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from MinuteBox

Compliance with the Corporate Transparency Act is a necessary legal obligation so that entities avoid the repercussions of non-compliance. Qualifying beneficial ownership data must be submitted to federal regulators at FinCEN by pre-determined filing deadlines to maintain compliance with the enforced laws.

However, many legal entities risk undermining their compliance only weeks after the enactment of the CTA legislation. According to a joint study by Deloitte and the Association of Corporate Counsel (ACC), nearly one in three legal entities still need a corporate compliance calendar.

What is the use of a compliance calendar?

Most corporate entities have annual filing deadlines for legal, tax, and accounting purposes. A corporate compliance calendar keeps track of all compliance filing deadlines, which can include:

• Corporate meeting minutes
• Reporting obligations
• Industry filings
• Permits or accreditations
• Merger or acquisition filings
• Beneficial ownership reports

A compliance calendar also assists with operational efficiencies, such as standardizing compliance workflows and assigning compliance tasks to key filing dates. Aligning the compliance calendar with an organizational chart also helps expedite approvals and signatories from key organizational stakeholders.

These are among the strategic business benefits that come from maintaining a corporate compliance calendar. Unfortunately, entities with limited legal entity management resources — working time, compliance budgets, corporate counsel staff — fail to reap these benefits.

What are the costs of non-compliance?

A compliance calendar ensures all filings are submitted by the appropriate deadlines. The compliance calendar also increases compliance awareness across the business. Greater awareness leads to fewer data or clerical errors, streamlining the entity management process.

However, what’s the biggest reason why your entity needs a corporate compliance calendar? According to Ponemon Institute LLC — with sponsorship from Globalscape — the average cost of non-compliance is $14.82 million.

In a benchmark study of multinational organizations, the researchers determined that the average annual cost of compliance is $5.47 million. Contrast this cost with the cost of non-compliance, and it results in 63% annual savings by simply submitting reporting data at the appropriate deadlines.

Additionally, the cost of a single non-compliance deadline amounts to revenue losses of $5.87 million for the average legal entity. If one out of three entities still lacks a corporate compliance calendar, this means billions of potential revenue dollars are sacrificed for no justifiable reason.

What information goes on a compliance calendar?

The Corporate Transparency Act was enacted to improve how corporate entities report data on their beneficial owners. The Act is part of a government effort to crack down on money laundering, tax evasion, and other financial crimes nationwide. A corporate compliance calendar tracks all filing deadlines so that ownership data is transparently submitted without penalty.

However, a compliance calendar isn’t just useful for tracking external filing deadlines. You can use your compliance calendar to set operational compliance workflows and assign deadlines to each entity management team member. This ensures that all reporting requirements are tracked using project management strategies so that filings are submitted in detail and on time.

How to create a corporate compliance calendar

If you’re amongst the one in three legal entities without a compliance calendar, it’s time to change that approach. Assess your business needs and evaluate your past compliance processes to proactively make improvements to those workflows.

Once you’ve mapped out your compliance objectives, you can create your compliance calendar. Many modern business entities use legal entity management software like MinuteBox, which has a built-in compliance calendar to automate, streamline, and verify all compliance workflows.

Using the calendar’s guided template, follow these steps to build a compliance workflow.

• Review current compliance trends, laws, and reporting requirements.
• Upload the dates into your entity management platform compliance calendar.
• Create a work-back schedule that contains all internal reporting deadlines.
• Set up reminders for each team member and schedule them for deployment.
• Review and modify your compliance calendar as needed.

Are you tired of conducting compliance workflows without a proper compliance calendar? Become a modern compliant business entity by joining the MinuteBox revolution. You’ll effectively maintain compliance with speed and precision while avoiding the steep financial penalties of non-compliance.

The Canadian government tabled a motion in the House of Commons on April 18, 2023, to begin deliberations on Bill C-42. The proposed legislation seeks to amend the Canada Businesses Corporations Act (CBCA) and other Acts that would improve transparency regarding individuals with significant control (ISCs) of Canadian entities governed by the CBCA.

Bill C-42 has undergone two votes in the House of Commons and will be presented to a committee for further consideration. Among the data that will be submitted to the committee is a Charter Statement issued by the Minister of Justice. The Charter Statement identifies rights and freedoms under the Canadian Charter of Rights that will be engaged by Bill C-42, and it also provides a detailed explanation of why those rights and freedoms will be engaged.

What does Bill C-42 propose?

Bill C-42 authorizes that regulators have authority to acquire certain taxpayer information and present that data to the Department of Industry. The data acquisition is intended solely to verify and validate that certain private corporations, governed by the CBCA, are living up to their responsibilities of corporate beneficial ownership registrations.

The specific contents of the legislation state that taxpayer information refers to shareholdings of individuals with significant control (ISCs) in a private corporate entity. ISCs are identified using corporate ownership structures that are reported to the Canada Revenue Agency.

How does Bill C-42 change shareholder reporting?

As proposed by Bill C-42, certain information in an ISC shareholder registry would be made public to promote greater corporate transparency and accountability. Specifically, Bill C-42 proposes changes, not limited to but including the following:

• The names, addresses for service or residential addresses, and share ownerships of ISCs be made publicly available
• Increasing information reported within an ISC Register, including an individual’s residential address, address for service and citizenship;
• Requirements that corporations submit ISC registers to Corporations Canada on an annual basis, when changes in control occur, and as stated by the laws

Additionally, Bill C-42 proposes modifying the penalties for non-compliance with the laws. If passed as tabled, Bill C-42 would enforce fines up to $200,000 and/or 6 months of criminal imprisonment for ISCs who fail to remain in compliance.

Who qualifies as an ISC?

An ISC is a shareholder with a significant controlling interest in a corporate entity. In most situations, an ISC is a shareholder with at least 25% of the voting rights for all issued corporate shares. In other cases, an ISC is anyone whose influence could exert a controlling influence over executive decisions issued by the corporation.

Canadian regulators have enacted multiple pieces of legislation at the federal and provincial levels in recent months to enforce greater ISC transparency and accountability. The purpose of each piece of legislation is to be part of a nationwide effort to crack down on white collar crimes, specifically fraud and malfeasance, that prove costly to innocent Canadian citizens.

In Ontario, for example, amendments to the Ontario Business Corporations Act (OBCA) were passed that require corporations to create ISC registers that are submitted to provincial regulators on an annual basis. In Quebec, provincial Bill 78 proposes similar legislation for ISC reporting. However, under Quebec law, ISCs are also classified as any shareholders who can elect, appoint, or remove corporate directors and executives from their positions.

Use entity management software to create ISC registers

Platforms like entity management software are one of the best resources for maintaining accurate ISC registers. These solutions have built-in shareholder register templates that simplify how your legal and compliance officers build ISC registers. The templates feature modules that help your team include any required shareholder information for individuals who fit the ISC profile.

Once you’re on the platform, access the Capital Section feature to input all authorized information about shareholders and corporate transactions in the open fields. This is where you can document names, addresses (residential and commercial), dates of birth, and jurisdictions where your ISCs operate.
All these features will help your corporate entity remain in compliance with the laws, including the new proposals in Bill C-42, should it pass final reading at the House of Commons. You can also use entity management software like MinuteBox to build a detailed compliance program, creating more organizational structure and accountability to protect your corporate entity from the significant risks and penalties of non-compliance.

Adopting new technology in a legal department can be challenging, particularly when there is resistance to change. In this blog post, we will explore strategies for overcoming resistance to change and ensuring successful adoption of new technology. Key points include connecting with successful peers, providing positive feedback and resources, and promoting a culture of learning and discovery. Here’s what we’ll cover in this post:

• Connecting with successful peers can help others understand the benefits of change
• Providing positive feedback and resources can encourage adoption
• Promoting a culture of learning and discovery can help people understand the need for change

Change is hard and people may challenge it. Adopting new technology in a legal department can be particularly challenging when there is resistance to change. However, with the right strategies in place, it’s possible to overcome resistance and ensure successful adoption of new technology.

One strategy for overcoming resistance to change is connecting people with successful peers. As Karen Anderson, Corporate Services Manager at Blakes Cassels & Graydon LLP, explains, “rather than me just saying, oh, no you just have to do this because this is what we’re doing. I would prefer to connect them with the folks that have been more successful, and so they can work together and say, talk to this person because they’re having the same issue, or they had the same issue.” By connecting people with others who have been successful with the change, they can learn from each other and understand the benefits of the new technology.

Watch the full interview, Overcoming Resistance to Change in Legal Departments

Another strategy is providing positive feedback and resources. Karen highlights that, “we’ve also just started sending emails amongst the groups with little tips, Hey, did you know you could do this? And sometimes people will know you can do that, but just a little off. Other times people will say hey, I never knew I could do this in this product in MinuteBox. Just sharing it and then people can keep all these emails for quick reference and it’s really helpful and encouraging.”

Promoting a culture of learning and discovery can also help overcome resistance to change. As Karen states, “I think having peer support is really helpful rather. People don’t just wanna be told we’re changing and this is what you’re doing.” By promoting a culture of learning and discovery, people can understand the need for change and make the transition smoother.

In conclusion, change is hard and resistance to change is a common challenge when adopting new technology in a legal department. However, by connecting with successful peers, providing positive feedback and resources, and promoting a culture of learning and discovery, it’s possible to overcome resistance and ensure successful adoption of new technology.

Rewards programs have become a staple of the credit card industry, offering everything from airline miles to cash back. Regardless of the gimmick, however, their purpose is clear: to encourage repeated use. The more you use it, the more you get back in return.

Sounds simple enough, right? But can such a simple concept translate to the world of large Canadian law firms? Given the changing legal landscape in Canada, large firms must find creative ways of retaining clients. The downside of losing a large client is greater today than ever before, as the marketplace for large clients in Canada is stagnant. Clearly clients have the power in this relationship. But surely more can be done to ensure continued loyalty between clients and large law firms.

While rewards programs can vary, here are two possible options for large firms. The first is the “buy today, save tomorrow” option, a variation on volume discounts. In any given year, for every additional piece of legal service a big law firm provides for a client, an additional percentage is taken from the costs of the total bill, up to a maximum percentage. For example, assume a Canadian bank wants to issue bonds. The firm will complete the service for X dollars. The next matter given to the firm from the Canadian bank will be charged at a rate of X-5% for example (X now being the cost of the new matter, not the bond issuance). A third matter would be X-10%, up until a maximum of say 25%. Some form of price predictability is created, allowing a client to more easily budget and allocate funds for their legal costs. Clients should also have the flexibility to decide on which matters they save, so they can get the greatest price reduction on the most expensive matters.

Some rules and parameters for the buy today, save tomorrow model obviously need to be set, including perhaps a minimum price on matters to receive the discount. But with a long term focus on client retention and a steady (if not increasing) stream of work in the future, a short term client pricing advantage is acceptable.

A second rewards option would be to allow clients to accumulate points which can be redeemed as price reductions in the future. Much like a credit card, a law firm can develop a formula that for every $1,000 spent by the client on services provided by the firm, the firm will award the client X points (at a conversion rate to be determined by the parties). The points can then be redeemed for price reductions on future matters.

Client loyalty has all but faded from the law firm/client relationship. The mindset is “what can you do for me today”? The law firm rewards program answers that question with “not only can we provide quality legal service today, but in so doing we can save you lots of money tomorrow”.

The legal industry is constantly evolving, and the use of technology by paraprofessionals is no exception. The pandemic has brought about new challenges and changes in the way law firms operate, including an increased reliance on remote work and virtual connections. In this interview, Tiffany Pereira, an expert in legal technology, shares her insights on how technology is being used by paraprofessionals and how it is evolving in response to these changes. From the rise of the self-service delivery model to the importance of ease of delivery in technology products, this post explores the ways in which technology is being utilized by paraprofessionals to better serve their clients and improve their workflow.

What we’ll cover in this blog post:

1. The rise of the self-service delivery model
2. The values of ease of delivery in the product
3. The use of recordings and a knowledge base
4. The shift towards a self-service delivery model

The use of technology by paraprofessionals is evolving in response to the changes brought about by the pandemic. As Tiffany Pereira notes, “with some of the lockdowns it forced some law firms, of course, to temporarily close their offices and really rely on those virtual connections, whether through Zoom or through phone. And clients turn to their devices instead of stopping by the firm’s office to read or sign documents or have those connections.”

This shift to remote work has led to an increase in the use of the self-service delivery model. As Pereira explains, “What can we look at if we have a question? What are our options? Are there resources? Is there a knowledge base? Are there webinars like this? Are there articles that we can utilize? How can we learn without sitting in a boardroom together?”

Watch the full interview, Evolving Technology for Paraprofessionals

Additionally, ease of delivery in the product has become more important. Pereira states, “So what we also saw was a lot of cancellations for training sessions, and that wasa bit of a shift from what we were used to. But then relying on recordings, relying on how I can get the most information and having basically a knowledge base or one-stop shop to everything I need to know about this product.”

To adapt to these changes, firms are utilizing recordings and knowledge bases to provide training and resources for paraprofessionals. This allows them to learn and access information at their own pace and convenience, rather than relying on traditional in-person training sessions.

Overall, the pandemic has accelerated the shift towards a self-service delivery model for technology used by paraprofessionals. This allows them to access the resources they need to effectively use the technology and provide service to clients in a more flexible and efficient manner.

Walk into any law firm, from small solo practitioners to the global behemoths and the one thing they all have in common is paper. Paper is synonymous with legal work. From single sheets strewn across desks to boxes filled with old documents, minute books covering up entire walls to fresh reams neatly stored under photocopy machines, paper is everywhere. Seemingly, the more paper lying around, the busier the law firm.

But in reality, paper is more of a burden than an asset. Paper takes up space, and space has a price. Holding on to paper documents on behalf of clients often costs law firms more money than they think. A square foot in downtown Toronto can range anywhere from $35-$65. Minute books and closing binders are great examples of unnecessary, burdensome and costly paper storage.

Paper documentation is also inefficient. Sheets always need to be printed and often get lost. One sheet is negligible, but producing thousands of sheets daily adds-up. This is exactly the sort of thing clients are pressuring law firms to strike from their bills.

Moving forward, try and use less paper. Test and utilize the many available tools and technologies. Simple.

But what about the documents already printed, those large binders stuffed with documents? Law firms, either internally or with the help of third parties, have begun scanning mountains of paper documents and transferring electronic versions to internal servers or cloud-based systems. While not a bad starting point, the value-added is minimal. Digitizing every document to sit in a computer file is no different from cleaning your house by moving all the clutter from the living room to the dining room. The mess still exists in a big way and absent an organization structure, there is no added efficiency.

Before you start digitizing, here are a few pieces of advice:

1. Plan Before You Scan: Map out how you will access the documented information. Which platform will you be using and where will the information be stored? How will users interact with the platform? Have you canvassed users (lawyers, clerks, clients etc…) on their preferences for accessing the information?
2. Scanning Can be Pricy and Tedious, But Necessary: Scanning a single document is easy. Scanning hundreds of thousands of documents is not. Hiring third party scanning professionals who have experience digitizing the materials is a worthwhile investment. For added security, always use third parties who will work on-site.
3. Utilize and Optimize the Data: Don’t just store the information, use it. Artificial intelligence systems can parse out information from the scanned documents. Most law firms are unaware of the treasure trove of information they are sitting on, which can be optimized for everything from document automation to predicting negotiation outcomes.