Disputes – we try to avoid them like potholes but
let's face it, even with the best maneuvering capabilities,
sometimes they're just unavoidable. While agreements with third
parties generally set out the governing laws and forums for
disputes, what happens to internal disputes in corporations with a
national reach? Where are matters resolved and what law governs?
Although we may not always be able to avoid the potholes, we can
choose where we get our repairs done.
Forum selection by-laws or intra-corporate jurisdiction clauses
ensure that all litigation arising out of a corporation's
internal affairs are to be held in a specific jurisdiction which
generally is the place of incorporation. In the U.S., Delaware
corporations began adopting this practice in order to address the
flood of multijurisdictional class actions against U.S.
corporations and the U.S. courts have enforced such by-laws.
Recently, Canadian corporations have begun doing the same. But do
forum selection by-laws have any place in the not-for-profit world?
We think so.
There are a number of potential benefits derived from having
forum selection by-laws and they are not restricted to publicly
traded companies and securities class actions. Forum selection
by-laws would address a number matters that affect not-for-profit
corporations including breach of fiduciary duties and
non-compliance with a corporation's governing legislation, to
name a few. By adopting forum selection by-laws, corporations,
including not-for-profit corporations, may (i) avoid
inconsistencies by selecting a single litigation forum with the
greatest degree of knowledge and expertise; and (ii) minimize costs
and inefficiencies by avoiding duplicative matters held in multiple
Canadian courts, unlike their U.S. counterparts, have yet to
confirm the validity of forum selection by-laws but there is no
reason to think that such provisions would not be enforceable in
Canada. Although they are not a solution for internal disputes,
forum selection by-laws will allow national corporations to bring
some certainty and efficiency to intra-corporate litigation.
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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