Audit, Compliance and Risk Blog

Mensa Williams was listed as a director in the incorporation documents for Ambrosia Elite Corp., a company run by his brother, Admin. Ambrosia was incorporated in 2007, but did not actively conduct its retail clothing business until 2008. Ambrosia became insolvent in 2014, leaving its employees with unpaid wage claims. The unpaid wage claims were pursued under Ontario’s Employment Standards Act, 2000 (ESA), and when those claims were unsatisfied, an order to pay was issued to Ambrosia’s directors including Mensa Williams.

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In Great American Insurance Co. v. Ramsoondar (2016 ABQB 73), the Alberta Court of Queen’s Bench was asked to declare that a director and officer liability insurance policy did not cover the losses claimed against Fredy v. Ramsoondar pursuant to a personal guarantee he granted to Faunus Group Inc. (FGI), a client of United Protection Services Inc. (UPSI). UPSI was a wholly owned subsidiary of United Protection Services Group Inc. (UPSG), and UPSG obtained a director and officer liability policy from Great American Insurance Co., and listed Ramsoondar as its chief financial officer on the policy.

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In recent years, activist investors have sought to expand climate-related reporting by publicly traded companies – directly by pressuring the companies, and indirectly by petitioning the U.S. Securities and Exchange Commission (SEC) and other regulators to require additional reporting in periodic reports on the businesses’ status and prospects, and in annual meeting reports and proxy requests. SEC has been criticized for doing very little in response to these requests, but took potentially important actions on March 23.

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The Ontario Superior Court of Justice issued an initial order in an insolvency proceeding under the Companies’ Creditors Arrangement Act (CCAA) providing a $3.1 million director’s charge even though the directors were covered by an existing D&O liability insurance policy and indemnities from the company (Re P.T. Holdco Inc., 2016 ONSC 495). The CCAA proceedings involved various corporate entities involved in the Primus telecommunications service business in Canada and the United States. Primus’ business was failing and it had arranged to sell its business to another company and wished to use the CCAA to finalize the sale and distribute the sale assets while its creditors were stayed from enforcing their claims.

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