Production
Business and Legal Checklist
The following is a brief list of the basic business and legal steps in the production of a motion picture for film or television, from completing the acquisition of underlying rights to completing the master tape or answer print. The issues are listed in an order which may not necessarily be the order in which they are addressed by a production company or its lawyer. Not all of the steps are necessarily undertaken by a lawyer.
□ Incorporate and organize a single purpose production company. While it is not necessary to incorporate a new production company for each production, it is common practice to do so.
□ Complete any agreement with a joint venture company or co-producer for the operation of the production company or, if such an agreement was entered into during development of the production, make any necessary amendments to an existing co-production agreement. Perform a credit check and corporate and bankruptcy status check on the co-production company. If the production is an international treaty co-production, each co-producer should apply to its own national authority (i.e., Telefilm Canada in Canada) for provisional certification as a co-production. International co-production treaties require that these applications be made in advance of the start of principal photography, often at least six weeks in advance.
□ Open a production company bank account specifically for the production.
□ Register the production company for Goods and Services Tax or Harmonized Sales Tax, as applicable ("GST/HST"). Most productions pay more GST/HST than they collect and it is essential that the production company register in order to receive a rebate of the net GST/HST.
□ Register the production company for provincial sales tax and obtain exemption certificates. Exemption certificates are available for certain purchases by a production company, exempting the production company from paying provincial sales tax on the purchases.
□ Register the production company as an employer with Canada Revenue Agency or enter into an agreement with a payroll service to administer the payroll for the production.
□ Register the production company as a corporation in each province in which it will carry on business locally.
□ Review all of the eligibility criteria for federal and provincial tax credits to be used and all funds anticipated from government or agency sources (e.g., Canada Media Fund, Telefilm Canada) against all production commitments.
□ Apply for Part A of the federal tax credit as well as the applicable provincial tax credit(s).
□ Complete all production financing agreements (e.g., broadcast licences, distribution and sales agency agreements, Canada Media Fund, Telefilm Canada, gap financing insurance, bank or other institutional lending) and review all conditions for advances under the agreements.
□ If the production is to be guaranteed by a completion guarantor, complete all agreements and other documentation with the guarantor. If some production funds are to be held in escrow in lieu of a completion guarantee, make arrangements for the escrow with a lawyer or other escrow agent. In either case, complete the documentation of the guarantee or escrow with the beneficiaries, namely the broadcasters, distributors, investors, lenders and other financial participants.
□ Complete all chain of title documentation securing the necessary rights to underlying properties (e.g., book, screenplay and/or other work or works upon which the production is based).
□ Complete all of the relevant steps in the Development Business and Legal Checklist. In particular, obtain and review title and copyright reports and a title opinion at this stage if they have not already been obtained or if more than 60 to 90 days have elapsed since the previous report. If the title changes, obtain a title report and opinion for the new title.
□ Register the necessary copyright in the script if it has not already been registered.
□ Review errors and omissions clearance procedures and take the necessary steps to complete the procedures to the production stage. It is customary for the production company's legal counsel and the insurer's legal counsel to discuss any risk concerns and appropriate risk management action, particularly in the case of documentaries and dramas which are based in whole or in part upon actual persons or events.
□ If any underlying work is secured under an option agreement, exercise the option within the time limits provided and according to the formal requirements of the option agreement. Most options require that exercise of the option be made no later than the first day of principal photography of the first production based upon the optioned work.
□ Assign all required rights to the production company, taking care to obtain any necessary approvals and consents required from third parties to effect the assignment.
□ Circulate chain of title documentation to investors, distributors, broadcasters, licensees, lenders, insurers, completion guarantors and other financial participants in the production having a right to review title. Obtain specifics of additional rights or documentation required, if any.
□ Obtain executed certificates of authorship if a distributor or other licensee requires confirmation by a writer that he or she has been paid in full, credit to the writer is settled or his or her writing agreement with the production company is in full force and effect.
□ Obtain executed releases from prior writers in cases where a writer who is a member of the Writers Guild of Canada ("WGC") under a guild agreement has been replaced, unless the language of the writing agreement with that prior writer contemplates a change of writer.
□ If the script writing agreements are subject to the WGC Independent Production Agreement, notify the WGC of the final writing credits and prepare a calculation of the production fee payable to the writer(s) upon start of principal photography.
□ Obtain executed certificates of employment from staff writers and researchers to confirm that they produced their work as employees and copyright vests with the production company as employer.
□ Apply for coverage under producer's errors and omissions liability insurance, entertainment package insurance, general liability insurance and workers' compensation insurance. Consider special coverage for unusual risks which may be excluded from most policies (e.g., shooting in a war zone or stunt work). The production company's legal counsel should review the application for errors and omissions insurance and may be asked by some insurers to correct any of the representations made by the production company in the application form.
□ Identify and add any parties to be included as an additional insured or as an additional named insured under any insurance policy.
□ Circulate copies of insurance binder notes to the additional insured and named insured.
□ Arrange for all cast to obtain an insurance medical exam upon booking and forward results to the insurer with a request for coverage.
□ Arrange immigration work permits for foreign cast and crew working in Canada.
□ Determine that cameras and other insured equipment have been tested prior to use.
□ Prepare, review with legal counsel, and complete all standard form of agreements for use in the production including:
□ cast agreements
□ extras' releases
□ crew agreements (employee and independent contractor versions)
□ location agreements
□ product use licenses.
□ Prepare, review with legal counsel, and complete all agreements which may require legal counsel's attention and individual negotiation. These may include the following, not all of which may necessarily originate with the production company:
□ producer, co-producer, line producer and executive producer agreements
□ agreements for star or other performers paid in excess of guild scale
□ director agreements
□ life story/publicity releases for the subjects of a production based on a true story
□ agreements for some key crew (e.g., editor, director of photography or others)
□ composer, music production and music publishing agreement(s) for original music
□ song and master use music licences
□ film clip or still photograph use releases
□ studio and production office leases.
□ If the production is to use guild or union labour, a letter of adherence to the applicable guild or union agreement will be required between the production company and the union or guild (e.g., WGC, ACTRA, DGC, IATSE, AFM). Some guild agreements or labour relations laws permit individual negotiation of variances to the basic form of the guild agreement in the case of each production. In such cases, the parties should negotiate all necessary variances to the guild's basic agreement concurrent with the letter of adherence to the guild agreement.
□ Post security deposits and/or other security agreements with the applicable guilds and unions.
□ Distribute copies of union and guild adherence letters as well as producer, director, key cast, crew, location, composer, music, studio and other key agreements to the completion guarantor and to all other parties financing production who may be entitled to receive copies of these documents.
□ Enter into trade agreements with laboratories, sound facilities, equipment suppliers and other suppliers establishing prices, credit terms and purchase order protocols.
□ Prepare weekly production and cost reports and distribute them to the completion guarantor and to all other parties financing the production who may be entitled to receive copies of these reports.
Written by Tony Duarte
© 2015 Thomson Reuters Canada Limited
Excerpted from “Canadian Film & Television Business & Legal Practice”, Thomson Reuters: Toronto, 2015
CAUTION: Duarte Entertainment & Media Law, the publisher, the authors, and all other persons involved in the preparation and presentation of these materials disclaim any warranty as to completeness, accuracy or currency of these materials. These materials are provided on the understanding and basis that they are not to be used as a substitute for personalized legal and other professional advice and that Duarte Entertainment & Media Law, the publishers, the authors and all other persons involved in the preparation and presentation of the materials shall not be responsible in any manner whatsoever for the completeness, accuracy or currency of the contents or for the results of any action taken on the basis of the information contained in these materials or for any errors or omissions in these materials. No one involved in these materials is attempting to render legal, accounting or other professional advice. If legal or other expert assistance is required the services of Duarte Entertainment & Media Law or other competent professionals should be sought.