Buying a business - CASL

Buying a business

Canada’s Anti-Spam Law (CASL) implications

Margot Patterson

Dentons Canada LLP

24 September 2015

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Overview

• CASL Key Elements

• CASL Due Diligence

• Transferring “Existing Business Relationship” Consents

• Transferring Express Consents

• Representations and Warranties, Indemnities

• Transition

• Post-transaction

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CASL Key Elements

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CASL – How important are the details to your

transaction?

Keep in mind that most companies doing business in Canada

are affected by CASL

Approach to CASL in purchase of a business will generally

depend on the nature of Vendor’s business

• Sales and marketing?

• Consumer-driven (B2C)?

• Is customer database and continuity a key asset?

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CASL – CEMs and Consent

CASL targets “Commercial Electronic Messages”

What are CEMs?

• include emails, texts, IMs

• most messages with commercial / promotional element

When can you send CEMs?

• Generally, when you have either:

CASL-compliant express (“opt-in”) consent; or

CASL-defined implied consent

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CASL – CEM content

CEMs must include:

• Contact info:

• mailing address plus one other:

URL, email or phone

(can be available via link)

• Unsubscribe mechanism

See also: Comparing CASL to CAN-SPAM

http://www.slideshare.net/DentonsGlobal/comparing-

casl-to-canspam-22498536

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25% off all end of

season items

About Us &

Contact: http://url

Text STOP to

unsubscribe

CASL Enforcement and Penalties

• CRTC: primary enforcement agency, with power to impose

administrative monetary penalties (AMPs)

• Maximum penalty is $10 million for an organization, per violation

• May enter into compliance undertaking with CRTC

• Directors’ and officers’ liability / Employers’ liability

• Importance of “due diligence”:

• No liability where due diligence taken to prevent the violation

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CASL Enforcement and Penalties

• Private Right of Action as of July 1, 2017

• For individual or organization affected by a contravention: can obtain

court order for compensation

• Acts or omissions

• Remedies include compensation for loss or damage suffered or

expenses incurred, and a maximum penalty of:

• $200 per contravention of anti-spam;

• max $1 million per day for spam, malware, spyware, message routing, PI

harvesting, misrepresentation; and

• max $1 million per act of aiding, inducing, procuring breach of spam,

malware, spyware, message routing.

• Class Actions?

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CASL Due Diligence

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CASL Due Diligence

• What consents does Vendor rely on?

• What is the format of requests for express consent?

• Types of implied consent (purchase, subscription, membership..)

• Reliance on any third-party consents

• Record keeping

• Do database(s) track type of consent, date of consent (some

consents can expire), and unsubscribe actions?

See also CRTC Compliance and Enforcement Bulletin 2014-326,

Guidelines to help businesses develop corporate compliance programs

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CASL Due Diligence

• Are Vendor’s messages CASL-compliant?

• CEMs should have all required elements

• CASL compliance policies

• Is there a written employee policy setting out processes, training

and monitoring, and designating a supervisor?

• Investigations / Non-compliance

• Copies of any CASL audits, assessments, investigations

• CASL complaints, claims, demands, proceedings

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Transferring

“Existing Business Relationship”

Consents

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Transferring “Existing Business Relationship”

Consents

• Under CASL, Vendor’s “existing business relationships”

transfer to Purchaser upon sale of the business

• These transferred relationships allow Purchaser to send

CEMs to these recipients

• See CASL section 10(12)

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Transferring Express Consents

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Transferring Express Consents

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• CASL is silent on whether and how express (opt-in) consents

may be transferred upon sale of a business

• In non-binding statements, Industry Canada and the CRTC

have stated that express consents will transfer upon the sale

of a business, if the contract of sale includes a provision

transferring these as a business asset.

Regulatory Impact Analysis Statement, Industry Canada

Electronic Commerce Protection Regulations

CRTC From Canada’s Anti-Spam (CASL) Guidance on Implied Consent

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Representations and

Warranties, Indemnities

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Representations and Warranties, Indemnities

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Vendor representations and warranties

• Validity of consents (all those held as of date of sale)

• Validity of records documenting consent

• Implementation of CASL compliance processes and policies

Share purchase transaction

• Past CASL compliance

Indemnities

• Consider CASL-specific indemnities

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Transition

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Transition

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• Ensure all message opt-outs/unsubscribes are processed

before and after closing (respecting the 10 business day

CASL opt-out window)

• Ensure all employees (existing and new) continue to be

trained in and implement the CASL policy

• Remember the CASL three-year transition period for

grandfathered “existing business relationships”

• CASL implies consent for all past business relationships (where relationship

included CEMs, and where there’s been no opt-out)

• Must obtain express consent before July 1, 2017, to continue to send CEMs

• Has Vendor already obtained these consents, or will you?

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Post-closing

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Post-closing

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Ongoing Liability

• Private right of action effective July 1 2017

• CASL doesn’t make it clear whether this is retroactive

Express Consents

• Where you are relying on express consents obtained in the past

(e.g. “Yes! Please send me the monthly product update email newsletter”)

you are limited to the scope of that consent.

• If you want to send a different kind of message, or send a message for a

different purpose, you must get new consent.

Housekeeping

• Three-year transition for “grandfathered” consents must be addressed

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More Information on CASL:www.dentons.com/en/issues-and-opportunities/anti-spam-legislation

Questions?

Margot Pattersonmargot.patterson@dentons.com (613) 783-9693

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