In June 2015, a 13-member panel created by the Minister of Government and Consumer Services (Ontario), known as the Business Law Agenda Stakeholder Panel, released “Business Law Agenda: Priority Findings & Recommendations Report”.

The panel reviewed corporate and commercial statutes in Ontario and made recommendations encompassing five key themes:

  • establishing a process to

On April 16, 2015, the securities regulators in British Columbia, New Brunswick and Saskatchewan published for comment Multilateral CSA Notice 45-315 – Proposed Prospectus Exemption for Certain Distributions through an Investment Dealer whereby the regulators proposed a new prospectus exemption that, if approved, would greatly increase the potential private placement investor base for a listed

On May 21, 2015, the TSX announced one set of amendments and one request for comment on proposed amendments to the TSX Company Manual (Manual), both respecting physical certificate requirements for securities. The amendments should not have a noticeable impact for many listed issuers or industry participants, but they do highlight a few trends to be aware of.

The amendments and proposed amendments were promulgated in response to the trend of increasing dematerialization of physical securities the securities industry has experienced over approximately the last decade, initiated on the part of industry participants such as transfer agents, exchanges, brokers, and especially, clearing agencies and depositories, like the Canadian Depository for Securities (CDS). Legal practitioners, transfer agents, issuers and underwriters should all be familiar with the effects of the trend, noting the continual increase in electronic closings in recent years, for both financing and M&A transactions. Topically, this trend is reflected in the increasing number of electronic issuances of securities to even United States purchasers by Canadian listed issuers, which until very recently would have required physical certificates to be delivered to those purchasers, mainly for legending and transfer restriction purposes.

The dematerialization of evidence of securities ownership is itself an industry response to mitigate the costs and risks associated with the physical evidence of security ownership, including the costs of printing, storing, transferring, and physical handling of certificates, and the risk of theft and loss. CDS especially, through its rules, has been at the fore of implementing the shift for participants to embrace dematerialization to reduce such costs and risks, as CDS was often the entity with the responsibility to securely store physical certificates, and maintain facilities, staff and processes for their handling and transfer.

The published amendments to the Manual are characterized by TSX as being of a “housekeeping” nature, which characterization the Ontario Securities Commission did not disagree with. The amendments have been in force since May 21, 2015. The amendments update the language of the Manual to contemplate additional forms of evidence of security ownership other than physical certificates, such as holding securities through CDSX, the electronic deposit system of CDS, and direct registration systems, (commonly referred to as “DRS”). The amendments otherwise update the Manual to codify or clarify existing practices and dematerialization trends as they apply to transactions for TSX listed issuers, including amendments to, among other things, the listing agreement, and the rules for supplemental listings, stock splits, and consolidations. One practical change in the amendments to highlight is that the Manual now codifies that TSX listed issuers may have a transfer agent with a principal office in one or more of each of Vancouver, Calgary, Toronto, Montreal, or Halifax, whereas the Manual previously required that issuers have a transfer agent with a principal office in Toronto.
Continue Reading

In recent years, crowdfunding has proven an exceptionally popular and efficient means by which individuals and companies make use of the internet to attract investors for a variety of purposes. The traditional model generally involves a large number of individuals contributing small sums of money to finance specific ideas or projects. Increasingly, however, equity crowdfunding is emerging as a way for start-ups and early-stage companies that are non-reporting issuers to raise capital at an earlier stage of development through the issuance of securities. Equity crowdfunding has already proven successful in certain foreign jurisdictions, and is expected to make an impact in Canada.

Following a consultation period held early last year, the securities regulators of British Columbia, Manitoba, New Brunswick, Nova Scotia, Québec and Saskatchewan (Jurisdictions) announced on May 14, 2015 that they have implemented, or expect to implement in the near future, changes to their securities legislation to provide for registration and prospectus exemptions for start-ups and early-stage companies that wish to raise capital through crowdfunding. Businesses wishing to rely on the exemptions will be able to conduct crowdfunding distributions in the Jurisdictions.

The start-up crowdfunding exemption actually consists of two distinct exemptions. The first is a prospectus exemption for start-up companies seeking to raise capital. The second is a dealer registration exemption for persons wishing to operate a funding portal, a platform which facilitates start-up crowdfunding distributions.

The Jurisdictions plan to implement these exemptions by way of local blanket orders. The conditions associated with the two exemptions are outlined in Multilateral CSA Notice 45-316 Start-up Crowdfunding Registration and Prospectus Exemptions (CSA 45-316), and are summarized below. The start-up crowdfunding exemptions will be effective in each Jurisdiction concurrently with, or as soon as possible after, the publication of the notice of CSA 45-316. Each exemption order is available, or will be available shortly, on the websites of each Jurisdiction’s securities regulatory authority.

The start-up prospectus exemption

The start-up prospectus exemption permits non-reporting issuers to issue eligible securities, subject to a number of conditions. The key conditions are:
Continue Reading

In a release issued today, the Ontario Securities Commission advised that the participating jurisdictions of the Canadian Securities Administrators are still reviewing the comments received on a proposed crowdfunding regime and an offering memorandum prospectus exemption.   In its release, the OSC stated that its goal is to publish proposed rules regarding these matters either

Background

On December 18, 2014, the Investment Industry Regulatory Organization of Canada (IIROC) published its final guidance note outlining common due diligence practices and suggestions for IIROC dealer members (Dealer Members) in underwritten public offerings of securities.  The guidance note follows IIROC’s March 6, 2014 proposed guidance and a three month public comment period.

The guidance note urges Dealer Members to take an approach to due diligence that goes beyond the mere avoidance of liability and mitigation of risk to the underwriter as Dealer Members play a role in protecting investors, fostering fair and efficient capital markets and creating and maintaining confidence in the capital markets.

The guidance note was prepared specifically to address Dealer Members involved in public offerings of securities. Although the March 6, 2014 proposed guidance indicated that some aspects of the guidance may be helpful to Dealer Members in the context of private placements, such reference to private placements was removed in the final guidance note.

Nine Principles of Underwriting Due Diligence

The guidance note is designed to promote consistency and enhanced underwriting due diligence standards among Dealer Members.  It sets out nine principles which underwriters should consider in the context of their due diligence of the issuer. These are:
Continue Reading

On May 6, 2014, the TSX Venture Exchange (TSXV) amended the definition of “Tier 1 Property” contained in Policy 1.1 – Interpretation of the TSXV Corporate Finance Manual (TSXV Manual).

The TSXV views its Tier 1 as its premier tier reserved for its most advanced issuers with the most significant financial resources.  As such, the listing requirements for Tier 1 issuers are more substantial than those of Tier 2 issuers (where the majority of the TSXV’s listed issuers trade).  On the other hand, however, the TSXV affirms that Tier 1 issuers benefit from decreased filing requirements and improved service standards.

The “Tier 1 Property” definition contained in the TSXV Manual sets out the property-related criteria an issuer must satisfy to qualify to list as a Tier 1 Mining Issuer on the TSXV.  The amended definition is not intended to substantially change the nature of this requirement, but instead looks to clarify ambiguities in the previous definition in an effort to provide greater interpretative certainty.

The amendments to the definition include the following:
Continue Reading

On April 7, 2014 the TSX Venture Exchange (TSX-V) published a bulletin entitled Discretionary Waivers of $0.05 Minimum Pricing Requirement, which provides issuers listed on the TSX-V with guidance on the circumstances in which the TSX-V will look more favourably upon an issuer’s request to waive the $0.05 minimum pricing requirement.  Generally, the TSX-V

On August 17, 2012 the TSXV published a bulletin entitled Private Placements – Temporary Relief from Certain Pricing Requirements, which provided, on a temporary basis and subject to compliance with the bulletin, the granting of relief to TSXV issuers from certain existing pricing requirements related to private placement financings. These temporary measures were effective

On August 17, 2012 the TSXV published a bulletin entitled Private Placements – Temporary Relief from Certain Pricing Requirements, which provided, on a temporary basis and subject to compliance with the bulletin, the granting of relief to TSXV issuers from certain existing pricing requirements related to private placement financings. These temporary measures were effective as