insolvency Act8 by filing a Proposal with
the creditors or the money lenders of the company. The method by following which this Proposal
usually works is that the business or the company through a Trustee in case of Bankruptcy
provides the Proposal in form of an offer to the creditors of the company requesting them to take
less than the amount of money actually owed by it such that the company can survive. The
trustee by working with the owners of the company drafts the said Proposal to represent a ‘win-
win’ condition for both the creditors and the company. Usually, these creditors are requested to
give up the rights to the money they owe in return of an offer by the company to pay some dollar
over time. In some situations, the company repays 100 percent of the money owed by it but it is
given some period of time during which such repayment is suspended. Thus a breathing time is
allowed as per the Business Law to allow the company a breathing time to recover from the loss
and collect some money to repay the creditors9. If a Proposal is successfully worked out, the
company is able to survive and thus it wins whereas the creditors also win as they are able to
retain an esteemed customer and in addition to this they also get some amount of their money.
However, if the company is turned into bankruptcy, the creditors probably will not be getting
anything.
8 Bankruptcy and Insolvency Act ( R.S.C. , 1985, c. B-3).
9Stritch, Andrew. "Policy analytical capacity and Canadian business associations." Policy analysis in
Canada (2018): 297.

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However, there are approximately ten legal issues that must be taken into account in case
of any Canadian Business10. The legal issues are climate change, privacy class actions, non
privileged information leveraging by tax authorities, Cyber-sex and IT security, checking fraud
in e-payment systems, business decisions being impacted by Regulatory Purgatory, compliance,
anti-spam law of Canada and others. All these factors of legal risk have being discussed in detail
in the following part of the write up.
 Climate change:
The greenhouse gas regime of Canada is said to be one of the leading challenges faced by
the businesses of the country. The Canadian companies have to undergo various changes
like installing large carbon emitters to check the effect of the green house gases on
climate.
 Actions of Privacy class:
A new trend has come across of launching of privacy class that follows the breach of
cyber security or disclosure of personal information improperly. Of late, the privacy class
actions are growing in the country due to data breaches and several suits are pending in
courts.
 IT security and cybersex:
Recently this has become a new threat where personal details of people were being
exposed. This happened when many users or subscribers entered their professional email
address to sign up in various websites. In addition to reputation loss, this questions the
security systems used by the employers at high risk.
10Carpentier, Cécile, and Jean-Marc Suret. "Canadian business angel perspectives on exit: a research
note." International Small Business Journal 33.5 (2015): 582-593.

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 The CETA deal and the Trans-Pacific Partnership:
Canada has signed negotiations with as many as 11 countries on Trans-Pacific
Partnership that can be regarded as one of the most significant trade agreement in history.
Moreover, Canada has allowed a new area of free trade by concluding Comprehensive
Economic and Trade Agreement or CETA with the European Union together with the
several bilateral agreements of trade and Agreement of the North American Free Trade.
All these will affect the manufacturing, agricultural and service industries through the
Canada.
Conclusion:
Thus from the above discussion, it is seen that Canada has several provisions in
the legislations that are concerned with the safe dealing of the business. Moreover, the
Canadian government has also tried its best to help the small scale as well as large
industries by its various policies, agreements and treaties that not only help to boost the
businesses but also provides protection to them.

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References:
Bankruptcy and Insolvency Act ( R.S.C. , 1985, c. B-3).
Bonanza Creek Gold Mining Co. v. The King 1915 CanLII 63, 50 SCR 534.
Canada Business Corporations Act R.S.C., 1985, c. C-44.
Carpentier, Cécile, and Jean-Marc Suret. "Canadian business angel perspectives on exit: a
research note." International Small Business Journal 33.5 (2015): 582-593.
Stritch, Andrew. "Policy analytical capacity and Canadian business associations." Policy analysis
in Canada (2018): 297.
The Bonanza Creek Gold Mining Company Limited v The King and another [1916] UKPC 11,
[1916] 1 AC 566.
The Citizens Insurance Company of Canada and The Queen Insurance Company v Parsons
[1881] UKPC 49.
The Companies Act 1862.
The Constitution Act, 1867.
The John Deere Plow Company Limited v Theodore F. Wharton and others [1914] UKPC 27,
[1915] AC 330.