CSA Proposed Amendments to Increase Canadian Investors’ Access to Exempt Market Offerings by Foreign Issuers


On June 29, 2017, the Canadian Securities Administrators (CSA) released proposed amendments to National Instrument 45-102 Resale of Securities (NI 45-102) and corresponding amendments to  Companion Policy 45-102CP to National Instrument 45-102 Resale of Securities for a 90-day comment period.  The proposed amendments relate primarily to section 2.14 of NI 45-102 which sets out a prospectus exemption permitting the resale of securities by an investor where the issuer of those securities is not a reporting issuer in any Canadian jurisdiction.

Currently, section 2.14 permits the resale of securities on a prospectus exempt basis only if the issuer was a non-reporting issuer at the time of the distribution or at the time of the resale; residents of Canada, at the distribution date, did not own more than 10% of the outstanding securities of the class or series and did not represent more than 10% of the total number of security holders (10% Ownership Ceiling); and the resale is made on an exchange or market outside of Canada or to a person or company outside of Canada.

The purpose of the existing section 2.14 exemption is to permit the resale of securities over foreign markets or to persons outside of Canada if the issuer has minimal connection to Canada and it is unlikely that a market for these securities would be developed in Canada.  The 10% Ownership Ceiling was initially intended to define when an issuer has minimal connection to Canada.  The proposed amendments to section 2.14 remove the 10% Ownership Ceiling for Canadian residents.Continue Reading CSA Proposed Amendments: Foreshadowing Future Changes to the Securities Resale Regime?

Part 3: Reform To Canadian Access to Information

Co-authored by Gianrico DePasquale and Roseanna Dat.

In Part 1, we discussed access to information requests in Canada and in Part 2, we discussed freedom of information requests in the United States.

As a follow up to Part 1, we report that the Government of Canada is in the process of amending the Access to Information Act[1] and is considering potential reform which may have an impact on businesses.  In its Review of the Access to Information Act, the Standing Committee on Access to Information, Privacy and Ethics recommended, among other things, that the Act should apply to institutions that are publicly funded by the Government of Canada.[2] There are three potential options suggested to determine whether an institution would be subject to the Act under the proposed reform.

Proposed Reform

The Information Commissioner of Canada (Commissioner) has proposed the following three options to determine whether an institution that is funded by the Government of Canada should be subject to the Act under the proposed reform:

  • if the institution receives a loan, grant or contribution of $5 million or more;
  • if the source of 50% of the institution’s funding originates (directly or indirectly) from the Government of Canada, and
  • if the institution’s income from the federal government reaches a certain percentage or an absolute threshold higher than $5 million of public funding.

According to the Commissioner, the criteria in option A is proposed to include expenditures, grants and contributions equal to or in excess of $5 million which are voted on by Parliament as separate line items in the Federal budget.[3] The criteria in option B is proposed as it is the method used in both Denmark and Serbia. The criteria in option C is proposed as it is a middle ground or saving grace between options A and B.[4]Continue Reading Government Access to Information – Part 3

Part 1: Canadian Government – Access to Information

Co-authored by Gianrico DePasquale and Roseanna Dat.

This is the first part of our series reporting on the potential for companies to seek access to information about business competitors held by governments in Canada and the United States.

In Canada, businesses that interact with Government Institutions as defined in the Access to Information Act[1] may be subject to an access to information (ATIA) request. An ATIA request requires Government Institutions to disclose the records submitted to or created by the Government Institutions, even if held only temporarily. As such, an ATIA request may be used in Canada to gain information about competitors.

Legislative Overview

Pursuant to the Act, any person who is a Canadian citizen or a permanent resident of Canada has a right to, and shall, on request, be given access to any record under the control of a Government Institution. The Act defines “Government Institution” as any department or ministry of the Government of Canada or any parent Crown corporation or its wholly owned subsidiaries, as listed in Schedule 1 to the Act. The Act defines “records” as any documentary material, regardless of the medium or form.  The term record captures any machine readable record (such as email and text messages) and any physical medium that can be written or etched upon.

Each province has its own ATIA legislation that applies to provincial institutions. Provincial institution obligations and exemptions can vary and may be more onerous than the federal Act; as such, different considerations and safeguards may apply.

Protecting Information

The Act applies to only records that are in the possession of Government Institutions, not information. Therefore, images viewed, but not copied or downloaded are not subject to ATIA disclosure (as noted above, emails are considered records subject to ATIA disclosure). An information sharing system that does not allow for copying or downloading of information, may be used to protect information, however, any notes related thereto may be subject to disclosure.Continue Reading Government Access to Information – Part 1

A recent case in Manitoba has explored certain issues relating to the use of proxies within the context of a limited partnership.  The case, 177061 Canada Ltd. et al. v. 5771723 Manitoba Ltd. et al., 2016 MBQB 40, discusses two points of interests relating to proxies in a limited partnership setting (and, by logical extension, a partnership setting): (1) whether, under Manitoba law, a unit holder in a limited partnership can give to another person an irrevocable proxy to vote, which extends beyond a single meeting or adjourned meeting, and (2) if so, whether such irrevocable proxy can be revoked.

The case concerns proxies that were created in 1998 as part of a payment for debt for various transactions between two sophisticated business parties (Lount and Shelter).  One of the parties, Lount, a respondent in this case, received two  “irrevocable voting proxies” from a company controlled by the other sophisticated party, Shelter, and from the wife of a business associate of Shelter (Sikora), each an applicant in this case, for voting rights of a limited partnership (unrelated to the transactions) which beneficially owned an apartment building in Winnipeg.

Lount proceeded to use the proxies until 2011.  An annual and special meeting of the limited partnership was scheduled for December 2013 in which significant changes to the limited partnership agreement were to be considered.Continue Reading Use of Proxies within the Context of a Limited Partnership

The American Bar Association has published its Canadian Private Target Mergers & Acquisitions Deal Point Study[1] (Study) analyzing transactions that involved Canadian private targets that were acquired or sold by public companies in 2014 and 2015. The Study included a sample of 101 transactions and excluded transactions with a value less than C$5 million,

Canada has proven to provide fertile ground for shareholders activism, in part due to a regulatory landscape that could be viewed as more shareholder friendly than some other jurisdictions. As a result, it is perhaps not surprising that activists have achieved significant success in Canada in recent years. It is apparent that shareholder activism is

In light of recent events, it appears that our American friends are taking a greater interest in Canada. The following is a description of some issues that may arise in connection with US agreements being “Canadianized” for use in Canada. Due to the complexity surrounding these issues, and other issues that may arise in connection

OSC and BCSC on Defensive Private Placements Under the New Take-Over Bids Regime

As discussed in our previous post, the first hostile take-over bid under the new Canadian take-over bid rules was launched by Hecla Mining Company (Hecla) in July 2016 for the purchase of all of the outstanding shares of Dolly Varden Silver Corporation (Dolly), a TSX Venture Exchange listed issuer. Since our initial post, this take-over bid has become of particular interest to capital market participants because applications were made by each of Hecla and Dolly to the Ontario Securities Commission (OSC) and the British Columbia Securities Commission (BCSC) related to the take-over bid and the subsequent private placement announced by Dolly. Many hoped that the OSC and BCSC (collectively, the Commissions) in deciding these applications would bring additional clarity on how regulators would review alleged defensive tactics in light of the new take-over bid rules.

A simultaneous hearing in front of the OSC and the BCSC was held on July 20 and 21, 2016 and while the applicable orders were rendered on July 22, 2016 by each of the Commissions, the highly anticipated joint reasons were not issued until October 24, 2016. In their reasons, the Commissions concluded that the question of whether a private placement is an abusive defensive tactic requiring regulator intervention is a fact-dependent balance between policy considerations and bona fide corporate objectives and outlined a two-step test for regulators to weigh the relevant factors.

Defensive Private Placements

The most anticipated portion of the Commissions’ reasons relates to Hecla’s application to cease-trade the private placement Dolly announced after Hecla announced its take-over bid. In its application, Hecla argued that the private placement should be cease-traded either as an abusive defensive tactic under National Policy 62-202 Take-Over Bids – Defensive Tactics (NP 62-202) or under the Commissions’ broader public interest mandate.Continue Reading Defensive Private Placements Under the New Take-Over Bids Regime

The Ontario Securities Commission (OSC) announced today its new initiative, OSC LaunchPad, described as the first dedicated team by a securities regulator in Canada to help fintech businesses navigate securities law requirements and accelerate time-to-market.

OSC LaunchPad will provide direct support to eligible new and early-stage fintech businesses through meetings with the OSC LaunchPad