Canada. Overview. 1. What documents need to be retained and for how long?

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1 Canada Overview Canada operates under both federal laws, which are applicable nationwide and provincial laws, which are effective in the province where the law was enacted. This overview focuses solely on federal laws of general application. 1. What documents need to be retained and for how long? 1.1 Companies (including company formation, registers, meetings, directors, records) No specific obligation is specified in relation to the following records, but due to their nature it is recommended and expected that they will be retained permanently: Corporate articles, bylaws and all amendments Unanimous shareholder agreements Minutes of meetings and resolutions of shareholders and directors (including any committee of directors) General ledgers Copies of all notices naming directors and any changes in directors Securities register which records the names and latest known addresses of those who are or have been securities holders, the number of securities held by each person, the date and particulars of the issue and transfer of each security Certificates, warrants or other evidence of conversion privileges, options or rights to acquire corporate securities (but see below regarding cancelled certificates) 1 Below is an overview of the retention requirements under the Canada Business Corporations Act (CBCA). The following records must be maintained: Accounting records (six years after the end of the financial period to which they relate) 2 Cancelled security certificates in registered form, warrants or other evidence of conversion privileges that are cancelled (six years after the date of cancellation) 3 The Canada Revenue Agency also recommends that all records and supporting documents required to determine tax obligations and entitlements are retained for six years from the end of the last tax year to which they relate. Reasonable precautions must be taken to prevent the loss or destruction of records created and maintained pursuant to the CBCA. Every person who, without reasonable cause, contravenes this requirement is guilty of an offence and liable on summary conviction to a fine not exceeding CAD 5,000 or to imprisonment up to six months, or to both. 4 A fine of CAD 5,000 may be imposed if a record required under the CBCA to be submitted to another person contains an untrue statement of a material fact or omits to state a material fact. 5 Dissolution of corporations The CBCA sets out the following retention periods for dissolved corporations: A person granted custody of the documents and records of a dissolved corporation must retain such records for six years from the date of dissolution or a shorter period if one is ordered pursuant to the CBCA A person who contravenes this requirement without reasonable cause is liable on summary conviction to a fine up to CAD 5,000 and/or imprisonment up to six months. 6 The Income Tax Act 7 prescribes that every person who carries on a business must retain the following documents for two years following corporate dissolution: General ledger (ie summaries of year to year transactions, including supporting contracts, agreements or documents) Minutes of shareholders and directors meeting Records containing details of share ownership or transfers in capital stock Any other corporate records and books of account 8 Records and supporting documents to verify tax obligations and entitlements of the dissolved corporation and additional required documents (see section 1.1 above) 9 Failure to comply with these retention and record maintenance requirements is an offence and, in addition to any penalty otherwise provided, one may be liable, on summary conviction, to a fine of between CAD 1,000 and CAD 25,000 and/or imprisonment for a year. 10 Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 29

2 1.2 Trading records of companies and businesses (including accounting records, contracts and invoices) It is recommended that the following documents are retained for at least the period specified in the relevant statutory limitation periods (see section 2 below): Contracts Invoices Any document likely to be relevant in possible litigation For accounting records and contracts/agreements included in the general ledger, see section 1.1 above and section 1.5 below. See section 1.1 above and section 1.5 below. 1.3 Auditors The Canadian Institute of Chartered Accountants CICA Handbook sets out the professional standards for auditors regarding an auditor s obligation to compile certain documentation. In addition, privacy legislation requires that documents are retained for only as long as is necessary to meet the purposes for which the information was collected. Auditors should, as a general rule, keep the documents in their possession for 10 years. The Institute of Chartered Accountants of Ontario s Rules of Professional Conduct requires that members and firms (including auditors) retain for a reasonable period of time working papers, records and other documentation. 11 As a general guideline the Institute of Chartered Accountants of Ontario recommends that all records are maintained for 10 years. Particularly useful records such as financial statements, agreements/contracts/leases, written opinions, tax files/assessment notices, detailed continuity schedules for fixed assets and deferred taxes should be maintained for a longer period and perhaps indefinitely. 12 Auditors should give successor auditors access to their working papers and therefore should retain records relating to work done or being assumed, eg opening balances and information on accounting policies and financial statements. 13 As discussed immediately above, such information should be retained for at least 10 years. Breaches of the Rules of Professional Conduct may result in disciplinary action. 1.4 Financial services regulation Pursuant to the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the regulations enacted under that law, federal and provincial financial institutions (including but not limited to insurance companies, loan and trust companies and banks) are required to maintain records of financial transactions, financial transfers, the opening of accounts and the means of identity verification for at least five years. The five year retention period begins: In respect of signature cards, account operating agreements, account application forms, credit card applications on the date the relevant account is closed (certain exceptions may apply) With respect to client information records, certificates of corporate status and records that are required to be filed annually under the applicable provincial securities legislation from the date the last business transaction is conducted (certain exceptions may apply) In respect of other records, the date they were created 14 See also section 1.9 below. Insurance companies, trust and loan companies and banks The retention requirements applicable to insurance companies, trust and loan companies and banks are extremely detailed. The key retention requirements are set out in the federal Insurance Companies Act, the Trust and Loan Company Act and the Bank Act, which are substantively similar. It is recommended that the following information be kept permanently: Incorporating instruments, bylaws and all amendments Minutes of meetings and resolutions of shareholders (and policyholders in the case of insurance companies) Information contained in certain specified returns to the Superintendent of Financial Institutions relating to annual general meetings Particulars of any authorisations, designations, conditions and limitations established by the Superintendent when an order is made approving the commencement and carrying on of business by a bank or as otherwise modified Particulars of exceptions granted that are from time to time applicable For banks: particulars from Schedule I or II of the Bank Act that are applicable to the bank as they are from time to time amended and published in the Canada Gazette Corporate accounting records and records containing minutes of meetings and resolutions of the directors and any related committee Central securities register 15 Banks and trust and loan companies must also retain all signature cards and signing authorities or any 30 Herbert Smith Gleiss Lutz Stibbe Document retention: an international review 2011

3 copies relating to any deposit or instrument in respect of which the bank has paid an amount to the Bank of Canada pursuant to the Bank Act until the Bank of Canada notifies the bank that they no longer need to be retained. 16 Banks and trust, loan and insurance companies, their agents and trustees, should retain cancelled security certificates in registered form for six years following cancellation. 17 Failure to retain the information above without reasonable cause is an offence. On summary conviction an individual may be fined up to CAD 100,000 and/or imprisoned for up to a year. On conviction on indictment an individual may be fined up to CAD 1 million and/or imprisoned up to five years. A corporation may be liable to a fine up to CAD 500,000 or on conviction on indictment a fine up to CAD 5 million. 18 Securities companies The Canadian Securities Administrators (CSA) was established by securities regulators from each of the 10 provinces and three territories in Canada. Pursuant to CSA National Instrument Registration Requirements and Exemptions (the National Instrument), registered securities firms must keep those records required under various applicable securities laws for seven years from the date the record was created. 19 Such records must be retained in a safe location and durable form and, for most provinces, in a manner that will enable it to be provided to the regulator in reasonable time. Failure to comply with the requirements set out in the National Instrument may result in enforcement action by the applicable regulator. In addition provincial/territorial or other legal requirements should also be reviewed. 1.5 Key tax provisions requiring a business or company to retain documents Pursuant to the Income Tax Act, every person carrying on business in Canada and everyone required to pay or collect taxes or other sums must retain for six years from the end of the tax year to which they relate: Records and books of account including an annual inventory 20 (certain exceptions may apply and reference should be made to the provisions of the Income Tax Act) Similarly, the Excise Tax Act requires that the following records are kept for six years from the end of the calendar year to which they relate: Records that will enable the amount of taxes or other sums that should have been paid or collected, the amount of stamps that should have been affixed or cancelled or the amount, if any, of any drawback, payment or deduction that has been made or that may be made to or by that person, to be determined 21 As a result of the above, one must keep all records and supporting documents required to determine tax obligations and entitlements for six years from the end of the last tax year to which they relate. As the Canada Revenue Agency could require accounting records, financial information and internal audit information these should be maintained for at least six years. 22 Retention requirements under the Excise Tax Act also apply to maintenance and retention of records relating to the federal Goods and Services Tax and/or Harmonised Sales Tax. Every person who carries on a business or is engaged in any commercial activity in Canada and/or is required to file an application for a rebate or refund must retain: Books, accounts, statements, vouchers, invoices, letters, agreements and memorandums, information relating to input tax credit claims (six years after the end of the year to which they relate) 23 Records pertaining to notices of objections and appeals (until these have been resolved) 24 Under the Income Tax Act any person who fails to comply is liable on summary conviction to a fine of between CAD 1,000 and CAD 25,000, or both a fine and imprisonment up to 12 months. 25 Similarly, fines and or imprisonment may be imposed for failure to keep the specified records under the Excise Tax Act Health and safety legislation/regulations The Canada Labour Code requires that employers to which the legislation applies 27 keep and maintain health and safety records in prescribed form. 28 The Canada Occupational Health and Safety Regulations (passed pursuant to the Canada Labour Code) require that the following documents, amongst others, are kept for 10 years: 29 Records of every minor injury of which the employer is aware that affects the employee in the course of their employment 30 An annual written report submitted to the minister setting out the number of accidents, occupational diseases and other hazardous occurrences of which the employer is aware affecting any employee in the course of their employment during the 12 month period ending on December 31 of the preceding year 31 Records of hazardous occurrences 32 Reports arising from investigations which determine that hazardous occurrences resulted in a disabling injury to an employee, electric shocks/toxic atmosphere/oxygen deficient Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 31

4 atmosphere causing an employee to lose consciousness, rescue/revival or similar emergency procedures or fires/explosions 33 Hazard reports and/or emergency procedures regarding, amongst other things, confined spaces and sound pressure 34 First aid records must be retained for at least two years beginning on the date the record was entered. 35 Failure to keep and maintain prescribed records is an offence and may result in conviction on indictment, a fine up to CAD 1 million and/or imprisonment up to two years, or, on summary conviction, a fine up to CAD 100, Environmental legislation/regulations It is recommended that all information that could pertain to environmental issues, such as pollutants and adverse environmental or human life and health risks, are retained permanently in order to avoid any potential legal or regulatory issues. For example, pursuant to federal regulations, certain persons must develop, maintain and submit an emergency response plan regarding regulated substances. Such plans must consider and/or include, amongst other things, the properties of the substance and the amount of the substance, what type of emergencies could occur, special circumstances that could increase environmental risk in an emergency, the description of environmental and human life and health risks in the event of an emergency, prevention/preparedness/ response measures, list of emergency equipment, training requirements and public communication plans. 37 All of this information should be retained permanently. Illustrative examples where federal legislation requires that specific information are retained for specified periods are set out below. Federal: Canadian Environmental Protection Act 1999 (CEPA) With respect to the export, import and transit of hazardous waste and hazardous recyclable material, each authorised carrier, exporter and importer must retain, for three years, the document pertaining to the carriage, export or import of hazardous waste and hazardous recyclable material. Exporters and importers must also retain, for two years, a copy of the confirmation attesting to the disposal of hazardous waste or recycling of hazardous recyclable material. Finally, where the Minister of the Environment requires an exporter to develop a plan for reducing or phasing out the export of hazardous waste or prescribed non-hazardous waste for final disposal, a copy of the plan submitted by the exporter must be retained for five years. 38 Contravention of the retention requirements in a regulation passed pursuant to CEPA is an offence and, on conviction on indictment, may result in a fine up to CAD 1 million and/or to imprisonment up to three years. On summary conviction, breach may result in a fine up to CAD 300,000 or imprisonment up to six months Employment legislation/regulations Employers subject to the federal Canada Labour Code must keep a substantial amount of documentation. For three years after termination of an employment contract, the employer must retain: 40 The date of commencement of employment and the date of termination 41 For at least three years after work is performed by an employee, the employer must retain: The full name, address, social insurance number, occupational classification and sex of the employee and where the employee is under the age of 17 years, the age of the employee 42 The rate of wages and the date and particulars of any change in the rate The hours worked each day (subject to certain objections) The employee s actual earnings The dates of commencement and termination of annual vacations The dates of commencement and termination of any leave granted to the employee, the notice of the leave and any relevant medical certificate Any general holiday or other holiday with pay granted to the employee The employer s pay periods For at least three years after the expiration of the employer s obligations arising from work-related injury or illness the employer must retain: Detailed reasons for an employee s absence due to work-related illness or injury A copy of any certificate of a qualified medical practitioner indicating that the employee is fit to return to work The date the employee returned to work, or a copy of any notification from the employer to the employee and any trade union representing the employee that return to work was not reasonably practicable 43 Every employer who fails to keep the required records is guilty of an offence and is liable on summary conviction to a fine up to CAD 100 for each day during which any such refusal or failure continues. 44 Proceedings in respect of such an offence must be instituted within three years Herbert Smith Gleiss Lutz Stibbe Document retention: an international review 2011

5 Pensions and employment insurance Pursuant to federal legislation, employers must also keep the following information regarding pension plans: Records and books of account containing such information as will enable any contributions payable under the Canada Pension Plan 46 (six years from the end of the year in respect of which those records or books relate or until permission for prior disposal is obtained from the Minister of National Revenue) Any contributions or other amounts that should have been deducted or paid under the Canada Pension Plan (six years after the year to which the record relates) 47 Failure to comply with the above requirements is an offence punishable on summary conviction 48 and, if a person destroys or otherwise disposes of the records or books of account of an employer to evade payment of a contribution imposed by the Canada Pension Plan Act, in addition the person may be liable, on summary conviction, to fine up to CAD 5,000 or double the contribution that was sought to be evaded. Imprisonment up to six months may be ordered in addition or in the alternative to a fine. 49 The following should also be retained: All documentation relating to a registered pension plan and supplemental pension plan maintained for employees (eg plan texts and amendments, funding policies, services contracts, employee communications, financial statements, regulatory filings) 50 While there is no specific retention period set out regarding registered and supplemental pension plans, corporations may face a fine of up to CAD 500,000 for destroying records and therefore these documents should be kept either permanently or for the members lifetime and a reasonable period after the termination of the plan. 51 The following insurance information should be kept for at least six years after the year to which they relate: Documents relating to employment insurance, including the social insurance number of each insured person to enable the determination of any premiums payable under the Employment Insurance Act or any premiums or other amounts that should have been deducted or paid (this could include particulars of any interruption of earnings and short term disability reports) 52 The same penalties as for breach of the Canada Pension Plan apply Money laundering Pursuant to the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act and related regulations, financial institutions and persons engaged in prescribed financial activities are required to maintain records of financial transactions, financial transfers, the opening of accounts and the means of identity verification for at least five years. See section 1.4 above for further details. 54 Every person who knowingly contravenes these requirements is guilty of an offence and is liable on summary conviction to a fine up to CAD 50,000 and/ or imprisonment up to six months. On conviction on indictment, those guilty are liable to a fine up to CAD 500,000 and/or to imprisonment up to five years Overarching provisions influencing how long documents should be retained In addition to the specific retention requirements set out above, the applicable statutory limitation periods influence the length of time an organisation retains information. Federal statutes often include specific limitation periods. For example, as noted above, the Canada Labour Code sets out a three year limitation period. If the action is brought in a provincial court and there is no limitation period in the federal statute in question the action is typically regarded as an action of simple contract or debt (although exceptions apply). If an action is brought in the Federal Court or Federal Court of Appeal, provincial limitation periods will be applied where there is no express limitation period in another act. If the cause of action arises otherwise than in a province (eg in a foreign jurisdiction) there is a maximum limitation period of six years. 56 Each province and territory has its own statute that addresses limitation periods: Ontario tort and contract claims are subject to a two year limitation period and there is an ultimate limitation period of 15 years provided by Ontario law. This means that proceedings may not be started after the 15 th anniversary of the date on which the act or omission on which the claim is based took place 57 Alberta tort and contract claims are subject to a two year limitation period and there is an ultimate limitation period of 10 years 58 British Columbia tort and contract claims are subject to a two year limitation period and there is an ultimate limitation period of 30 years 59 Manitoba tort claims are subject to a two year limitation period, contract claims are subject to a 6 year period and there is an ultimate limitation period of 30 years 60 Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 33

6 New Brunswick claims are generally subject to a two year limitation period from the date the claim was discovered 61 Newfoundland most tort claims and contract claims are subject to a two year limitation period. A six year limitation period applies to enforce an obligation arising from a statute and certain torts and there is an ultimate limitation period of 30 years 62 Nova Scotia certain tort claims are subject to a one year limitation period, actions for penalties, damages or sums of money given to the parties aggrieved by any statute are subject to a two year period, contract claims are subject to a six year period and an ultimate period of 25 years exists for persons with a disability 63 Quebec tort and contract claims are generally subject to a three year limitation period although actions to enforce immovable real rights are subject to a 10 year period 64 Saskatchewan tort and contract claims are subject to a two year limitation period and there is an ultimate limitation period of 15 years 65 Prince Edward Island tort claims are generally subject to a two year limitation period (but actions based on, amongst other things, fraudulent misrepresentation are subject to a six year period), contract claims are subject to a six year period and there is an ultimate limitation period of 30 years where a party is under a disability 66 The Northwest Territories 67, Yukon 68 and Nunavut 69 generally subject tort claims to a two year limitation period (claims based on fraudulent misrepresentation have a six year period) and contract claims are subject to a six year period Failure to maintain documents and records until the expiry of the applicable limitation period is not an offence and carries no penalty. However, failure to maintain documents and records until at least the expiry of the relevant limitation period could prejudice the evidentiary record and make it difficult to enforce legal rights or defend legal claims. 3. In what circumstances must documents be destroyed? Data protection rules restricting the length of time certain documents should be retained Canadian laws (both federal and provincial) governing the protection of personal information provide that personal information should be retained only for so long as is necessary for the purposes for which the information was collected. Thereafter it must be destroyed 70. The time frame for which such information is retained will depend upon the type of information and the uses to which it is put. It is an offence under Canadian privacy laws to destroy information for which an access request has been made. This means that information must be retained long enough that the individual may exercise a right of access to that information. Canadian privacy laws also include an obligation to correct or update personal information that has been retained upon the request of the individual to whom the information relates. Other procedural statutes or rules General commercial law requires the retention of records for the periods specified. Thereafter, secure destruction will be the responsibility of the organisation holding the information. Government institutions in Canada that are subject to specific privacy and access (freedom of information) legislation may only destroy documents or information once permission has been obtained from the government institution charged with the responsibility to preserve records and archives. In Canada all provinces, with the exception of New Brunswick, have legislation governing the regulation of consumer reporting agencies. In general, the legislation is broadly drafted and requires the registration of consumer reporting agencies. The time periods for the retention of personal and credit information by consumer reporting agencies are prescribed by law and there is some variation from province to province. 71 Banks and other financial institutions have, typically, in customer credit or account applications, included a direct reference to and consent for the ongoing exchange of information with consumer reporting agencies. The purpose for which this information is collected typically includes identity verification, verification of information provided by a customer, assessment of credit-worthiness, as well as the detection and prevention of fraud. This language also typically directly references an exchange of information with a credit reporting agency. Violation of any of the above requirements could give rise to consumer complaint, enforcement action, mandatory orders, fines and other enforcement orders depending on the nature of the violation and the remedies prescribed for the violation under the applicable law. 4. Who may documents have to be handed over to? Disclosure in disputes In Canada, parties to civil litigation and certain regulatory proceedings are required to produce documents that are relevant to the issues in dispute. Generally speaking, civil 34 Herbert Smith Gleiss Lutz Stibbe Document retention: an international review 2011

7 litigation is governed by provincial rules of practice and dispute resolution. Those rules must be followed in the context of the dispute and typically include an obligation to disclose relevant documents. Failure to do so could have adverse consequences on the party in the context of litigation. In civil litigation, record production obligations frequently require parties to produce documents and electronic records (including s). Regulatory authorities may request electronic records in the context of regulatory reviews or audits. Search protocols (in the criminal field) often include searches of electronic files and records. There is, further, a growing awareness that documents are never truly destroyed (given built-in computer redundancies) and that it is generally possible to recreate or locate documents that have been altered or purportedly deleted. Duty to preserve Spoliation is the loss or destruction of evidence required by another party for the conduct of litigation. At the first sign of litigation, destruction of any potentially relevant documents must immediately cease. A litigation hold policy (amended and updated as required) is essential to ensure that no documents are inadvertently disposed of including those for which the retention period may have expired. Recent legislative changes reflect the advances made in electronic document creation and storage methods. It has become increasingly important to ensure that electronic records are maintained in such a way that the owner of those records may establish the authenticity of the records for subsequent use. In one sense, electronic records are more fragile (or more susceptible to alteration, change, loss or inadvertent deletion) than paper copies and may require more advanced document retention strategies to protect their integrity. Electronic disclosure (e-disclosure) Electronic documents are discoverable in Canada. Federal, provincial and territorial legislation and rules of court in Canada define document to include electronically stored information as well as sound recordings, videotapes, films, photographs, charts, graphs, maps, plans and surveys. Practice directions in many common law jurisdictions in Canada, such as British Columbia and Alberta, encourage the parties to meet and confer to discuss electronic disclosure issues in the litigation at a very early stage. Further, The Sedona Canada Principles Addressing Electronic Discovery developed by and available online from The Sedona Conference (the Sedona Canada Principles) contain detailed best practice guidelines on how to deal with electronic discovery issues and have been cited by Canadian courts. Principle 4 of the Sedona Canada Principles provides that counsel and the parties should meet and confer as soon as possible, and on an ongoing basis, regarding the identification, preservation, collection, review and production of electronically stored information. In Ontario, the rules of court now require the parties to consult the Sedona Canada Principles when preparing a discovery plan for the litigation. 72 Metadata 73 is disclosable if it is relevant and not privileged. According to the Sedona Canada Principles, deciding what metadata needs to be specifically preserved and produced represents one of the biggest challenges in electronic document production. Accordingly, and consistent with Canadian case law, Comment 8a of Principle 8 of the Sedona Canada Principles states as follows: Production of electronic documents and data should be made only in electronic format, unless the recipient is somehow disadvantaged and cannot effectively make use of a computer, or the volume of documents is minimal and metadata is known (and agreed by all parties) to be irrelevant. Disclosure on insolvency In Canada, there are two key federal statutes that deal with matters of insolvency: the Bankruptcy and Insolvency Act (BIA) and the Companies Creditors Arrangement Act (CCAA). The BIA deals with both bankruptcy and corporate/individual re-organisations. The CCAA deals with corporate or corporate group re organisations. Under the BIA 74, unless the court orders otherwise, a trustee must keep, for at least four years after the date of the trustee s discharge, the books, records and documents relating to the administration of that estate 75. The BIA requires that the Superintendent of Bankruptcy keep records of bankruptcies for between 10 and 30 years depending on the circumstances of the bankruptcy 76. Under the BIA, a bankrupt must: Make discovery of and deliver all property that is under the bankrupt s possession or control to the trustee or to any person authorised by the trustee to take possession of it Deliver to the trustee all books, records, documents, writings and papers including title papers, insurance policies and tax records and returns which in any way relate to the bankrupt s property or affairs Within five days following the bankruptcy, prepare and submit to the trustee in quadruplicate a statement of the bankrupt s affairs showing the particulars of the bankrupt s assets and liabilities, the names and addresses of the bankrupt s creditors, the securities held by them respectively, the dates when the securities were respectively given and such further or other information as may be required Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 35

8 Make disclosure to the trustee of all property disposed of within the period beginning one year before the date of the initial bankruptcy event (unless the court otherwise directs) and ending on the date of the bankruptcy Make disclosure to the trustee of all property disposed of by gift or settlement without adequate valuable consideration beginning five years before the date of the initial bankruptcy event and ending on the date of the bankruptcy 77 Applications made under the CCAA must include copies of all financial statements, audited or unaudited, prepared during the year before the application or, if no such statements were prepared in that year, a copy of the most recent statement. 78 As part of the CCAA process, a monitor is appointed to oversee the business and affairs of the company seeking creditor protection. For the purposes of monitoring the company s business and financial affairs, the monitor has access to the company s property, including the premises, books, records, data, including data in electronic form and other financial documents of the company, to the extent that is necessary to adequately assess the company s business and financial affairs. 79 The Superintendent of Bankruptcy must ensure that for a period of 10 years from the time the information is received, a public record of prescribed information relating to proceedings under the CCAA is maintained. Similarly, other records relating to the administration of the CCAA that the Superintendent considers appropriate must also be retained for 10 years after the day on which the information is received. Key rules governing the disclosure of documents to regulatory authorities Canadian laws at both the federal and provincial level commonly include the obligation to disclose documents to regulatory authorities in order for those authorities to conduct regulatory mandates or carry out regulatory investigations. Failure to assist in such investigations or to disclose the relevant documents is usually an offence under the statute requiring disclosure, punishable by either fines and/or imprisonment. Such laws are found in virtually all sectors of Canadian business including, but not limited to, transportation services, telecommunications, tax reporting, food and drug regulation, employment and labour, energy and competition law investigations. Major commercial transactions involving mergers, acquisitions or, in certain cases, investments may also be subject to mandatory regulatory reporting and the obligation to pre-clear certain commercial transactions. The obligation to disclose such information may be found in either a governing law, a regulation or may be required pursuant to judicial order. Information sharing by regulatory authorities Information sharing within Canada is conducted within the constraints of legislation governing access to information (discussed below). Internationally, information may be shared on the basis of commercial treaties, agreements or memoranda of understanding. Disclosure by public authorities Freedom of information legislation at the federal, provincial and territorial levels in Canada create a quasiconstitutional right of access to information and records in the hands of government institutions subject to certain defined and limited exceptions. Although the particular scope of the obligation to disclose such records will vary from jurisdiction to jurisdiction, typically confidential commercial information that was either provided to the government institution in confidence or the disclosure of which would be reasonably likely to cause commercial harm will be exempt from disclosure. The possibility of public disclosure of records and information provided to government institutions must be carefully considered before providing such information and, to the extent possible, steps should be taken to protect against the disclosure. 80 Rules governing the disclosure of documents stored in Canada upon request by an international court, regulatory body or third party International disclosure of documents in the context of litigation or investigations is governed by international treaties that have been implemented in Canada. 81 There are also provincial/territorial procedures in Canada for the recognition and enforcement of foreign orders within Canada. 82 It is, however, possible, that disclosure orders made against litigants in a foreign jurisdiction may pressure Canadian entities to release documents in response to the court order despite the lack of jurisdiction over records retained in Canada. Without seeking recognition of the foreign order, companies may feel compelled to attempt to require a Canadian subsidiary to disclose documents. Such type of action frequently raises issues concerning compliance with Canadian privacy laws and whether those records may be released to a foreign authority in the absence of the consent of the individual to whom the information relates. Rules enabling a person to seek disclosure of documents located outside Canada for the purpose of a dispute commenced in Canada Canada is also a party to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965, (the Hague Service Convention). The Hague Service Convention facilitates the service of documents from Canada outside Canada or the service of documents located in a contracting state into Canada. In addition, the Canada Evidence 36 Herbert Smith Gleiss Lutz Stibbe Document retention: an international review 2011

9 Act (CEA) provides for the taking of evidence relating to proceedings in courts outside Canada whereby an order may be issued concerning the examination of a witness in Canada for the purposes of proceedings (whether civil, commercial or criminal) before a court or a tribunal outside of Canada. Upon application, a Canadian court or judge may, in its discretion, order the examination on oath on interrogatories, or otherwise, before any person or persons named in the order, of that party or witness accordingly. By the same or any subsequent order, it may command the attendance of that party or witness for the purpose of being examined and for the production of any writings or other documents mentioned in the order and of any other writings or documents relating to the matter in question that are in the possession or power of that party or witness. 83 Letters rogatory from a court or tribunal outside Canada in which the civil, commercial or criminal matter is pending, may be deemed and taken to be sufficient evidence in support of the application How should I store my documents? Principal legislative or regulatory provisions prescribing the mode of storage of particular documents As an overriding consideration, information must be stored securely in a manner that will permit the information to be accessed as required for regulation or other purposes (including litigation). Changes made to the Canada Evidence Act (the CEA) have resulted in new provisions relating to the admission of electronic documents in all criminal and civil proceedings over which the federal Government has jurisdiction. A key element of the new electronic documents provisions of the CEA is that a party seeking to introduce an electronic document into evidence bears the burden of proving, by evidence capable of supporting a finding that the electronic document is as it purports to be. 85 To meet the standard set in the CEA, it is necessary to be able to establish that the computer system is working properly. This requires verification that audit procedures are in place and are adequate and that there has been no document storage error or systems malfunction. To the extent an audit reveals an inconsistency in the document retention system it is necessary to establish that it is possible to make all corrections necessary to restore the integrity of the document(s). The purpose of the document and any standard document retention practice(s) in the industry may also be relevant to the determination of the admissibility of an electronic record. Accordingly, it is critical for document retention policies and practices to be commensurate to the importance of the documents concerned and at least acceptable under standard industry practice (if any). Legislative or regulatory provisions prescribing the way in which a document retention policy must be prepared Generally speaking, Canadian laws do not dictate how a document retention policy must be prepared. However, the document security principals set out above must be borne in mind when preparing such a policy. Main information you recommend a business operating in Canada includes in its written document retention policy A record retention policy should meet the following objectives: Compliance with legal requirements all records must be retained for at least as long as may be required under applicable Canadian laws Availability and accessibility all records must be retained in a manner sufficient to ensure that records are available and may be accessed for as long as may reasonably be required to meet legal requirements and for business purpose Cost reduction records that are no longer necessary (for business or legal reasons) should be disposed of in order to reduce unnecessary cost The key aspects of a document retention policy are: A description of the types of records that are included in the policy The company s retention principles the length of time that a record should be retained. These will, in general, be governed by one or more of the following: A legislative requirement to retain the record for a certain period of time A business need for a historical record (the development of a corporate procedure or policy) and/or A current, or perceived future, need for the maintenance of a record (regulatory response or civil litigation) A civil litigation hold policy How electronic records will be retained Identification of a records manager Record retention periods Document creation, naming, filing and indexing systems Destruction protocols Audit requirements Retention policy review Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 37

10 6. Should I store my data in Canada? Main advantages and disadvantages an international business would likely face if it decided to store its hard copy documents/electronic documents/servers in Canada Once documents are stored in Canada, they are subject to Canadian laws and, potentially, to access by Canadian regulatory and law enforcement authorities. International organisations wishing to store documents in Canada should also ensure that such storage is consistent with document management and transfer requirements in the originating jurisdiction. Further, documents may be subject to examination, seizure and/or copying by regulatory authorities acting pursuant to statutory/regulatory authority. To the extent that Canada has entered into multilateral treaties with foreign countries, this could also mean that information is shared by Canadian regulatory authorities beyond Canadian borders. While public authorities in Canada are also subject to public sector laws governing the protection of commercial information submitted by their parties, these laws are not automatic and corporate information may nonetheless be shared beyond Canada s borders. Contributors: Martha A. Healey, partner Ogilvy Renault LLP mhealey@ogilvyrenault.com Andrew Mason, lawyer Ogilvy Renault LLP amason@ogilvyrenault.com 1. Canada Business Corporations Act, RSC 1985, chapter C-44, see sections 1, 20, 50, 106 and Canada Business Corporations Act, section 20(2.1) 3. Canada Business Corporations Act, section 50(7) 4. Canada Business Corporations Act, section Canada Business Corporations Act, section Canada Business Corporations Act, section 225(1) and (2) 7. Income Tax Act, RSC 1985, c. 1 (5th Supp.) section 230(4) and the Income Tax Regulations, CRC, c. 945, section Income Tax Act, section 230(4) and the Income Tax Regulations, section Income Tax Act, section 230(4) and the Income Tax Regulations, section Income Tax Regulations, section Institute of Chartered Accountants of Ontario, Professional Rules of Conduct, section Institute of Chartered Accountants of Ontario, CI218: Retention of Documentation and Working Papers 13. Institute of Chartered Accountants of Ontario, Professional Rules of Conduct, section Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/ , section 69; passed pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c Insurance Companies Act, SC 1991, c. 47, section 269, the Trust and Loan Companies Act, SC 1991, c. 45, section 251 and the Bank Act, SC 1991, c. 46, section 246(1) 16. Bank Act, section 246(2) and Trust and Loan Companies Act, section 251(2) 17. Insurance Companies Act, section 277, Trust and Loan Companies Act, section 259 and Bank Act, section Insurance Companies Act, sections 1023 and 1027, Trust and Loan Companies Act, sections 533 and 534 and Bank Act, sections 980 and Canadian Securities Administrators, National Instrument Registration Requirements and Exemptions, section 11.6 (effective September 28, 2009) 20. Income Tax Act, section 230(4) 21. Excise Tax Act, RSC 1985, c. E-15, section See eg Canada Revenue Agency, Keeping Records (2009), page Excise Tax Act, section 286(3); see also Canada Revenue Agency, GST/HST Memorandum 15.1 General Requirements for Books and Records, paragraph Excise Tax Act, section 286(4) 25. Income Tax Act, section See among others, Excise Tax Act, section Provincial employment legislation (applicable to provincially regulated employers) will also provide for retention periods for employment records 28. Canada Labour Code, RSC 1985, c. L-2, section 125(g) 29. Canada Occupational Health and Safety Regulations, SOR/86-304, sections 15.11, 11 and 7.3(6) 30. Canada Occupational Health and Safety Regulations, sections 15.7, 15.1(b) 31. Canada Occupational Health and Safety Regulations, section 15.10(1) 32. Canada Occupational Health and Safety Regulations, section 15.6(1) 33. Canada Occupational Health and Safety Regulations, section 15.8(1) 38 Herbert Smith Gleiss Lutz Stibbe Document retention: an international review 2011

11 34. Canada Occupational Health and Safety Regulations, see, by way of example, sections 11.2(2), 11.5(1)(a) 35. Canada Occupational Health and Safety Regulations, section 16.13(3) 36. Canada Labour Code, section Environmental Emergency Regulations, SOR/ , section 4; passed pursuant to the Canadian Environmental Protection Act, 1999, SC 1999, c Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations, SOR/ , sections 14, 21, 36(3) and 38(2) A movement document sets out required information concerning the movement of the waste in question 39. Canadian Environmental Protection Act, 1999, section 272. Where an offence is committed or continued on more than one day, the person who committed the offence is liable to be convicted for a separate offence for each day on which it is committed or continued 40. Canada Labour Code, section. 252(2) 41. Canada Labour Standards Regulations, CRC, c. 986, section 24(1) 42. The source for the remaining obligations is the Canada Labour Standards Regulations, section 24(2) 43. Canada Labour Standards Regulations, section 24(4) 44. Canada Labour Code, section 256(3) 45. Canada Labour Code, section 257(2) 46. Canada Pension Plan, RSC 1985, c. C-8, section 24(2) 47. Canada Pension Plan, section 24(2). If the records pertain to an employee who is subject to a ruling or who has commenced an appeal they must be kept until the ruling or until the appeal or has been disposed of and any further appeal disposed of or retained until the time for any further appeal has expired. See section 24(3) 48. Canada Pension Plan, section 41(2) 49. Canada Pension Plan, section 41(4) 50. Pension Benefits Standards Act, 1985, RSC 1985, c. 32 (2nd Supp.) section 34(1) 51. Pension Benefits Standards Act, section Employment Insurance Act, SC 1996, c. 23, section Employment Insurance Act, section Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, section Proceeds of Crime (Money Laundering) and Terrorist Financing Act, section Federal Courts Act, RSC 1985, c. F-7, section Limitations Act, 2002, SO 2002, c. 24, Schedule B, at sections 4 and Limitations Act, RSA 2000, c. L-12, section Limitation Act, RSBC 1996, c. 266, sections 3 and 8(1)(c) 60. The Limitation of Actions Act, CCSM c. L150, sections 2(1) and 7(5) 61. Limitation of Actions Act, SNB 2009, c. L-8.5, section Limitations Act, SNL 1995, c. L-16.1, sections Limitations of Actions Act, RSNS 1989, c. 258, sections 1, 2 and Civil Code of Quebec, LRQ, c. C-1991, articles 2925 and Limitations Act, SS 2004, c. L-16.1, sections 5 and Statute of Limitations, RSPEI 1988, c. S-7, sections 2 and 48(2) 67. Limitation of Actions Act, RSNWT 1988, c. L-8, section Limitation of Actions Act, RSY 2002, c. 139, section Nunavut employs the Limitation of Actions Act of the Northwest Territories 70. Canada: Personal Information Protection and Electronic Documents Act, SC 2000, c. 5; British Columbia: Personal Information Protection Act, SBC 2003, c. 63; Alberta Personal Information Protection Act, SA 2003, c. P-6.5, Quebec: An act respecting the protection of personal information in the private sector, RSQ c. P-39.1; Ontario: Personal Health Information Protection Act, 2004, SO 2004, c. 3, Schedule A 71. Consumer Reporting Act, RSNS 1989, c. 93; Consumer Reporting Act, RSPEI 1988, c. C-20; Consumer Reporting Act, RSO 1990, c. C.33; Business Practices and Consumer Protection Act, SBC 2004, c. 2; Fair Trading Act, RSA 2000, c. F-2; Credit and Personal Reports Regulation, Alta. Reg. 193/1999; Credit Reporting Act, SS 2004, c. C-43.2; Quebec: An act respecting the protection of personal information in the private sector, RSQ c. P-39.1; Personal Investigations Act, CCSM c. P34; Consumer Protection and Business Practices Act, SNL 2009, c. C-31.1; Consumer Reporting Agencies Regulations, CNLR 774/ Rules of Civil Procedure, RRO 1990, Reg. 194, Rule (4) 73. Metadata, as explained in The Sedona Canada Principles, is information created by the operating system or application about a file that allows the operating system or application to store and retrieve the file at a later date. Metadata includes information on the file designation, creation and edit dates, authorship and edit history and hundreds of other pieces of information used in system administration, some of which is not accessible by the computer user without special tools 74. Bankruptcy and Insolvency Act, R.S.C. 1985, c. B Bankruptcy and Insolvency Act, section Bankruptcy and Insolvency Act, section Bankruptcy and Insolvency Act, section Companies Creditors Arrangement Act, RSC 1985, c. C-36, section Companies Creditors Arrangement Act, section See, for example, the Access to Information Act, RSC 1985, c. A-1, section See by way of example, the Canada-United Kingdom Civil and Commercial Judgments Convention Act, R.S.C. 1985, c. C-30, implementing the Convention Between Canada And The United Kingdom Of Great Britain And Northern Ireland Providing For The Reciprocal Recognition And Enforcement Of Judgments In Civil And Commercial Matters. See also, by way of example, the Mutual Legal Assistance in Criminal Matters Act, RSC 1985, c. 30 (4th Supp.)) 82. An example of provincial legislation is the Reciprocal Enforcement of Judgments (UK) Act, RSO 1990, c. R.6 and the Reciprocal Enforcement of Judgments Act, RSO 1990, c. R Canada Evidence Act, RS, 1985, c. C-5, section Canada Evidence Act, section Canada Evidence Act, RSC 1985, c. C-5, section 31.1 Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 39

12 Checklist 1 Document Company documents Articles of incorporation, bylaws, amendments, notices of general shareholder meetings, audited financial statements, minutes of the foundation meeting, unanimous shareholder agreements, notices of changes to directors Shareholder/securities registry Minutes of directors and shareholder meetings Cancelled security certificates in registered form Recommended 2 document retention period Life of the company (and 6 years following dissolution) Life of the company (and 6 years following dissolution) Life of the company (and 6 years following dissolution) 6 years after the date of cancellation Storing the document Paper/original documents Retain in Registered office or any other place in Canada designated by the directors or outside Canada if specific requirements are met Paper/original documents Central securities register to be maintained at registered office or at any other place in Canada designated by the directors; branch securities registers may be kept at any place in or outside Canada designated by the directors Paper/original documents Registered office of the corporation or at such other place as the directors think fit or outside Canada if specific requirements are met Paper/original documents Central securities register to be maintained at registered office or at any other place in Canada designated by the directors; branch securities registers may be kept at any place in or outside Canada designated by the directors 40 Herbert Smith Gleiss Lutz Stibbe Document retention: an international review 2011

13 Document Trading records of companies/businesses Accounting books and records Contracts, invoices Auditors Audit reports and accounting audit reports (all documents received from clients, any audit working papers and copies of clients' financial statements) Financial services regulation Incorporating instrument and bylaws, minutes of meetings and resolutions of shareholders or policyholders for insurance companies Financial institution records of financial transactions, financial transfers, opening of accounts, identity verification Recommended 2 document retention period At least 6 years after the end of the financial period to which they relate; see also limitation periods applicable in the province/territory in which the company carries on business See limitation period for particular province/territory 10 years (or such other period as professional standards may, from time to time, require) Permanently At least 5 years from the day on which the account to which the information relates is closed, from the day on which the last business transaction is conducted or from the day on which they were created depending on the nature of the record and provincial securities legislation Storing the document Paper/original documents Registered office of the corporation or at such other place as the directors think fit. If accounting records are kept outside Canada, accounting records adequate to enable the directors to ascertain the financial position of the corporation on a quarterly basis must be kept at the registered office or any other place in Canada designated by the directors or outside Canada if specific requirements are met Paper/original documents Assess whether provincial requirements exist Paper Paper, though electronic copies can be made Safe location at head office, unless other conditions met Paper, photographic film, or electronic if Safe location at head office, unless other conditions met Authorisations, designations, conditions and limitations Permanently Paper, photographic film, or electronic if Safe location at head office, unless other conditions met Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 41

14 Document Accounting books and records containing minutes of meetings and the resolutions of the directors and any related committees Recommended 2 document retention period Permanently Storing the document Paper, photographic film, or electronic if Safe location at head office, unless other conditions met Financial statements Permanently Paper, photographic film, or electronic if Safe location at head office, unless other conditions met Transaction/internal trading records, central securities register Permanently Paper Safe location at head office, unless other conditions met All books and accounts Permanently Paper, photographic film, or electronic if Safe location at head office, unless other conditions met Tax Books, general records and financial statements relevant to tax Journals, general ledgers and documents regarding transactions, information relating to input tax credit claims, internal audit information 6 years from the end of the tax year to which they relate 6 years from the end of the tax year to which they relate Records pertaining to notices of objections and appeals Retain at least until such objections and appeals have been resolved Health and safety Books, records and other documents, relevant substances, reports including records of injuries, written accident reports, records of hazardous occurrences, reports arising from investigations, hazard reports/emergency procedures In a form that allows for the determination of taxes (paper or electronic) Place of business or residence in Canada or outside Canada if permission obtained Paper/electronic if Place of business or residence in Canada or outside Canada if permission obtained Paper/electronic if Place of business or residence in Canada or outside Canada if permission obtained 10 years* Paper/electronic if At the work place in respect of which the record applies 42 Herbert Smith Gleiss Lutz Stibbe Document retention: an international review 2011

15 Document Environmental legislation/regulations All information relating to environmental issues such as pollutants and adverse environmental or human life health risks Required shipping documentation relating to hazardous waste Employment Important personnel affairs and records such as the rate of wages, hours worked each day, employee's actual earnings Records relating to an employee's absence due to work-related illness or injury Records and books of accounting for pension plans All documentation relating to a Registered Pension Plan and Supplemental Pension Plan Money laundering Money laundering records Recommended 2 document retention period Storing the document Permanently Paper/electronic if Documents should be readily available and, if the place where a substance is located is a place of work. then a copy must be available at that place 2 years Paper/electronic if Principal place of business in Canada At least 3 years after work is performed by an employee* At least 3 years after the work related injury or illness* 6 years after the year the record refers to Permanently* At least 5 years (check the specific date which triggers the 5 year period) Paper/electronic See also provincial requirements Paper/electronic See also provincial requirements Paper/electronic if Place of business or residence in Canada Paper/electronic if Place of business or residence in Canada Paper/electronic if Every record that is required to be kept must be retained in such a way that it can be provided to an authorised person within 30 days after a request is made to examine it 1. This is a summary only. Please consult the text and/or seek legal advice for more information 2. The periods specified reflect legal requirements, statutory limitation periods, or best practice * Provincial legislation must be reviewed for retention requirements in respect of provincially regulated employers Document retention: an international review 2011 Herbert Smith Gleiss Lutz Stibbe 43