Backdating law

To cure this deficiency, the company, and their solicitor, backdated the contracts of the newly hired employees to a date before the application to unionize.

The Law Society of Upper Canada Ontario Discipline Committee determined that backdating the employment contracts was for the purpose of misleading a third party, and suspended the solicitor for a period of twelve months.

This practice contravened both the TSX Rules as well as RIM's stock option plan that required options "to be granted at an exercise price not less than the closing price of RIM's common shares on the TSX on the last trading day preceding the date on which the Options are approved for grant".

In summary, backdating is generally permissible where it is done to alter the obligations of the contracting parties only.

However, it is impermissible where the parties backdate either to unconscionably interfere with the rights of third parties (including the government's right to tax such parties) or where it contravenes applicable rules or legislation.

It is common for two parties, particularly in the commercial context, to enter into a contract at one time, but agree to have the contract come into effect at an earlier time. Courts respect the parties' decision to backdate since giving effect to backdating provisions respects the parties' intentions as well as their freedom of contract., 1968 (the date the contract was delivered to the insured).

The Court considered the construction of the whole policy and held that the exclusion clause took effect on the backdated date chosen by the parties.

Last modified 06-Nov-2015 05:19