Start-Up Visa Program for Foreign Entrepreneurs

 

Introduction

Canada has always been a leader in welcoming and supporting entrepreneurs from around the world. The Canadian Start-Up Visa Program is a prime example of this commitment, providing a pathway for innovative entrepreneurs to immigrate to Canada and build their businesses here. The Start-Up Visa Program is designed for foreign entrepreneurs who have an innovative business idea and the ability to create jobs and contribute to the Canadian economy. It is a program that helps entrepreneurs who are not Canadian citizens or permanent residents to immigrate to Canada by providing them with the necessary support and resources to establish and grow their business in the country.

What are the requirements of the Start-Up Visa Program?

To qualify for the Start-Up Visa Program, entrepreneurs must first secure a commitment from a designated Canadian organization. These organizations, which include venture capital funds, angel investor groups, and business incubators, must be willing to invest in the entrepreneur's business idea and provide them with the necessary support to establish and grow their business in Canada. Velletta Pedersen Christie is proud to be connected to a Designated Business Incubator with international reach that can provide the essential Letter of Support required for the Start-Up Visa Program. This means that foreign entrepreneurs who work with our law firm will have access to the resources and support they need to apply for the program and establish their business in Canada.

How do I get a Letter of Support from a Designated Business Incubator for the Start-Up Visa Program?

To obtain accurate evaluation from the Designated Business Incubator and a Letter of Support, you will need: (1) a detailed resume; (2) a copy of your Passport Information Page; (3) a one page summary of the proposed startup venture which clearly states the problem you are attempting to solve, the initial customer segments, and the business model; and (4)  International English Language Testing Score (IELTS) General Exam score showing Canada Language Benchmark Level 5. The Designated Business Incubator will normally assess your application within one month.

How can I apply for the Start-Up Visa Program?

Once an entrepreneur has secured a commitment from a designated organization, they can then apply for the Start-Up Visa Program. The application process includes submitting a business plan, providing proof of language proficiency, and passing a medical examination and security clearance. Once an entrepreneur is accepted into the Start-Up Visa Program, they will receive a work permit that will allow them to come to Canada and establish their business. They will also have access to a network of resources, including mentorship and networking opportunities, to help them succeed in Canada. Work permit approvals normally take 5-16 weeks. The business incubation period starts and continues for 8 months. It is estimated that a decision regarding permanent residency will be issued within 12-24 months by Immigration, Refugees and Citizenship Canada.

Conclusion

The Start-Up Visa Program is a great opportunity for entrepreneurs who are looking to establish and grow their business in Canada. It provides a pathway for talented and innovative entrepreneurs from around the world to immigrate to Canada and contribute to the Canadian economy. If you're an entrepreneur with a great business idea, the Start-Up Visa Program may be the perfect opportunity for you to achieve your dreams and build a successful business in Canada. Importantly, our law firm can help you navigate the process and secure the support you need to make it happen.

A Cautionary Note

This article provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

If you're Interested in learning more about the Start-Up Visa Program, contact our lawyers directly.

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Growing your Startup without Capital: Advisory Agreement

How can my startup business attract talent while bootstrapped?

If you are running a startup, chances are you have reached out to a contractor or an advisor for help. While outsourcing work to independent contractors to undertake specific business functions often remains a cheaper and faster option than hiring a full-time employee, there are certain individuals that bring indispensable amounts of knowledge, skills, or resources to your business. Based on their expertise, you want to ensure that these individuals continue to work with your startup. The problem is, your startup cannot afford the salary or benefits that an established tech company can offer its workers.

 

What should I look for in an Advisor?

 

If an independent contractor has relevant experience in developing a product or technology, leveraging their advice can materially improve the growth of your company. Some individuals may have associations to investors or possess the requisite knowledge and experience in boosting your startup’s profile. Other individuals may provide professional or specialized services that your startup consistently relies on. Despite all the potential benefits that an Advisor can offer, entrepreneurs and founders should engage with potential advisors carefully. Having a good reputation or expertise in an area does not mean that they will be a good fit within in the company. Moreover, founder and entrepreneurs should take steps to protect leakage of intellectual property and confidential information.

 

What can my bootstrapped startup offer an advisor?

 

Without funding to pay Advisors a competitive salary, many tech startups in Victoria and Vancouver choose to offer independent contractors future equity in the company. In this instance, equity refers to the extent of ownership in the company. In other words, startup business offer a stake in the business contingent on reaching certain milestones which help the business build and grow. Offering future equity in a business is a great option when the Company and the Advisor are agreeable that the value of the shares issued in the Company to the Advisor are likely to increase through their cooperative efforts. Before considering what number of shares to issue to an Advisor, you’ll want to consider drafting an Advisory Agreement.

 

What is an Advisory Agreement?

 

An Advisory Agreement provides flexibility to startup companies so that they can give the people who help them grow a percentage of the company to reward them in the long-term. An Advisory Agreement is an agreement between the startup company and the potential advisor. An Advisory Agreement will help you determine the advisor’s role, time commitment, term, compensation, level of confidentiality, protection of intellectual property, assignment of development intellectual property, and how the shares will vest over time.

One option is the FAST agreement by the Founder’s institute. This agreement was made for the US market and should be used with caution by Canadian startups. Since it’s last update in 2017, several laws around employment and securities regulations have changed in Canada. Additionally, the FAST agreement does not contain bolstered protection for intellectual property. Instead of using a one-size-fits-none template that you found online, we offer flat rates to review and edit existing Advisory Agreements.

 

What is a Vesting schedule?

 

A Vesting Schedule outlines the process of earning an asset, like ownership in a company. Companies often use Vesting Schedules to encourage its personnel to stay with the company for longer or to perform better.

There are generally three types of vesting schedules: (i) Time-Based Vesting; (ii) Milestone-based Vesting; (iii) a Blended Option. With time-based stock vesting, you earn options or shares over time. Often there is a cliff period involved which requires that the Advisor work for a certain period of time before the options or a tranche of shares vests. Another option is milestone-based vesting where the advisor gets the option or shares after completing a specific project or after assisting the startup reach a certain business goal. Depending on the scenario, a startup may even implement a blended option which utilizes both time and milestones for shares in a company to vest.

A vesting schedule that works for one Advisor is not necessary the best suited for another. Our business lawyers have worked with hundreds of startups and can help you determine the best vesting schedule for your short term and long term business goals.

 

Startup Business Lawyers in Victoria

 

As part of our growing initiative to reduce the level of legal work and documentation that founders have to manage, our law firm, Velletta, Pedersen, and Christie have developed a streamlined process in assisting Founders and Advisors formalize and execute their expectations. Whether your company is in the Idea Stage, Startup stage, or Growth stage, our experienced business lawyers can provide valuable advice to avoid common pitfalls that startup businesses encounter while rapidly expanding.

 

A Cautionary Note

This article provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

Promissory Notes

 

Ancient Origins, Modern Importance

 

Promissory notes are believed to have originated in ancient China, and then made their way into European history, before ultimately becoming an important part of modern business. In ancient times money was made of precious metal, and any large transfer of funds over a distance was a heavy proposition, so promissory notes evolved as a lighter alternative. Now it is common to use promissory notes in many different business transactions, and for loans between private individuals. The Canadian Bills of Exchange Act (R.S.C., 1985, c. B-4) creates a statutory definition in section 176(1) for promissory notes in Canada:

“an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.”

 

What are the Benefits of Promissory Notes?

 

The main benefit of a promissory note is that it clearly documents an obligation to pay money, and creates a strong cause of action in the event that the issuer defaults upon the note. The signed promissory note is effective from the time it is made, and is an independent obligation of the issuer. If the note is drafted properly, the holder of the note can sue upon it without having to prove much beyond the fact that the defendant issued the note, and then defaulted upon it.

 

Strategically, having a signed promissory note can be invaluable to a creditor seeking to collect upon a debt. Collections work is pragmatic, and no creditor wants to spend more money enforcing a debt than the debt is actually worth. Litigation is expensive, and it takes a significant amount of time to obtain a judgement. In order to provide a more efficient method of obtaining judgment, the British Columbia Supreme Court Civil Rules contain a process called a summary trial. A summary trial is available in cases where a judge is able to decide the issue without having to hear live testimony and weigh the credibility of the parties. A signed promissory note can help a creditor to qualify for the summary trial process, and as a result obtain a more rapid and cost effective judgment against the debtor.

 

What are the Disadvantages of a Promissory Notes

 

Promissory Notes Disadvantage #1 - A Sum Certain in Money

 

In order to be a promissory note, the document must make it clear that the issuer of the note is unconditionally promising to pay a specific amount of money. This makes a promissory note distinguishable from a revolving line of credit. The note must make it clear how much is owed by the issuer of the note. If the amount is not clear, then you have no promissory note, and consequently a big problem.

 

Promissory Notes Disadvantage #2 - Interest

 

If the note contains interest, it must be clear how interest is calculated. This ties in to the requirement that the note be for a sum certain in money. The interest must be capable of being objectively calculated, and this requires that the rate of interest be stated, along with the formula for how interest is calculated – e.g. simple interest, or interest compounded monthly.

 

Promissory Notes Disadvantage #3 - Notice of Default or Demand for Payment

 

Notes need to make it clear when a default has occurred. Many notes with regular payments contain a provision that the holder of the note must give notice of default to the issuer of the note, and the issuer must fail to remedy the default within a certain period of time, before the issuer can accelerate the debt and collect. If you are the one signing the promissory note, you may want a provision that gives you time to remedy a default without the holder of the note taking collection actions. On the other hand, if you are the holder of the note, you need to make sure that you give notice of a default correctly, and wait the requisite amount of time before taking collection actions.

 

For promissory notes that are payable on demand, you will also likely want to include in the note the amount of time that the issuer has to pay the note, after demand has been given. Under the common law, the issuer had a reasonable amount of time to satisfy the demand, and this had to be assessed taking into consideration the amount of the note. You would be wise to include a specific amount of time in order to avoid this issue, and make it totally clear how much time the issuer has to satisfy the demand.

 

For both defaults on installment notes, or demands for repayment on demand notes, the note should specify whether the notice must be given in writing, and whether it needs to be given at a particular place. In order to give effective notice, the holder of the note will need to comply with these requirements, or else the notice may be ineffective and therefore not trigger the issuer’s obligations.

 

Promissory Notes Disadvantage #4 - Limitation Periods

 

Promissory notes can be either due on demand, or else contain specific dates on which payments must be made. For both types of notes, if the issuer defaults, you must bring a civil action to enforce the note within the applicable limitation period. The Limitation Act [SBC 2012] c.13 creates a general two year limitation period to commence a civil action. This limitation period runs from the date that the claim is discovered. For a note with regular payments, a claim would usually be discovered when the issuer of the note defaults upon a payment and fails to remedy the default within any time specified in the note.

 

For demand notes however, the situation is potentially much different. A note payable on demand can be demanded by the holder of the note at any time. Under the common law, demand notes were considered to be due and payable when the note was issued, and the limitation period ran from that date. Fortunately, the Limitation Act contains section 14, which provides that for claims upon a demand obligation, the claim is discovered on the first day that there is a failure to perform the obligation after a demand for performance has been made. This protects the holder of a demand note from their claim becoming statute barred before they have even issued a demand for performance. This only protects the holders of demand notes in British Columbia, and other jurisdictions might have less forgiving limitation periods.

 

Whether your note is payable in installments, or due on demand, it is vital to commence your enforcement proceedings quickly after there is a default. Failing to do so might result in your claim expiring, and then you are left unable to collect upon the amount in court.

 

Promissory Notes Disadvantage #5 - Acceleration on Default

 

When a note contains payment in installments, and a payment is missed, this traditionally only allows the holder of the note to sue for the missed payment. The holder of the note could not sue for the full amount of the note unless there is a provision allowing the holder to accelerate the debt. Acceleration is important, because if the issuer of the note starts missing payments, you want to be able to claim the whole amount owing immediately, and not have to commence a separate lawsuit for each missed payment as the payments are missed. Promissory notes are subject to the legal rule of contra proferentem, meaning that courts will strictly interpret any ambiguity in the note against the party who drafted it, resolving any doubt about the meaning of a term in favor of the other party. It is important that the provision is drafted clearly, and gives the holder of the note the unambiguous right to claim the entire outstanding amount as immediately due and owing if the issuer of the note defaults upon a single payment.

 

From a practical point of view, you might choose not to accelerate the note, but the threat of doing so is a powerful bargaining chip to keep the issuer of the note on track with their payments.

 

Should I Hire a Lawyer to draft a Promissory Note?

 

Our office routinely sees promissory notes that were drafted by the parties themselves without the benefit of legal assistance. These notes can range from relatively well drafted notes that are still enforceable despite their flaws, to totally useless pieces of paper that provide nothing more than a false sense of security. Even worse, we see clients who loaned money or made an agreement verbally and did not get a signed promissory note at all, which makes it potentially much harder to collect the amount owed.

 

For a lawyer, drafting an enforceable promissory note is relatively simple, and can be done for the client affordably. The lawyer will also meet with you to review your specific circumstances, and can advise you about any particular pitfalls in your situation, or about additional steps that you can take to protect yourself. In many cases, if you are loaning money and the debtor has assets, you might also want to obtain security over those assets so that you have collateral in the event that the debtor defaults. When the small cost of having a lawyer draft the note is compared with the huge hassle you can face in the event of a default, it is clear that if you are lending any significant amount of money, you’d be wise to have a lawyer prepare a promissory note.

I am Michael Velletta, a founding partner of Canadian law firm Velletta & Company. Why should you choose British Columbia as your place to incorporate? For those desiring to do business in Canada the obvious jurisdiction of choice is British Columbia.

 

British Columbia is an investor friendly environment and has the most contemporary business laws in Canada. Perhaps, even the most contemporary anywhere on the globe. These laws reduce bureaucracy and increase flexibility. An interesting feature of incorporating in British Columbia is that at the same time you incorporate in BC you can also incorporate into Alberta, which is the neighboring province.

 

In fact British Columbia companies can be extra-provincially registered in every jurisdiction in Canada and can be extra-territorially register in just about every jurisdiction around the globe. One advantage of being a British Columbia company is that you have access to the Canadian legal system which is considered extremely stable and is very well-respected. It also meshes well with all US jurisdictions, Australia, New Zealand, Great Britain and many other corporate business jurisdictions around the globe.

 

A BC incorporation also gives you great opportunities and exposure to Canadian capital markets with the Toronto Stock Exchange that Toronto Stock Exchange, Venture, which is the junior market, and the Canadian Stock Exchange. In addition, companies that are listed companies in Canada can at the same time use documents filed in Canada on inter-listed U.S. stock exchanges such as NASDAQ, the American Stock Exchange and the New York Stock Exchange.

 

Finally, the cost of doing business in Canada is much more attractive than most other jurisdictions. You might be surprised to learn that the tax regime in Canada is not very aggressive, and is in deed much more attractive than most U.S. jurisdictions.

 

Velletta & Company is adept at advising international clients on all corporate matters, and particularly creating your British Columbia Corporation. I hope that you will let Velletta & Company provide you with corporate advice and be a part of your team.

 

 

Hi, my name is Eric Pedersen I'm a lawyer for Velletta and Company practicing employment law. Today we're going to talk about another employment law topic which is constructive dismissal. Now the constructive dismissal is really just a fancy way to say, "I quit" to your employer to also at the same time exercise and enforce all of the rights that you would have if you were an employee who was fired without cause.

The general rule of thumb in British Columbia is that an employee who quits their position isn't going to be entitled to any severance pay or any notice they're walking away from the job and that's on them. But constructive dismissal is a very specific category in the law that allows an employee who quits to bring a claim against the employer for severance. The idea is that although the employer hasn't fired the employee they have by their conduct in the way that they might have changed the employee's workplace duties changed their employment. Such to the point that they've pretty much been fired and have all of the rights of a fired employee.

Not every minor change that an employer might make to an employee's employment contractor to their workplace will result in an employee having the rights of a constructively dismissed employee. A really obvious example would be if you were a CEO one day and then you showed up the next day you were demoted to janitor. Well you haven't been fired but you have pretty much been fired.

So you have all of this same rights to claim for severance as an employee who was fired but not all cases are black and white. And there's a lot of grey area. It's important that you do consult a lawyer before exercising the option of constructive dismissal.

 

W. Eric Pedersen is a lawyer practising in Velletta & Company's civil litigation department. Mr. Pedersen has worked with the civil litigation department to achieve successful outcomes for individuals and businesses, appearing in Provincial Court, Supreme Court, and the British Columbia Court of Appeal. His practice is focussed primarily on the following areas: Personal injury and motor vehicle claims, Employment and Human Rights Law, Commercial litigation, Real estate litigation, General insurance litigation, Disability insurance litigation and General civil litigation.

If they ever existed, the days of doing business based on a handshake and a verbal agreement seem to be long gone. We regularly have clients come to our firm with disputes in which there is no written agreement. The failure to draft a written agreement often results in a complicated fact situation that has to be sorted out by our firm and another law firm. For example, we recently assisted a client who had become embroiled in a contentious partnership dispute over a small business. While we ultimately resolved the matter with a large degree of success, it would have been much simpler, and a dispute may have been avoided entirely, if the parties had formalized their arrangement in a written agreement.

 

The Gold Standard:

In terms of enforceability, the gold standard is usually a professionally drafted contract, signed by both parties, after having received independent legal advice. Depending upon the complexity of the agreement, such a contract might cost several thousand dollars to prepare; however, if the subject matter of the contract is valuable, this cost is money well spent to protect each party in the event of a dispute. If you’re starting a business partnership that you expect to last for many profitable years, spending some money up front will help protect that business, and will help avoid your hard work being swallowed up in lawyers’ fees after a dispute develops.

 

For simpler agreements, it can be surprisingly cost effective to have a contract drafted by a lawyer, and having the contract professionally drafted will provide the peace of mind that it includes all of the proper legal formalities to make it enforceable. Sadly, we often see contracts that are drafted by the parties themselves, and these can range from perfectly enforceable contracts, to ones that lack basic legal certainties necessary to make the agreement enforceable.

 

Reconsider DIY Contracts:

We generally recommend that people do not attempt to draft their own contracts, or pull contracts from the internet in the hopes that they can tailor that general contract to their specific needs. We have seen client drafted contracts for Canadian clients contain errors such as references to the United States Uniform Commercial Code – something that you almost certainly do not want in a Canadian contract.

 

Clear Communication:

A further benefit of written agreement is that good communication and clear terms help stop disputes before they start. All too often parties skirt around the difficult or contentious issues in a business relationship, hoping to avoid conflict. In reality, by not dealing with these issues up front, the potential conflict is only pushed into the future, where both parties may have spent time and money in reliance upon agreement terms that they thought existed.

 

Damage Control:

As a final last resort, it can be beneficial to clearly communicate important terms of an agreement to the other party in writing, even if that written communication takes the form of text messages or emails. Text messages and emails are admissible as evidence, and we routinely utilize such documents in court to protect our clients’ rights.

 

The difficulty is that you cannot force terms upon someone merely by sending them a message. If the other party replies with their agreement to your stated terms, that would be beneficial. If the other party disputes the terms, then at least you have identified a disagreement early on, before time and money has been expended. If the other party just ignores your message containing the terms, and does not agree or disagree, then it may be possible to argue that they went forward with the agreement, knowing that you were relying upon the terms that you set out to them. The latter situation is a far from ideal, and if the other party does not acknowledge your terms, you should follow up to clarify your agreement, sooner rather than later.

 

In conclusion, beware of people who refuse to put things into writing. If someone balks at committing your verbal agreement to a written form, there is usually a reason, and it is better to find out sooner rather than later what that reason is.

 

If you are seeking a well drafted purchase and sale contract, partnership agreement, shareholders agreement, or other contract, or if you are involved in a business dispute, we offer a free half-hour consultation to discuss your situation and legal needs. Please feel free to contact us to schedule an appointment.

 

 

 

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