JUDGEMENT SUPPORTING THE BASIS OF THE VALUATION
JUSTICE A. D. MACLEOD, COURT OF QUEEN’S BENCH OF ALBERTA
In this particular court case, a Chartered Business Valuator presented CBV guidelines as if they were law; (which is not true) and the CBV suggested Eric Jordan by not following CBV guidelines was therefore wrong.
The Judge didn’t buy the CBV argument and ruled in favour of my client who used my Valuation Report.
Let google be your friend for details:
The legislation governing Business Valuations in Canada comes from the Canada Income Tax Act and the Canada Revenue Policy Paper on Business Valuations.
(1) The Policy Paper requires “Fair Market Value” be determined.
(2) The Policy Paper requires all assets both tangible and intangible be identified, measured, weighed, and valued. The legislation and CRA policy paper are quite clear in that they do not recognize any designation or any group or association as being necessary or required to produce a “Fair Market Value” Business Valuation.
(3) The Policy Paper values relevant experience.
We endeavour to make our methodology the most compliant with the Canada Income Tax Act and the CRA Policy Paper on Business Valuations. We believe following CRA Policy and the Legislation is what is best for our clients. Again the Judge ruled for our client as you saw.
Any competent lawyer should make the argument that a Business Valuation Report produced without identifying, measuring, weighing, and valuing ALL of the Intangible assets could and should be thrown out for “NON COMPLIANCE” with the governing legislation. Things have changed since 1975 as per chart.
98% of Canadian CPA’s do not do business valuations, and for a good reason.
It is generally the big guys and the firms that follow them who push the envelope get caught for non compliance. When they get caught it is never good for the client.
Multi Million Dollar Fines and Settlements are not given out for “singing too loud in the park”.