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Vuru, DIY Investing, and the Toronto Startup Scene

Links from this article:
StartUp HERE Toronto

StartUp HERE Toronto puts a spotlight on Vuru, a local startup that uses a value analysis engine to create simple and easy-to-use financial reports for investors. Clausehound shares the same emphasis on user-friendliness, all with the aim to make drafting legal contracts more accessible for people, and especially new businesses and entrepreneurs.  

 

Vuru journeyed from Toronto to Silicon Valley, where it accumulated over $1M in seed funding before, as co-founder Niles Lawrence puts it, returning “home.” Vuru is now a neighbour of Clausehound’s at Ryerson’s Digital Media Zone (DMZ). The DMZ is a business incubator that houses many of Toronto’s up and coming startups.

 

Lawrence highlights the importance of the diversity that can be found at DMZ—people from all sorts of backgrounds and skill sets. Fostering a startup in such a broad pool of talent and ways of thinking results in collaboration, and therefore growth. Clausehound has and continues to enjoy the city’s startup scene just like Vuru has!

 

To read StartUp HERE Toronto’s full article on Vuru and the local startup scene, please click here.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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What voting rights do non-voting shareholders have?

A common question that entrepreneurs/inventors have when incorporating is how to structure the business. The options for structuring a business can be overwhelming, especially when it comes to determining the number of share classes to include in your corporation. Generally, founders will initially want to issue shares to themselves, their investors, and certain employees.

 

This share issuances will typically governed by a shareholders’ agreement and, if necessary, an employee stock option plan (ESOP).

Why employees, you ask?

Offering employees (or contractors) an option to purchase shares from the start of the company incentivizes employees to grow the company as if it’s theirs. It also works as a retention tool – encouraging the employee to stay with the company long-term.

 

What kind of shares should you issue to your employees?

Businesses usually issue non-voting shares to its employees. Issuing shares proves to drive the performance of employees, but founders still want to maintain control over critical decision-making for the business.

Source

 

Are non-voting shares really non-voting?

Although called ‘non-voting shares’, there are certain situations where the legislation under which the corporation was incorporated will give non-voting shareholders the right to vote.

 

For example, Sections 170(1) and (3) of the Ontario Business Corporations Act (OBCA) states that non-voting shareholders may vote on resolutions to amend the corporation’s articles of incorporation if the amendment is related to:

 

  • Changing the maximum number of authorized shares of the non-voting class;

  • Changing the rights, privileges, restrictions or conditions attached to the shares of the non-voting class, or equal to or greater than the non-voting shares class;

  • Changing restrictions related to the issue, transfer or ownership of the shares of the non-voting class;

  • Increasing the maximum number of authorized shares of a class having rights or privileges equal to or greater than the non-voting shares class;

  • Exchanging, re-classifying or cancelling shares in the non-voting class;

  • Creating a new class of shares equal to or greater than the non-voting share class; or

  • Allowing a class of shares to be exchanged for the non-voting class shares.

They will also be able to vote on proposed amalgamations that will affect their share class. In short, non-voting shareholders will have a right to vote on resolutions that will have an impact on the rights attached to their share class (but not necessarily on all resolutions that will have a business impact on them as shareholders). The reasoning behind these exceptions is to prevent the voting shareholders from impairing the rights of the non-voting shareholders, and to prevent the voting majority from oppressing the non-voting shareholders in this way.

 

To view a sample articles of incorporation, click here!

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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The Fundica Roadshow will take place on May 24th, 2017 in Toronto. Pitch your business to have the chance at winning a $1,000,000 investment!

Links from this article:
Fundica Roadshow – Toronto

Clausehound’s Founder & CEO, Rajah Lehal, will be attending the Fundica Roadshow on May 24th, 2017 in Toronto in his capacity as Co-Founder of Multiplicity – a not-for-profit group supporting entrepreneur education and thought provoking conversations in Canada’s startup community. Fundica invites technology based companies to pitch their business, in hopes to win the $1,000,000 FSVP investment award. In addition to the pitch competition, each road stop brings forth speakers, workshops, and educational sessions to help coach attendees on how to grow their business.

 

To learn more about the Fundica Roadshow and the $1,000,000 pitch competition, please click here!

 

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Clausehound.com regularly curates a list of innovation and entrepreneur-focused events. Events we like have insightful speakers and provide attendees an opportunity to network with entrepreneurs, and learn from others within the community.

Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound.com offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Attend Lawyering In The 21st Century on May 15th in Toronto for a day filled with insightful speakers, networking opportunities with global leaders, and workshops tailored to help grow your legal skills!

Links from this article:
Lawyering in the 21st Century

On May 15th, 2017, LexisNexis and the Legal Innovation Zone, where Clausehound is located, is hosting an interactive forum discussing innovations and transformations in law firms and legal departments. Lawyering in the 21st Century will include insightful speakers, networking opportunities, and workshops tailored to help transform law firms and legal departments. Whether you are In-House Counsel, a Senior Partner or a Sole Practitioner, you will benefit from acquiring practical skills to implement innovation and drive positive change in your legal practice.

 

The event takes place at 55 Dundas Street West in Toronto.

 

To learn more about Lawyering in the 21st Century, please click here!

 

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Clausehound.com regularly curates a list of innovation and entrepreneur-focused events. Events we like have insightful speakers and provide attendees an opportunity to network with entrepreneurs, and learn from others within the community.

Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound.com offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

What you don't know can hurt you! Subscribe to stay informed.

Sign up now and receive an email when we publish new content.

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The Innovation Lab has joined the Open Sky Incubator in Kitchener, Ontario in conjunction with the Co-Operators Group Limited with goal of driving innovation in the financial services sector!

Links from this article:
https://www.openskyincubator.ca/

Clausehounds partner organization, Open Sky Incubator, in conjunction with the Co-Operators Group Limited, is happy to announce the opening of its Innovation Lab in Kitchener, Ontario. As a Canadian co-operative with more than $44 billion in assets under its administration, the Co-Operators Group Limited is hoping to drive its innovative spirit by entrenching itself within Open Sky’s entrepreneurial culture. Through its group of companies, the Co-Operators Group Limited offers services and products related to home, auto, life, commercial and farm insurance, as well as investment products.

 

To learn more about the Innovation Lab at Open Sky Incubator, please click here!

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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How to Get Cheap Office Space!

Links from this article:
Bullfrog Insurance

Clausehound’s partner organization, Bullfrog Insurance, discusses ways that growing organizations can save on the cost of commercial offices. With co-working spaces on the rise, startups in the GTA can turn to communal or non-exclusive working environments like Workhaus, Project Spaces and Open Sky Incubator to provide the required space to work. At a fraction of the cost, these co-working spaces also provide access to numerous essential office amenities including conference rooms and reception services.

The Clausehound management team has previously worked in their own rented office space where the space managed everything from wifi to security access to keeping the kitchens clean and the space tidy. Clausehound continues to work out of a coworking space, which has saved us invaluable time in not having to manage office services. When the internet goes down, we react as a customer to the space and the space contacts management to solve problems. Previously, we managed our own office and had to interrupt work to solve issues with the office. We readily agree that co-working is the best option for a growing business.

To read Bullfrog Insurance’s full article on saving on office space, please click here.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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What rights can you not sign away in a contract?

The power to contract is extremely broad, but that doesn’t mean the power is limitless. You can’t contract to perform illegal activities and you certainly can’t contract away constitutional rights. Contracts won’t be enforceable if they’re unconscionable and, in making enforceability determinations, courts give significant weight to public policy.

 

Two examples of such public policy considerations relevant to many commercial agreements deal with (i) an author’s moral rights; and (ii) each person’s right to compete in the marketplace.

 

1. Moral Rights

 

Moral rights: an author’s rights to attribution, integrity, and association of his or her work.

 

Moral rights prohibit other people from distorting or modifying the work to the prejudice of the author. As a result, only the author may have these rights, and they cannot be assigned to anyone else. However, by waiving those rights in a contract, an author can promise not to use those moral rights against others.

 

If other IP rights in the work have been transferred to you, depending on how you intend to use the work, the author’s moral rights may need to be waived. For example, if you intend to conduct research, a waiver of the moral rights would allow you to use the material as a part of a bigger project. If moral rights are not waived, any integration or modification to the author’s material would be an infringement of the author’s moral rights.

 

To avoid liability and ensure that you have complete rights to use the work of the author, a standard moral rights clause should be included in any IP agreement. For example, most software development agreements will include a moral rights waiver clause in addition to an assignment of IP clause.

 

Source

2. Right to Economic Competition: Non-Disclosure, Non-Solicit, & Non-Compete

 

Our economy is based on competition in the marketplace, and the courts have been reluctant to enforce contractual provisions that place unnecessary restraints on trade. In other words, the courts have placed limits on the extent to which they will permit a person to ‘give away’ their right to compete in the marketplace.

 

At the same time, the courts have tried to balance  ‘restraints on trade’ with legitimate efforts to protect a business’ confidential information, or efforts to protect against unfair competition.

 

The enforceability of the ‘restrictive covenants’ clauses: non-disclosure (of confidential information), non-solicitation (of employees or customers or business opportunities), and non-competition (with the business of the company), will depend on whether the particular clause is too restrictive.

For example, a temporary restriction on competition might be justified in order to prohibit an employee from using knowledge about the employer to unfairly take advantage of the employer and to cause injury to the employer’s business, but a restriction that goes so far as to make it impossible for the individual former employee to earn a living in their chosen profession will not likely be enforced.

 

To be enforceable, a non-competition clause (for example) must include limitations of time, geography, and scope of activities. For all restrictive covenants, the clauses must be unambiguous and reasonable (reasonably necessary to protect the other party) in order to be enforceable. Courts are hesitant to enforce restrictive covenants and only do so when it is necessary to prevent unfair business practices.

 

Source

 

If you are subject to a restrictive covenant, make sure you understand the specific limitations to your activities, and seek legal advice about whether it is enforceable against you.

 

If you choose to include a restrictive covenant in a contract with another party, take the time to ensure that the limitations are clear, reasonable, and that you have objective evidence to show that they are only as restrictive as is required to protect your legitimate interests. Otherwise, if they are too restrictive, they might be completely unenforceable – and you will end up with no restrictions.

 

Clauses of this nature can be found in a variety of agreements, such as

 

For agreement templates and samples of clauses discussed here, check out Clausehound’s Small Business Law Library!

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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The Breakout Project will be showcasing entrepreneurs, brands and thought leaders from May 10-12 in Kingston, Ontario!

Links from this article:
The Breakout Project

From May 10-12 in Kingston, Ontario, The Breakout Project is taking hackathons to the next level by creating an immersive innovation experience featuring keynote speakers, entrepreneurs, brands and thought leaders. Join thousands of others while you learn from leading innovators as they address how to scale businesses, inspire audiences, build teams, leverage technology, and discuss why Canada needs to take a leadership role in innovating solutions to the very big and very real problems we face as a society. Clausehound’s CEO, Rajah Lehal, will be supporting The Breakout Project as a part of his philanthropic role with the BMW Foundation.

 

 

To save $100 on a Full Event Pass, use the promo code ygkfirst when purchasing your ticket!

 

Learn more about The Breakout Project, please see their complete event page here. 

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

What you don't know can hurt you! Subscribe to stay informed.

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Disclaimer: This database is provided for informational purposes only and copying, downloading, or use of any content on this site in any way does not create a lawyer-client relationship with the reader. ClauseHound Inc. does not provide legal advice, nor should any advice from ClauseHound Inc. be construed as such. Read the Full Disclaimer