In a number of recent cases, Canadian courts have demonstrated a willingness to vest mining claims free of royalty rights notwithstanding that those rights might constitute interests in land. One such case before the courts in Ontario is Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc.

Continue Reading Dianor Resolved – Jurisdiction to Vest Off Interests in Land in Receivership Upheld, but GORs Hard to Impair

On June 4, 2019, the US Securities and Exchange Commission (SEC) sued Kik Interactive Inc. (Kik), a privately-held Canadian corporation based in Waterloo, Ontario, for conducting an unregistered securities offering of its digital token “Kin” in violation of section 5 of the Securities Act of 1933. The SEC is seeking a permanent injunction, disgorgement of ill-gotten gains, and civil penalties against Kik.

Continue Reading Alive and Kik-ing: Kik Interactive Faces SEC Action but Vows to Fight Back

Since it costs a lot to win, and even more to lose,

You and me bound to spend some time wondering what to choose.

Deal – The Grateful Dead

IIROC recently published guidance regarding managing conflicts of interest arising from soliciting dealer arrangements. The guidance elaborates on existing conflict of interest rules in the context of takeover bids, plans of arrangement, proxy contests and other securities transactions involving various types of solicitation fees.

Continue Reading IIROC Provides Guidance on Soliciting Dealer Arrangements

On June 5, 2019, the Ontario Securities Commission (the OSC) sent out a notice by means of a broadcast e-mail (the Notice) with respect to certain amendments regarding the suppression of terrorism or Canadian sanctions (STCS) applicable to all registered firms, exempt dealers and exempt advisers (each a Firm).

Continue Reading OSC Update re: Suppression of Terrorism Notice

As of June 13, 2019, the Canada Business Corporations Act (the “CBCA”) requires that each federal private corporation (a “Corporation”) implements and maintains a register (the “Register”) listing all individuals with significant control over the Corporation (the “Individuals with Significant Control”).  The register must be kept at the corporation’s registered office or another place in Canada designated by its directors.

While each Corporation has until June 13, 2019, to comply with this new Register requirement, we recommend that you begin, as soon as possible, to prepare the required Register and to develop the internal procedures necessary to ensure compliance with this requirement on an ongoing basis.  To assist you in this task, we enclose a Register template that can be used for this purpose.

The Register must accurately list the Individuals with Significant Control which are:

  • Each individual who has the ability to control the Corporation through indirect or direct influence (“control in fact” of the Corporation); and
  • Each individual who is the beneficial or registered owner of, or has direct or indirect control or direction over, 25% or more of the outstanding shares of the Corporation, measured by fair market value, and
  • Each individual who is the beneficial or registered owner of, or has direct or indirect control or direction over, a number of shares carrying at least 25% of the outstanding voting rights of the Corporation.

This covers any individual who (i) is a registered shareholder; (ii) is a beneficial owner; (iii) has direct or indirect control or direction over the shares of the Corporation or (iv) has joint ownership or control over the shares of the Corporation.

The law is in some cases unclear as to when a particular shareholder must be included in the Register, but this description is a starting point for understanding what is required.

Additionally, the Register must contain the following information for each Individual with Significant Control:

  • Name, birthdate and latest address;
  • Jurisdiction of residence for tax purposes;
  • Date when Individual with Significant Control obtained significant control and ceased to hold significant control of the Corporation;
  • Description of how the Individual with Significant Control has significant control of the Corporation;
  • Description of the reasonable steps taken by the Corporation in each financial year to ensure the Register is complete and accurate; and
  • Any other prescribed information as set forth in any regulations (which are yet to be determined).

Shareholders are responsible for replying accurately to the Corporation when it requests information, to the best of their knowledge. In turn,  the Corporation is responsible for creating and maintaining the Register and updating it once every year as well as within 15 days of being informed of a change. Every director, officer or shareholder who knowingly acts in contravention of these duties will be liable to a fine of up to $200,000, or up to six months imprisonment, or both, and a Corporation that fails to comply with its obligations respecting its Register faces fines of up to $5,000.

Corporations Canada has prepared general information on the topic that Corporations can use as a guide when preparing their Individual with Significant Control Register.  Additional materials will be published at as more information becomes available. Kindly note that we will continue to monitor and, where appropriate, provide guidance and any further updates.

Corporations Canada further expects all Corporations to be compliant with the amendments upon coming into force. No grace period will be given to non-compliant Corporations.

For many family businesses, control of long-term direction and management of the family corporation are key issues, particularly during times of growth or periods of succession. The Institute for Governance of Private and Public Organizations (“IGOPP”) recently published a new policy paper that should be of interest to family businesses and their advisors in planning the capital structure for their enterprises: The Case for Dual-Class of Shares, Policy Paper No. 11 (2019). The paper revisits[1] the state of dual-class public corporations in Canada, emphasizes their value to entrepreneurs, family businesses and Canadian society as a whole and makes a number of structuring recommendations, which are outlined below.

Continue Reading It Stays in the Family – Dual Voting Share Structures for Family Businesses

On April 8, 2019, the federal government introduced Bill C-97 to implement measures from its spring budget. The bill proposes amendments to many federal statutes, including several important amendments to the Canada Business Corporations Act (CBCA) relevant to both private and public companies. Our summary of the proposed changes is set out below, some of which deal with familiar issues, while others would introduce new requirements for companies.

Continue Reading Something old, something new: Proposed amendments to the CBCA in the 2019 budget implementation bill

If the Hillary Clinton email scandal wasn’t a clear enough lesson that one should not conduct “official” work using personal electronic communication tools (be it personal email, texts or other methods), a number of recent court decisions have required executives to produce communications from their personal accounts and devices. Executives and advisors should not assume that communications using methods other than corporate email will somehow be protected or otherwise not find the light of day in the event of a dispute or investigation.

Continue Reading Think Before You Send: The Legal Risks of Emails and Text Messages from Personal Accounts

The Competition Bureau announced the 2019 transaction-size pre-merger notification threshold under the Competition Act increased to C$96 million from C$92 million, effective February 2, 2019. Innovation, Science and Economic Development Canada also announced new foreign investment review thresholds under the Investment Canada Act, effective January 1, 2019.

For more information about the new thresholds under the Competition Act and Investment Canada Act, see the Competition Chronicle.

As of June 13, 2019, private corporations incorporated under the Canada Business Corporations Act (CBCA) must maintain a register regarding individuals who have “significant control” over the corporation through direct or indirect influence. This requirement was one of several new initiatives included in Bill C-86, the Budget Implementation Act, 2018, No. 2 which received Royal Assent on December 13, 2018.

Continue Reading Power and Influence: New CBCA Registration Requirements for Private Companies