Pssst! CNF Need Not Be A Swear Word

Posted on by Gordon B. Greenwood

Who would have ever thought that regulatory compliance could actually give you a competitive advantage? While some companies do in fact know that, and have made use of it, we have a further little hint for companies who export cosmetics to Canada.

Canada has a post-market reporting scheme for cosmetics sold within its borders. Within 10 days of first sale in Canada, the manufacturer, or its authorized representative, must file a document called the Cosmetic Notification Form (CNF). Filing of labels is not (yet) mandatory at this stage. While this form can be completed online, it is still somewhat of a nuisance to do since it is not necessary in many other countries.

The CNF has various uses such as permitting Health Canada to monitor for safety of the ingredients in certain products and Environment Canada to monitor certain chemicals which may be released into the air or water as the case may be. Being post-market notification means that it does not restrict your entry and sale in Canada but it does put a burden on the manufacturer or importing entity to ensure that the CNF is filed within the first 10 days after sale, failing which there could be consequences. The downside is always that your CNF will be refused and you have to pull the product, or amendments may be required to your ingredients or packaging.

However, looking on the bright side and supposing for the moment that the products are compliant and a CNF has been issued, the existence of that number may well facilitate your entry into Canada while a competitors product is being delayed at the port of entry pending examination by the Canada Border Services Agency (CBSA).

The fact that you have the number, or have filed, doesn’t necessarily speed up your entry unless CBSA is aware of this fact. While we have encouraged clients to indicate the CNFs on their customs and commercial invoices, this has not received a rousing degree of support. As an alternative, we have suggested that they prepare a spreadsheet corresponding to their customs and commercial invoices where they match skus or items with one of three corresponding notifications: 1. The Cosmetic Notification Number itself if available; 2. The date upon which the CNF filing was made if the CNF has not yet been issued; or 3. In circumstances where the CNF has not yet been applied for, then a statement that it is pending and an anticipated date for filing.

Our clients have indicated that they are experiencing delays in clearance of their cosmetic products at certain points of entry in Canada. When we receive this type of information, we encourage them to prepare the chart referred to above and we understand that has been met with some degree of success.

While the issuance of a CNF number is not equivalent to “approval” of your cosmetic product by Health Canada, it is an indication that the ingredients have been reviewed and there were no immediate red flags raised. Non-rejection vs. outright approval. If your filing information is communicated to the customs officers at the point of entry, it could assist in a more speedy clearance of goods, a reduction in costs and a potential advantage over your competitors whose goods are being delayed.

Regulatory compliance is not only the law, it may also be commercially expedient. An hour preparing a CNF chart like we referred to above may result in release of your goods days if not weeks earlier. Try it!

Trademarks require French chaperones in Québec

Posted on by Mary G. Griffith

Once again the province of Québec has added to the province-specific considerations that businesses will have to assess to determine if it is worth trying to tap into the Québec market. On May 4, 2016, the Québec government published draft regulations to amend the Charter of the French Language (the “Charter”). These amendments will require the sufficient presence of French when a trademark in a language other than French is displayed on signage or posters outside a place of business. The Québec government cannot directly enforce translation of registered trademarks which may be in languages other than French, but these amendments will require businesses to add French to any outdoor signage without otherwise altering the registered trademark. Your trademarks require a French chaperone to accompany them at your place of business. The French that will be required could, for example, be a slogan or a generic term or description of the type of business being carried on. Examples of how to comply can be seen here.

With this latest amendment the cost of accessing the Québec market has just increased again, and makes one speculate as to what might be coming next. Not surprisingly, many businesses, both national and international, think twice before deciding to conduct business in or run promotional programs in the province of Québec. The overall return must certainly be assessed to determine if it outweighs the cost and inconvenience associated with ensuring that the Charter is complied with, not to mention other provincial restrictions.

The Charter affects the French language requirements for packaging and labelling; for catalogues, brochures and other commercial publications; for in-store materials and all advertising; and strives to include websites for companies that sell products or services in the province. It is also important to remember that the Consumer Protection Act in Québec is likely the strictest in the country: advertising to children under 13 is prohibited; and most contests that are run in Québec need to comply with the rules of Procedure of the Régie des alcools, des courses et des jeux as well as paying a levy which is a percentage of the prize value.

It is small wonder that carrying on business in Québec can appear to be a daunting challenge, but it is one that can be navigated successfully with the help of knowledgeable lawyers in the area, and can be a highly profitable endeavor when you consider that almost a quarter of our population lives Québec.

So You’ve Been Appointed an Estate Trustee (aka Executor), Now What? – Part 1

Posted on by Megan E. Fife

Someone close to you has just passed away and you’ve learned, maybe for the first time (unless you were told by the deceased before their death), that you are named Estate Trustee (aka Executor), either alone or with one or more other people. You’ve never acted in this capacity before and the task seems daunting, especially so soon after the death of someone you care about. What do you need to know and what steps do you need to take? This series of blog posts will walk you through the basics of administering an estate as an Estate Trustee; but keep in mind, the normal caveat applies: this information only applies to estates administered in Ontario and should be used as a guide only! Speak with a lawyer about your specific situation, as every case is different.

First and foremost, the information here assumes the deceased died with a Will. If they did not have a Will at the time of death (i.e. they died intestate), administration of the estate is done in accordance with Ontario legislation and you should seek legal advice accordingly.

The originally signed Will of the deceased and any codicils should be sought out as soon as possible as this will dictate how you proceed with administering the Estate itself. Try contacting the deceased’s lawyer (if you know who they are), or searching for aptly named files in a home safe or home or office filing cabinet. Some people choose to express their wishes regarding burial, cremation, funeral and memorial services in their Will. If the family members are not sure of the deceased’s wishes regarding burial, it’s best to try to find the Will as soon as possible following death. There is no immediate rush to begin the process of probate (if required) and administration of the estate, so apart from any planning required for the funeral and any other final arrangements, your work as Estate Trustee can wait a bit; but be sure to keep receipts of all costs associated with the funeral and related events, as these can be reimbursed to you by the estate if you have not already instructed the bank that they be paid directly from the deceased’s bank account.

After the flurry of funeral and/or related events has died down, it’s time to turn your mind to your role as Estate Trustee. But what if you don’t want to be the Estate Trustee? You can renounce your appointment at any time for whatever reason. It’s much easier to do so before you’ve begun administering the estate, and in that case you’ll need to complete Form 74.11 (“Renunciation of Right to a Certificate of Appointment of Estate Trustee (or Succeeding Estate Trustee) With a Will”). If you have begun administering the estate and received probate, a court application, as per section 37(1) of the Trustee Act, is required and the court will have to order your removal as Estate Trustee.

On the other hand, if you’ve decided to act as Estate Trustee, the first step is to begin the process of completing the Application for Certificate of Appointment of Estate Trustee with a Will. While you can do this yourself, estate lawyers can provide valuable expertise and advice in this and other aspects of your responsibilities as Estate Trustee. You’ll need to collect information about the deceased such as: full name (and any other names they were known by); last address; last occupation; date of birth and date of death; marital status at the time of death; and whether the deceased got married after the date of their last Will. You will also need to determine the beneficiaries of the estate: are people specifically named in the Will, or does the Will simply refer to “children” of the deceased? You will need the names of the beneficiaries and their addresses. Finally, you will also need to begin the process of valuing the assets of the estate (more on assets in Part 2)

All of this information will be required to begin completing Form 74.4 (“Application for Certificate of Appointment of Estate Trustee with a Will”) and ”Form” 74.7 (“Notice of an Application for a Certificate of Appointment of Estate Trustee with a Will”). Note that if there are multiple people appointed by the Will who wish to act as Estate Trustee, only one set of these forms needs to be completed for all Estate Trustees.

Next time – valuing assets and getting probate.

Avoiding Surprises – Tips from a Family Law Lawyer – Part 3

Posted on by Michael A. Chambers

With people marrying later in life than in years gone by, and second and third marriages becoming more and more common, it is now often the case that both spouses marry with each owning a home going into the marriage. Which home the newly married couple chooses to reside in as their matrimonial home can have a dramatic impact upon the financial position of each of them on exiting the marriage should the marriage unfortunately fail and lead to separation and divorce.

As you may know, with the exception of a very limited list of assets acquired during marriage, on the separation of a married couple in Ontario their assets, debts and liabilities are “divided” between them by means of an equalization accounting exercise. This equalization is basically effected by means of comparing the increase in net worth of each of the spouses over the course of their marriage, and then having the spouse with the greater increase in net worth pay the other spouse one half of the difference between each of the respective increases in net worth to even things up, as one might say. This payment is called the equalization payment.

One quirk in the law, section 4(1)(b) of the Family Law Act of Ontario, can be a surprise to many, and a shock to some. This provision excludes from the calculation of the net worth at marriage of a spouse a home owned by that spouse at the time of marriage which becomes the spouses’ matrimonial home and remains such at the time of their subsequent separation. If both spouses owned a home at the time of marriage this can come as quite a surprise, or shock, to the matrimonial home owning spouse at the time of separation.

A simple example makes the point. Assuming for the sake of example that all else is equal, let’s assume that two spouses marry each owning a mortgage free $500,000.00 home. They have to pick one home to live in, so they pick spouse 1’s home to do so. Spouse 2 keeps his or her home and rents it out and the spouses therefore never live in it. After six years of happy marriage unfortunately things unravel and the spouses separate. In our example, all else remains equal and let’s also assume no increase in the market value of the homes over the six years of marriage. Because of the operation of section 4(1)(b) spouse 1 cannot subtract the $500,000.00 at marriage value of his or her home (in our example, his or her total net worth at marriage) from its assumed $500,000.00 at separation value. Spouse 1’s net worth over the course of the marriage, for equalization purposes, is therefore treated as having increased by $500,000.00. Because the home owned by spouse 2 at marriage was never occupied by the spouses as their matrimonial home, spouse 2 gets to subtract its value at marriage from its value at separation ($500,000.00 in each case) resulting in a $0.00 increase in net worth over the course of the marriage for spouse 2.

You can probably now see where this is going. Although in fact both spouses came into the marriage with a $500,000.00 home, and both are leaving the marriage with the same $500,000.00 home, because of the operation of section 4(1)(b), spouse 1 will owe spouse 2 an equalization payment of $250,000.00. Spouse 1 will therefore exit the marriage $250,000.00 poorer, and spouse 2 will exit the marriage $250,000.00 richer. Perhaps a pleasant surprise to spouse 2; perhaps a disappointing shock to spouse 1.

As with just about everything that is prescribed by the Family law Act this result can all be avoided by the parties entering into a marriage contract, preferably before their marriage but also at any time during their marriage. If a couple contemplating marriage don’t wish the above example to apply in their case in the event of separation, they should each seek out a family law lawyer of their choice and negotiate between themselves and with the assistance of their respective lawyers a regime that they both wish will apply to their particular circumstances in the event of their subsequent separation should that unfortunately occur.

By way of epilogue, interestingly in the above example, had the spouses sold spouse 1’s home before their separation and replaced it with a new home, still just in spouse 1’s name but their new matrimonial home, then in that case spouse 1 would have been able to deduct the value of his or her first home from the value of his or her home, the matrimonial home, at the time of separation. And, in that case, assuming that the new matrimonial home was also worth $500,000.00 spouse 1 would also have a $0.00 increase in net worth over the period of the marriage and no equalization payment would be owed by either spouse to the other. Also, if the marriage had lasted less than 5 years, the Court would have the discretion to reduce the equalization payment owed but this is a very limited discretion and not something a spouse should ever assume is going to be available to right something that he or she sees as a wrong.

So, if your prospective spouse suggests that on marriage the two of you should take up residence in your house, you may want to suggest that you would much rather prefer that the two of you take up residence in theirs.