Canada: Corporate Digest Volume 1 - Number 2 October 18, 2004

Edited by Rod Seyffert

• Important New Developments in Dealing with the Government of Canada
  Originally published in TAXATION LAW BULLETIN - September 2004, Issue No. 055

• Big Fines for Internet Defamation
  Originally published in ADBYTES - Special Dual Edition, July/August 2004, No. 9

• Canadian Federal Election 2004: What Does It Hold For Canada's Environmental Agenda?
  Originally published in GOVERNMENT BRIEFING - August 13, 2004, Vol. 10, No. 3

• Video Cameras in the Workplace
  Originally published in PRIVACY BRIEFING - July 9, 2004, Vol. 3, No. 14

• Canada: Privacy Commissioner of Canada Issues Best Practice Guides
  Originally published in PRIVACY BRIEFING - August 20, 2004, Vol. 3, No. 17

• Amendments to OSC Rule 61-501, Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions
  Originally published in M&A UPDATE - June 2004

• Due Diligence, An added Incentive to "pay it its due"
  Originally published in M&A UPDATE - July 2004

• "Sale of All or Substantially All" revisited in light of the Hollinger Decision
  Originally published in M&A UPDATE - August 2004

• The Supreme Court of Canada and Valuation of Environmental Loss
  Originally published in the ENVIRONMENTAL BULLETIN - July 2004, Vol. 1, No. 7

• First Bill C-45 Amendments Pending
  Originally published in OHSLAW REPORT - September, 2004

• Monsanto Decision
  Originally published in PENSIONS BULLETIN - August 3, 2004, Vol. 1, No. 3

• Limited Liability Companies Coming to Alberta?
  Originally published in CANADIANTAX@GOWLINGS - Sept. 8, 2004, Vol.1, No.1

• Québec Government Tables Legislation For New Public-Private Infrastructure Partnership
  Originally published in INFRASTRUCTURE@GOWLINGS - July 16, 2004, Vol.1, No.3

• Russian Technology Transfers
  Originally published in MOSCOW ONLINE - July 16, 2004, Vol. 1, No. 1

Important New Developments in Dealing with the Government of Canada

"Public ethics" was a key theme in the recent federal election campaign. Of particular relevance to corporations and associations are a series of three new laws, rules and guidelines at the federal level that have materialized over the last several months. These relate to (1) political donations, (2) lobbyist registration and (3) hospitality offered to public servants. Each has important implications for organizations' involvement in political and public-policy processes.

Major changes to Canada's political finance law at the federal level have been in effect since January 1, 2004, as a consequence of an Act to Amend the Canada Elections Act and the Income Tax Act (political financing). It is important for Canadian companies to be aware of the new rules, as they significantly limited - indeed, all but eliminate - corporate donations in federal politics. Among the law's most important provisions are the prohibition of political donations by corporations, unions and unincorporated associations to registered federal political parties and leadership contestants and the establishment of limits (i.e. $1,000) on corporate and union donations to local party constituency associations, party nomination contestants and official candidates of a particular registered party. The law also imposes limits on the contributions of individuals and establishes a regime for public financing of political parties.

Important changes to the federal Lobbyists Registration Act which were passed by Parliament in 2003 are not yet in effect. Consequently, the annual re-registration by In-House corporate lobbyists should be, for the time being, submitted in the format required over the last several years. It is anticipated that the new provisions of the LRA - which include significant changes in the manner in which In-House corporate lobbyists must register - will take effect later this year once the accompanying regulations are completed and subjected to a period of consultations. That is expected sometime later this summer or early fall.

There have also been a number of important changes over the last year to federal rules and policies concerning "gifts and hospitality" for federal public office holders, particularly as they relate to Ministers, members of ministerial political staff and to public servants (i.e. bureaucrats). The new rules are significantly stricter than had been the case in the past.

June 2004: The Ontario Court of Appeal has overturned a lower court decision involving Internet libel in the Barrick Gold Corporation v. Jorge Lopehandia and Chile Mineral Fields Canada Ltd. case. The issues on appeal were what damages (general and punitive) should be awarded in Internet defamation cases, and whether injunctive relief should be granted in such circumstances. In 2001, Mr. Lopehandia asserted a claim against one of Barrick's mining properties in Chile. Barrick insisted that the grievance was unfounded. Following Barrick's refusal to settle the complaint, Mr. Lopehandia embarked on what the Court viewed as a systematic, extensive and vicious campaign of libel over an extraordinarily lengthy period, with the express purpose and intent of embarrassing Barrick and injuring its reputation. The campaign was conducted over the Internet and involved the posting of hundreds of false and defamatory statements concerning Barrick on various Web sites.

The Court of Appeal increased the trial judge's award by quintupling the general damages award to $75K and adding $50K in punitive damages. The Court also permanently restrained the defendant from disseminating, posting on the Internet or publishing in any manner whatsoever, defamatory statements concerning Barrick. Barrick was also awarded its costs for the appeal.

The Court held that:
Internet defamation is distinguished from its less pervasive cousins, in terms of its potential to damage the reputation of individuals and corporations… especially its interactive nature, its potential for being taken at face value, and its absolute and immediate worldwide ubiquity and accessibility. 

On June 28, 2004, Canadians went to the polls to elect a new Parliament of Canada. The result was a minority Liberal government, with no single opposition party holding the balance of power. The Liberals now hold 135 of the 308 seats in Parliament. The Conservatives hold 99 seats, the Bloc Québécois ("BQ") 54, the New Democratic Party ("NDP") 19, and one seat is held by an independent member of the House. (Mr. Chuck Cadman [Surry North, British Columbia], who sat as a Conservative before the election, lost the nomination but ran and won the seat anyway.)

Paul Martin remains the Prime Minister of Canada. He has indicated he will proceed with the implementation of the Liberal Party's policy agenda, building alliances with the other parties in the House of Commons on an issue-specific basis.

What does the result of Election 2004 mean for the future of the Liberal Party's environmental policies?

It may mean that the Liberal government will be able to successfully advance a number of significant environmental initiatives in alliance with several, if not all, of the opposition parties. An assessment of the environmental platforms of the various federal parties indicates more commonalities than differences.

The Liberals have pronounced repeatedly a strong commitment to implement the Kyoto Accord on Climate Change. They propose to proceed in a fashion that recognizes regional differences and which does not constrain Canada's economic growth. Kyoto implementation is strongly supported by the NDP and the BQ. NDP and BQ support affords the Liberals a large majority in the House of Commons which would be supportive of Kyoto implementation. Only the Conservative Party opposed its implementation, and its opposition alone in the House of Commons would be insufficient to defeat implementation legislation.

The Liberal platform strongly endorsed the principle of environmental sustainability, proposing to continue with current programs to clean-up contaminated sites and the development of clean and renewable energy sources. The Liberals also made a strong commitment to accelerate investment in environmental technologies as well as the renewal and enhancement of Canada's environmental infrastructure, particularly in urban centres.

Advancing these commitments will be Stephane Dion, the newly appointed Minister of the Environment who replaces David Anderson, who held the position since August 1999. At the same time, Bryon Wilfert was appointed Parliamentary Secretary to the Minister of the Environment. Mr. Dion's lack of direct experience inside or outside of government in matters concerning the environment may or may not indicate the priority Paul Martin attaches to this portfolio. However, given Mr. Dion's pivotal past role as Intergovernmental Affairs Minister during the events leading up to the Supreme Court opinion on unilateral secession of Quebec, and on the Clarity Act, Martin's selection of Mr. Dion may signal a new active era of environmental policy development.

The Conservative Party, led by Stephen Harper, is Canada's Official Opposition. While against the implementation of the Kyoto Protocol, it was strongly in favour of program development focused on clean air, clean water, clean land and clean energy. The Conservatives would have Canada negotiate a continental clean air program with the United States to reduce the emissions of nitrogen oxide, sulphur dioxide, and volatile organic compounds. The Conservatives also favour federal programs to clean-up contaminated sites and redevelop brownfields, enhancing urban revitalization, and to develop renewable energy sources and renewable energy technologies. Bob Mills was recently reappointed Environment Critic for the Conservative Party.

The NDP environmental platform was probably the most detailed of the major parties. In addition to strongly favouring Kyoto implementation, the NDP would be supportive of clean air and clean water programs. Indeed, while a left-of-centre political party, the NDP platform proposed the creation of a Canadian Climate Change Exchange, to use market economics to reduce emissions and generate revenue for green energy and sustainable development through the trading of emission credits. The NDP are also supportive of public investment in environmental infrastructure, enhanced regulations with respect to toxic chemicals, and the strengthening of the environmental protection provisions of NAFTA. Nathan Cullen, a newly elected MP, was appointed Environment Critic for the NDP. However, leader Jack Layton kept responsibility for energy and climate change, meaning he and not Mr. Cullen will be the lead in pressing the Liberals to maintain their commitments on the Kyoto protocol.

The BQ's mandate is limited to the representation of ridings in the Province of Quebec, and solely from the perspective of protecting what it sees to be Quebec's interests. Its environmental platform supports the implementation of Kyoto, the protection of environmental diversity, the strengthening of regulation with respect to the approval of genetically modified organisms and the end to government support of the nuclear power industry. The BQ would have the federal monies spent in support of the nuclear power industry redirected to research and development on green energy. The BQ releases their shadow cabinet at the end of August. Bernard Bigras has held the position of environment critic since 2000.  While there are many contentious issues facing the next Parliament of Canada, the Liberal government may well find a broad base of support from the other parties for environmental protection initiatives. Certainly, there should be sufficient support in principle for legislation to implement Kyoto, to promote the use of renewable energy, to reduce levels of air contaminants, to invest in environmental infrastructure revitalization and enhancement, to clean-up contaminated sites and to invest in environmental technologies.

On the other hand, the reality of a minority government is that nothing is certain, least of all the durability of the government. In order to pass legislation through the House of Commons deals will have to be brokered and compromises made. This will mean that the Members of the House of Commons in opposition will have more power than they would have in a majority government and Standing Committees of Parliament will also be able to play a more active and meaningful role in legislation development. Policy development, law making, and implementation through regulation, will now be more complex, and more interesting, than ever.

For private sector stakeholders, it is important to realize that public policy advocacy now has to be addressed not only to the government and its bureaucracy but also to the parties in opposition. The outcome of questions referred to parliamentary committees is now more unpredictable than ever, and opportunities to affect committee deliberations through skilled presentations are greater than ever. Private sector stakeholders should not only be carefully watching developments on Parliament Hill, they should ensure that their voices and positions are properly directed, heard and understood.

Two employees of a railway complained that the company used video cameras ordinarily used for operational purposes to determine that they were leaving company property during regular working hours. The company then imposed a disciplinary penalty against them for leaving work without permission.

The Assistant Commissioner deliberated as follows:

This Office has a lead role to play in determining whether organizations subject to the Act are adhering to it, and in educating them about their obligations, and the public about its rights, under the Act. As well, the present complaints raised issues that may set a precedent. She therefore declined to exercise the discretion that subsection 13(2) of the Act grants her, to not deal with these complaints.

The Act does not restrict the definition of personal information to information that is recorded only. It clearly defines personal information to include any information about an identifiable individual. She therefore found that the cameras in question do collect the personal information of employees, and were used in this instance to collect the personal information of the complainants, the fact that they were leaving the yard during work hours.

There is no question that the customary use of the cameras to enhance the safety of the workplace is appropriate, as per subsection 5(3) of the Act. The cameras were installed subsequent to a risk analysis, and their use is supported by both union and management.

Turning to the issue of the appropriateness of using the cameras in the circumstances surrounding the complaints, the Assistant Commissioner noted that the company did not present any evidence that unauthorized absences from the workplace were a persistent problem with the complainants, or, for that matter, with other employees. The company did not present any evidence of other, less intrusive efforts it had taken to manage the problem of unauthorized absences. She concluded that a reasonable person would not consider it appropriate to use the cameras to manage a workplace performance issue. This use was contrary to subsection 5(3) of the Act, in the circumstances.

Where an employer suspects that the relationship of trust has been broken, it can initiate the collection of information for the purposes of investigating that breach without the consent of the individual. The only evidence that the company presented to suggest a possible breach in the relationship of trust was the fact that the employees in question were entering a private vehicle on this occasion. The company admitted that the employees might have been leaving the site with the permission of their immediate supervisor, and that the manager who used the camera only determined after the fact that the employees left the work site without such permission. The Assistant Commissioner remarked that cameras are highly privacy intrusive, and cautioned that a decision to use them, even in the circumstances set out in Paragraph 7(1)(b), must be taken with great care and deliberation. Where there is a less intrusive method of achieving the same result, it should be the first avenue of recourse.

Accordingly, she concluded that the complaints were well founded.

Full text of finding available at:
http://www.privcom.gc.ca/cf-dc/2004/cf-dc_040219_02_e.asp

The federal Privacy Commissioner's Office has issued three sets of guidelines for use by Canadians. Two are helpful to organizations while the third is aimed at individuals and their use of the Internet.

Best Practices for dealing with pre-PIPEDA personal information (grandfathering)
http://www.privcom.gc.ca/fs-fi/02_05_d_22_e.asp

Best Practices for the use of Social Insurance Numbers in the private sector
http://www.privcom.gc.ca/fs-fi/02_05_d_21_e.asp

Protecting Your Privacy on the Internet
http://www.privcom.gc.ca/fs-fi/02_05_d_13_e.asp

The Ontario Securities Commission (the "OSC") amended OSC Rule 61-501, Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions (the "Rule") protecting minority security holders to clarify confusing provisions, reduce the need to apply for exemptive relief and eliminate the regulatory burden where costs of compliance with the Rule have been determined to outweigh the benefits. This article summarizes the amendments to this Rule.

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On the corporate front, considerable attention has recently been give to the increased exposure of directors and officers to personal liability. In an M&A transaction, while the due diligence lifeboat may save directors and officers from liability for misrepresentation, it might also save them from making ship-sinking decisions.

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Recent Canadian jurisprudence indicates that Canadian courts will likely apply both a qualitative and quantitative test to asset sales to determine whether a shareholder vote is required for a sale of all or substantially all of the assets of a corporation. The recent U.S. decision in Hollinger Inc. v. Hollinger International provides guidance to management and boards of directors considering asset sales.

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In a recent decision, B.C. v. Canfor, the Supreme Court of Canada ruled on a claim for damages by the province of British Columbia for the loss of harvestable and non-harvestable timber in a fire that destroyed provincial logging lands. A majority of the Court held that, as a matter of evidence, the Crown was unable to prove any financial loss, and dismissed the claim for environmental loss as it had not been included in the original pleading that commenced the action in the B.C. trial court. The majority did acknowledge that it may be appropriate to consider awarding damages for ecological or environmental damage in a future case, on suitable evidence. Binnie, J. stated that the development of the common law, if it occurs in a principled and incremental fashion, could assist in achieving the "fundamental value of environmental protection". In a strong dissent, three judges of the court would have upheld the province's claim for damages for the loss of both harvestable and non harvestable timber and in doing so, provided an analysis in support of valuing environmental loss in Canada.

For a more detailed summary of the case and an analysis of its significance, see the article written by Gowlings summer student, Joanne Grower at:
http://www.gowlings.com/resources/publications.asp?pubid=1018

The first charges under the Bill C-45 amendments to the Criminal Code have been laid against a supervisor of a construction project in York Region. In a media release dated August 26, 2004, the York Regional Police stated, "York Regional Police have arrested a Newmarket man in connection with a trench collapse in King Township on April 19, 2004 that claimed the life of a 38-year old Toronto man."

This first charge under Bill C-45, known as the Westray Bill, will be watched closely by health and safety professionals, risk managers, executives, and legal counsel across Canada. Twenty-six miners were killed at the Westray mine in 1992. No manager or employer was ever held legally responsible for the Westray disaster.

On March 31, 2004, Bill C-45 came into force, amending the Criminal Code to establish a new OHS duty on everyone who directs how work is done or has authority to direct how work is done in the workplace. This new duty, if breached, would give rise to the crime of OHS Criminal Negligence.

The police media release went on to state that, "The individual accused has been charged with one count of criminal negligence causing death." The accused was supervising the deceased and another man as they repaired a drainage problem at 10th Concession residence in the Township of King.

The workers had been using a mini-excavator to dig a 12-foot trench at the front of the garage. The deceased had been working inside the excavation when the ground gave way and he became trapped by heavy dirt. Emergency services were not able to revive the victim.

The maximum penalty under the Criminal Code for conviction of criminal negligence causing death is life imprisonment. The accused is scheduled to appear in the Ontario Court of Justice in Newmarket on September 28, 2004. The Ministry of Labour investigation is continuing.

On July 29, 2004, the Supreme Court of Canada (the "Court") released its decision in Monsanto Canada Inc. v. Ontario (Superintendent of
Financial Services).

In Monsanto, the Court was asked to answer a very narrow question: does subsection 70(6) of the Pension Benefits Act (Ontario) (the "PBA") require the distribution of a proportional share of surplus when a defined benefit pension plan is partially wound up? The Superintendent of Financial Services (Ontario) (the "Superintendent") had determined that it does. On appeal from the Superintendent's decision, a majority of the Financial Services Tribunal (Ontario) (the "Tribunal") disagreed, stating that subsection 70(6) simply provides the members affected by a partial wind up with a right to participate in surplus distribution upon the wind up in full of a pension plan. The Tribunal's decision was overturned by the Ontario Divisional Court on appeal, and the Court of Appeal agreed with the Divisional Court. The Court dismissed a further appeal, effectively upholding the Superintendent's original determination.

The facts in Monsanto were straightforward. The corporate employer, Monsanto, undertook a reorganization that resulted in 146 active members of its defined benefit pension plan receiving notice that their employment would be terminated. The resulting partial wind up of the relevant pension plan was effective May 31, 1997. At the time, the plan contained an actuarial surplus of slightly in excess of $19 million (prior to benefit enhancements granted on the partial wind up to certain of the affected members), of which approximately $3 million was attributable to the members of the plan that were affected by the partial wind up.

In arriving at its decision, the Court acknowledged that the voluntary nature of the private pension system required that legislative interventions in this area be carefully calibrated to avoid discouraging employers from making plan decisions that are advantageous to their employees. The Court stated that the PBA seeks, in some measure, a balance between employee and employer interests that will be beneficial to both groups and for the greater public interest in establishing pension standards. While the Court acknowledged that any decision on its part must also balance these interests, the Court indicated that its interpretation of subsection 70(6) of the PBA would be "unlikely to disrupt the balance between employer and employee interests". In other words, the Court was not persuaded by arguments advanced by Monsanto and others that, by dismissing the appeal, it would be driving one more nail in the coffin of defined benefit pension plans.

While the Monsanto decision is fairly narrow in scope, its implications cannot be underestimated. The most immediate implications will be felt by Ontario-registered plans that have previously filed a partial wind up report, but pension plans that are registered in other jurisdictions may also be impacted by the decision.

Ontario-registered plans that have previously filed a partial wind up report - Administrators of pension plans that are registered with the Superintendent and who have previously filed a partial wind up report in respect of their plan will first feel the impact of the Monsanto decision. The Financial Services Commission of Ontario ("FSCO") announced, within hours of the release of the Monsanto decision, that within 30 days FSCO will be sending letters "requesting current compliance information from each plan administrator who filed a partial plan wind up report but who has not yet dealt with the related surplus." What is not clear is how far back FSCO will be reaching in its requests for compliance information and requirements to comply - to the date that the Superintendent issued the order that was the subject matter of the appeal in Monsanto, the date that subsection 70(6) was adopted by the Legislature under pension reform (1987), or perhaps even to the date that this concept was first addressed in Ontario legislation (1960s). The fact that the administrator of an Ontario-registered pension plan does not receive a notice from FSCO does not categorically mean that its plan(s) will not be affected by the decision - FSCO's records may not be complete, and as noted above, it is not known at this time how far back FSCO intends to "apply" the Monsanto decision. If FSCO does not reach back in time as far as it could in law, there is nothing to prevent plan members who were affected by a partial wind up of a pension plan in the past from exerting pressure on a plan administrator or former employer through legal action.

Ontario versus other jurisdictions - The narrow focus of the Court's decision in Monsanto was subsection 70(6) of the PBA. In other words, the Court was considering Ontario law. However, it is important to note that the pension benefits standards legislation of other jurisdictions in Canada contain, or may in the past have contained, provisions that are the same as, or similar to, subsection 70(6) of the PBA. As such, the Monsanto decision will be felt by the administrators and sponsors of pension plans registered in other jurisdictions in Canada as well - it is not restricted to benefits that are governed by Ontario law.

Surplus entitlement - It is important to note that the Monsanto decision does not address the issue of surplus entitlement on partial wind up - the issue of entitlement is governed by the terms of the plan and the related funding instruments, both current and historical, and applicable law. The practical implication of the Court's decision in Monsanto is that the surplus attributable to the portion of the plan that is partially wound up must be dealt with, either by way of benefit improvements to the partial wind up group, by way of employer surplus withdrawal application, or by a combination of the foregoing. Under current Ontario law, even if the employer "owns" the surplus in a pension plan, the employer is not entitled to withdraw surplus from the partially wound up portion of the plan, absent consent from the collective bargaining agent (if any) and the prescribed number of members and former members affected by the partial wind up. In this regard, the regulations under the PBA currently stipulate that 2/3 of the members of the plan and an "appropriate" number of the former members and other persons entitled to benefits from the plan must provide their consent. These surplus sharing regulations would presumably be "read down" by a court to apply only to members, former members and other beneficiaries affected by the partial wind up, but this is unclear. The surplus sharing regulations are slated to expire on December 31, 2004. It remains to be seen whether the regulations will be extended, as they have been on a continuous basis since the early 1990s, or whether the Ontario government will take this opportunity to change the rules with respect to surplus withdrawals from a partially or fully wound up pension plan.

Increased Litigation - In Ontario, prior to Monsanto, many employers were concerned with the implications that a partial wind up of their pension plan might have on their funding obligations to the pension plan(s) that they sponsor due to the so-called "Rule of 55". Under the Rule of 55, on a partial wind up, an affected member whose age plus service is equal to 55 or more is entitled to "grow in" to certain benefits under the pension plan as at the effective date of the partial wind up. These "grow in" benefits permit members who otherwise would not meet the plan's unreduced early retirement age and service requirements to become entitled to receive an unreduced pension upon attaining that age. The Court's decision in Monsanto may provide further reason for employers to be concerned with the implications of a partial wind up of their pension plan. Given the advantages that a partial wind up gives to terminating members (vesting of benefits; Rule of 55; surplus distribution) and the increased financial implications that a partial wind up may have for employers and the pension plans that they sponsor, it is reasonable to expect that the Monsanto decision will give rise to further litigation as plan members and employers struggle over the question of whether a partial wind up has been triggered in a particular case.

Deference to decisions of the Tribunal - In previous decisions, the courts had given some deference to decisions of the former Pension Commission of Ontario (the "PCO"), indicating that the standard of review to be applied by a court in reviewing decisions of the PCO was the standard of reasonableness. In Monsanto, the parties themselves, and the lower courts, had agreed that this was the standard to be applied in reviewing the Tribunal's decision. Notwithstanding this, the Court determined that, in light of a number of factors, the standard of review to be applied in this case was the standard of correctness. Of importance in the Court's determination was that, unlike the former PCO or FSCO, the Tribunal has no policy functions as part of its pensions mandate. While the Court was clear that the standard of review to be applied will depend on the particular issue under review in each case, it would appear that the standard of review for Tribunal decisions will, in general, be the standard of correctness, at least on matters of law. It can be expected that more appeals of Tribunal decisions will occur in the future, given that courts will, in most cases, not give deference to decisions of the Tribunal as they did to decisions of the former PCO.

Unanswered Issues - The Monsanto decision clarifies the law in this matter, however it raises other issues. For example:

• if the surplus identified in a previously-filed partial wind up report has since been reduced or eliminated (as will be so in many cases), what are the implications for employer liability? Will employer liability depend on the reasons that the surplus decreased (poor investment performance, employer contribution holidays, changes to long term interest rates, etc.)? The Superintendent has previously advised plan administrators and employers to ensure that there are sufficient assets in the plan to meet the plan's partial wind-up obligations. In light of the Monsanto decision, plan administrators that have not segregated the assets attributable to the partially wound up part of a pension plan should reconsider their previous decision.

• if an employer that clearly owns plan surplus in accordance with the plan and trust documentation chooses not to deal with surplus on partial wind up, what will happen?

• will the Court's decision in Monsanto result in the courts' attaching a fiduciary duty to employers or plan administrators (as applicable) to voluntarily commence partial wind up proceedings where it is clear that the Superintendent has the power to order a partial wind up?

• How will the decision impact on a plan's actuarial valuations and plan financial statements?

These issues and more will have to be addressed in the months and years ahead.

Hybrid entities, or entities that possess a certain set of characteristics for income tax purposes in one jurisdiction but a different set of characteristics for such purposes in another jurisdiction, have been useful in cross-border tax planning. For a number of years, the Nova Scotia Unlimited Liability Company ("NSULC") has been used as a hybrid entity, offering corporate characterization for Canadian tax purposes but, in appropriate circumstances, characterization as a flow-through entity for U.S. tax purposes. It appears that Alberta will be the second Province in Canada to offer the availability of a hybrid entity. The intent of the Government of Alberta to introduce legislation to permit the establishment of unlimited liability companies in Alberta was announced in its most recent Budget. We understand that the target date for the introduction of legislation in the legislature is this Fall, however, the release of legislation could be delayed until Spring if the government calls a Fall election.

The Alberta Budget announcement contained very few details and left one to wonder whether the Government of Alberta would introduce legislation based on Nova Scotia's existing NSULC law. In particular, because an NSULC is formed under somewhat antiquated company legislation, such an entity can often be difficult to work with. For example, it is often necessary to obtain court approval for a number of corporate steps that are much easier to effect under more modern corporate legislation. For example, the amalgamation of an NSULC with another corporation requires court approval. It would not be surprising to see the Government of Alberta introduce legislation for the establishment of corporations in Alberta that can achieve hybrid status, but that is more similar to more modern corporate legislation. We understand that while the characteristics of the new unlimited liability entity are intended to be modelled after the NSULC, the amendments are expected to be part of the existing Alberta Business Corporations Act. The Alberta Business Corporations Act is a modern corporate statute which provides for simplified incorporation and streamlined reorganization provisions, including the ability to amalgamate corporations without the requirement of court approval.

Stay tuned for further developments.

On June 17, 2004, the Québec government tabled legislation establishing a new agency to govern all public-private infrastructure partnerships within the province. The new agency will be called "Agence des partenariats public-privé du Québec" or "Partenariats Québec."

Its mission is to contribute to the renewal of public infrastructure and the enhancement of services delivered to citizens through public-private partnerships. The bill defines a public-private partnership contract as a "long term contract under which a public body allows a private-sector enterprise to participate, with or without a financial contribution, in designing, constructing or operating a public work." (Bill 61 s.6 National Assembly - First Session - Thirty Seventh Legislature Québec Official Publisher (2004)).

Among the proposed duties and functions of the agency are to:

• advise the government on any public-private partnership matter, particularly with regards to selection and prioritization;

• operate a public-private partnership knowledge and expertise centre that will be accessible to all persons;

• inform public bodies, the business community and the general public about the concept of public management in the public-private partnership mode;

• develop and apply promotion strategies to foster public-private partnerships;

• be involved in all aspects of the delivery of infrastructures, equipment and public services; and

• provide expert services to public bodies for the evaluation of their infrastructure, equipment and public service delivery projects in the public-private partnership mode.

In addition to detailing the financial and organizational structure of the agency, the bill also provides for the formation of special committees of experts chosen for their knowledge and expertise in fields related to public-private partnerships. The bill further stipulates that all public bodies must use the services of the agency for their public-private partnership project except in the case subject to the conditions determined by the government.

Although in its early stages, the Committee on Public Finance has been instructed to hold public hearings beginning on October 5, 2004 in pursuance of a general consultation on the bill.

Bill 61 s.6 National Assembly - First Session - Thirty Seventh Legislature Québec Official Publisher (2004)

Russia is a land of opportunities, and in this section, we focus on opportunities in Russian technology. In fact, this article is the first in a series on such technology transactions. This describes opportunities in a general sense, while later articles will discuss how to plan, negotiate and execute Russian technology transfer deals.

Russia is in a unique technology environment, with two primary aspects of specific interest here. First, under the Soviet system, technology was developed in contexts that were very different than those in other countries. This resulted in an incubation of technical approaches that rely upon different resource availability and different applications. Because of this, some of this technology presents "fresh" approaches to various industrial and other problems.

The second point of interest is that the collapse of Russian industrial activity since 1992 has resulted in depressed domestic demand for technology. While there certainly are Russian technologies with good domestic demand, for the most part, the supply of quality Russian technology and technologists far exceeds domestic demand. Despite the atrophy of research and development capabilities in Russia caused by the choking off of investment and operating capital for research institutes and scientists, Russia still has world class technical talent and capabilities.

Ultimately, these factors translate into real opportunities and competitive advantages for Russian technology export deals. Russian technology may provide valuable "fresh" approaches for problems and Russian scientists and research institutes are open for business to assist with research and development as well as other technological applications such as engineering testing, clinical trials and others.

There are several ways to make use of these opportunities. One way is to acquire the technology outright. Another is to obtain rights to use technology through a license arrangement. A third option is to undertake research and development or testing projects with Russian scientists or institutes. There are really any number of ways to make Russian technology work for you and we at Gowlings are here to help you make this happen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.