You may be familiar with a parent's teaching to
"share" with others – "sharing is
caring". This teaching has been a part of our economic system
throughout history; bartering and sharing of goods is not a new
concept. However, in recent years, "sharing" has entered
the marketplace in new and innovative ways, primarily by
facilitating elaborate peer-to-peer networks. Many businesses rely
on the concept of collaborative consumption to create value for
shareholders, and have been highly successful in doing so. Some of
the sharing economy pioneers include Airbnb, Uber and Spotify.
The sharing economy is a socio-economic ecosystem that is
supported by the sharing of human and physical resources. Companies
in the sharing economy unlock the potential of underused assets. As
a result, the sharing economy has recently received acolytes from
industry experts. In 2011, collaborative consumption was named one
of TIME Magazine's greatest ideas that will change the world. The
Ontario Chamber of Commerce, in Harnessing the Power of the Sharing
Economy, states that peer-to-peer networks have
the potential to become a significant segment of Ontario's
future economic activity. According to the Consumer Intelligence Series: The Sharing Economy,
published by PwC in April 2015, there is a significant and growing
appetite for business opportunities in the sharing economy.
With its many benefits and minimal barriers to entry, it is
likely that we will witness an increase in the number of businesses
participating in this sphere. With this growth, come positive
implications on M&A.
Zipcar Inc. is a recent example of a "sharing"
business that achieved the mark of success of many start-up
companies; Zipcar Inc. was bought out by and earned $173.4 million
in an IPO in 2011 and was subsequently acquired for $509.9
million in 2013.
Despite the potential growth in the sharing economy, investors
and purchasers must remain aware of its potential risks. Firstly,
trust is an integral element of the sharing economy. Unfortunately,
this social sentiment is difficult to transfer. Courts have
historically barred the transfer of contracts that are of a
personal nature (Warner Bros Pictures vNelson,
 3 All ER 160). This makes for potential complexity and
increased risk in the event of a change of ownership. Further, many
of the industries where these businesses operate remain
unregulated. For example, the hospitality industry is subject to a
large amount of regulation, escaped by companies such as Airbnb and
Couchsurfing. Although deregulation may spawn an environment for
merger, it increases the risk of encountering a litigious business
The greatest inhibitors to this potential source of M&A are
the risks associated with the unaccustomed legal system and the
potential for liability. So long as businesses in the sharing
economy are able to effectively combat these risks, it is likely
that we will witness an increase in M&A activity as a result of
this new-found and highly accessible niche.
The author would like to thank Lauren Day, articling
student, for her assistance in preparing this legal
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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