Canada: The Growing Importance Of Privacy Compliance In Transactions

Last Updated: August 4 2017
Article by Imran Ahmad

Increasingly, a key asset that organizations hold is the sensitive data they collect, use and retain about their customers, employees, and suppliers. It is therefore no surprise that data security and privacy compliance have become a top of mind consideration for organizations not only in the context of day-to-day operations, but also in connection with transactions they may be involved in.

While the federal Personal Information Protection and Electronic Documents Act ("PIPEDA") has been in place since 2000, the amendments made in 2015 through the enactment of the Digital Privacy Act were significant. Among other things, the Digital Privacy Act introduced an exemption that allows organizations to use personal information without the consent of the applicable individuals in the context of business transactions – commonly referred to as the "business transaction exemption". Simply put, business transactions that require personal information can proceed without obtaining explicit consent from each individual.

The Genesis of the Business Transaction Exemption

Prior to the enactment of the business transaction exemption, businesses often had to jump through hoops that were unreasonable from a commercial standpoint in order to obtain consent from each individual. In the 2012 Ontario Superior Court decision Re Southlake Regional Health Centre Employees' Credit Union Ltd., the Court expressed the need for the inclusion of a business transaction exemption under PIPEDA. Southlake Credit Union sought an exemption from the requirement to disclose the personal information of identifiable individuals to Energy Credit Union. The only information that would be disclosed was that which was necessary to complete the proposed transaction. While the Court ultimately granted the exemption, it also urged legislative changes that would permit such exemptions in the future so as to avoid unnecessary court applications.

What Business Transactions Are Exempt?

Broadly speaking, business transactions generally include the sale of a business, a merger, the making of a loan, or the lease of a company's assets. It is important to note that the exemptions for business transactions do not apply to a transaction which primarily involves the sale or lease of personal information.

There are four requirements that must be met to rely on the business transaction exemption:

  1. There must be an agreement, in writing, to limit the use and disclosure of personal information to that essential to the proposed transaction;
  2. Appropriate safeguards must be implemented to ensure the protection of the personal information;
  3. All personal information must be returned or destroyed if the transaction does not proceeds; and
  4. In the event the transaction does proceed, reasonable notice must be provided to each individual whose personal information was subject to the exemption.

Roadmap to Compliance

To rely on the business transaction exemption, organizations should ensure that the following steps are implemented:

Understand the Privacy Implications of the Transaction. It is important for organizations to understand, within the context of the transaction, what personal information is affected and how and where it is kept. For example, in transactions where personal information is a key component of the organization's assets, privacy concerns will play a more integral role in the overall structure of the deal. Therefore, understanding the nature and scope of both your business and the business of other parties to the transaction is essential to understanding and quantifying privacy concerns and obligations.

Establish a Privacy Strategy Team. Organizations should establish a privacy strategy team that can oversee all privacy and cybersecurity related matters. By working with other parties to the transaction, the Privacy Strategy Team can ensure that all employee contacts, confidentiality and non-disclosure agreements, employee policies and training, access to hardware and software, and all other issues are considered during the due diligence process.

Tailor Due Diligence Process. When organizations are pursuing a new business transaction, it is imperative that they thoroughly research the history and current practices of other businesses involved in the transaction to identify and control any potential liabilities.

Limit Use, Disclosure and Retention of Personal Information. While conducting due diligence, buyers should also seek to limit their use, disclosure and retention of personal information. The following actions can help to temper an organization's use of personal information:

  • Keep detailed records for every new use of personal information
  • Establish maximum and minimum retention periods for using personal information
  • Dispose of personal information when appropriate and possible
  • Carefully dispose of personal information to avoid privacy breaches
  • Check all hardware before disposal to ensure no personal information remains

Use of Representations and Warranties. When structuring any business transaction, organizations should consider all future developments. In order to help protect against any future issues that may arise, organizations should consider including representations and warranties in the agreement. Possible representations and warranties may include:

  • Measures to ensure compliance with all applicable laws, policies and procedures
  • Creating training procedures for all employees with regards to privacy, data security, responding to data breaches and CASL compliance
  • Coordinating adequate data security and cybersecurity mechanisms and controls
  • Disclosure of any recent privacy, data security, cybersecurity or CASL breaches

Post-Closing Considerations. Where relying on the business transaction exemption, following the closing of the business transaction, the organization must take appropriate steps if they wish to continue using the personal information of individuals. In the post-closing phase, the organization must (i) show that the personal information is required in order to carry on their business; and (ii) notify all individuals, within a reasonable time period, that the transaction has been completed and that their personal information has been disclosed.

Key Takeaways

It is safe to say that digital assets, especially those relating to personal information, will continue to be a major consideration in business transactions. The 2015 amendments to PIPEDA introduced the business transaction exemption as a means to facilitate the necessary exchange of personal information between parties to a transaction. It is important for buyers to spend time planning the due diligence process to ensure that they comply with the requirements of the business transaction exemption and to ensure that the risk associated with the personal information (or the digital assets of other parties to the transaction) is mitigated.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Imran Ahmad
Similar Articles
Relevancy Powered by MondaqAI
Lawson Lundell LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Lawson Lundell LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions