Canada: Capital Markets Bulletin - March 10-14, 2014

Last Updated: March 18 2014

Edited by Alexandra Iliopoulos and Gregory Hogan


News and Notices

New OSC Initiatives Aimed at Strengthening Enforcement
By: Alexis Bowie, Anita Kim, Jamie Litchen and Joel McElravy

The Ontario Securities Commission's Staff ("OSC Staff") has announced that it is proceeding with the following enforcement initiatives:

  1. "No-contest settlements" – a program whereby certain kinds of enforcement cases could be settled without the respondent making formal admissions respecting its misconduct;
  2. A program for explicit no-enforcement action agreements;
  3. Clarifying the self-reporting process under the current credit for cooperation program; and
  4. Enhanced public disclosure of credit granted to persons who co-operate with OSC Staff in the course of an enforcement investigation.

It should be noted that the initiatives described above do not affect any of the Ontario Securities Commission's Rules of Procedure, and that any decision to accept or reject a proposed no-contest settlement would ultimately be determined by the Ontario Securities Commission hearing panel considering the matter.

Further information about these initiatives can be found in OSC Staff Notice 15-702 Revised Credit for Cooperation Program.

IIROC Releases Proposed Guidance on Underwriting Due Diligence
By: Alexis Bowie, Anita Kim, Jamie Litchen and Joel McElravy

On March 6, 2014, the Investment Industry Regulatory Organization of Canada ("IIROC") released proposed guidance for underwriters conducting due diligence in the context of securities offerings (the "Proposal"). The Proposal stems from a review by IIROC of its members' underwriting activities, and its identification of different due diligence and record-keeping practices across members.

IIROC has released the Proposal in an attempt to promote consistency and enhanced standards in respect of the underwriting due diligence practices of its members.

The overarching theme of the guidance offered by the Proposal is the need, on the part of underwriters, to apply professional judgment and context-specific analysis to the due diligence process. Aside from the most basic due diligence functions, a formulaic or "check-the-box" type approach should be eschewed for a due diligence process that considers the particular details of the offering, and the level of due diligence that is both reasonable and appropriate in the circumstances (e.g. offerings involving certain foreign and emerging market issuers may necessitate a higher level of due diligence). Form should not trump substance. While a member's due diligence process should be flexible and context driven, it should not be ad-hoc. Rather, the Proposal would require that an underwriter maintain written due diligence policies and procedures and an oversight process to identify compliance issues that arise in the course of a member's underwriting activities.

More generally, the Proposal emphasizes the important role underwriters play as gatekeepers to the capital markets. The Proposal notes that a gatekeeper role necessitates a due diligence process that encompasses a much broader purpose, one that goes beyond risk mitigation or limitation of liability, and that seeks to play a role in "protecting investors, fostering fair and efficient capital markets and creating and maintaining confidence in capital markets."

The complete text of the Proposal is available here, and includes a summary of suggested and common due diligence practices, and a list of matters to be considered by underwriters when formulating a due diligence plan. IIROC is soliciting comments and answers to various questions from members and interested parties up until June 4, 2014.


Updates and commentary from Canada and around the world

Finders and Referral Agents Beware! Proposed Changes for Unregistered Individuals in Canada

Brian Koscak and Peter Dunne from our Securities Group have published an article on the implications of the proposed amendments to National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103"). The article focuses on the proposed amendment to section 8.5(a) of NI 31-103, which currently provides an exemption to the registration requirement to a person or company who makes a trade, if such trade is made solely through an agent who is a dealer registered in a category that permits the trade. The Canadian Securities Administrators proposes to amend the exemption by removing the "solely" qualifier and adding language to restrict the circumstances in which the exemption may be relied upon. For the full article, please click here.

Nothing in Life is Free, Including Employees

Geoffrey Breen from our Employment & Labour Group has published an article cautioning employers to be wary of hiring interns on a without-pay basis. As employment standards legislation in most jurisdictions only permits interns to be unpaid in very limited circumstances, employers could find themselves facing significant fines or ordered to pay damages for failing to pay or provide employment benefits to the interns they hire. Needless to say, the improper use of unpaid interns has the potential to be exploitative and can be very damaging to an employer's reputation at the same time. For the full article, please click here.


Tips and guidelines to assist our clients in understanding the law and becoming better drafters

Disclosure Matters

Material Change Report Filed in Connection with Related Party Transaction
By: Jennifer Hansen and Jennifer Poirier

Issuers are reminded that in a material change report, if any, required to be filed in connection with a related party transaction, they must provide the detailed disclosure described in section 5.2 of MultiIateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. This disclosure includes, among other things, (i) a description of the interest in the transaction of every interested party (and any associated entities of the interested parties) and of the related parties; (ii) the anticipated effect of the transaction on the percentage of securities of the issuer or an affiliated entity of the issuer beneficially owned or controlled by any of the foregoing persons, for which there would be a material change in that percentage; (iii) a discussion of the review and approval process adopted by the board of directors and the special committee; and (iv) the formal valuation and minority approval exemptions, if any, on which the issuer is relying.

If the material change report described above is filed less than 21 days before the expected closing of the transaction, issuers must explain in the news release and in the material change report why the shorter period is reasonable or necessary in the circumstances.


Information and intelligence about what public companies are doing in the market

Public Offerings [lead underwriters noted/agents noted]

Equity Offerings

Company Securities Offered/ Number Gross Proceeds Agent/Underwriter
First National Financing Corporation
  • 2,000,000 Common Shares
$49,800,000 RBC Dominion Securities Inc. and TD Securities Inc.
Neovasc Inc.
  • 4,192,000 Common Shares
$25,152,000 Cormark Securities Inc.
Roxgold Inc.
  • 43,200,000 Common Shares
$25,056,000 BMO Nesbitt Burns Inc.
BNK Petroleum Inc.
  • 15,910,000 Common Shares
$35,002,000 Macquarie Capital Markets Canada Ltd.
Encanto Potash Corp
  • Units/TBD; Flow-Through Units/TBD
TBD Secutor Capital Management Corporation
Enterprise Group, Inc.
  • 24,000,000 Commom Shares
$24,000,000 Canaccord Genuity Corp. and GMP Securities L.P.
Gear Energy Ltd.
  • 14,000,000 Common Shares
$56,000,000 FirstEnergy Capital Corp. and Peters & Co. Limited
NexGen Energy Ltd.
  • 22,300,000 Units
$10,035,000 Dundee Securities Ltd.
Primero Mining Corp.
  • 31,151,200 Common Shares
$224,288,640 Canaccord Genuity Corp.
SQI Diagnostics Inc.
  • TBD/Units
TBD Euro Pacific Canada Inc.
West Kirkland Mining Inc.
  • TBD/Units
$25,000,000 to $30,000,000 Cormark Securities Inc. and PI Financial Corp.

Take-Over Bids

Acquiror Target Securities to be Purchased Consideration
CWAL Investments Ltd. ("CWAL") Coast Wholesale Appliances Inc. All of the issued and outstanding common shares not already owned by CWAL $4.55 per common share

Upcoming Shareholder Meetings

  • On March 28, 2014, the Class A shareholders, Class L shareholders, Class B shareholders and Class P shareholders of The Business, Engineering & Technology Discoveries Fund Inc. (the "Fund") will be asked to vote, each as a class, to approve, among other things, the sale of all or substantially all of the property of the Fund to Tier One Capital Limited Partnership.
  • On April 3, 2014, the shareholders of Canada Bread Company, Limited ("Canada Bread") will be asked to vote to approve a plan of arrangement with Bimabel Canada Inc., a wholly-owned subsidiary of Grupo Bimbo, S.A.B. de C.V., whereby ("Bimabel") will acquire all of the issued and outstanding common shares of Canada Bread.
  • On April 4, 2014, the shareholders of Pennant Energy Inc. ("Pennant") will be asked to vote to approve a plan of arrangement with Blackbird Energy Inc. ("Blackbird") whereby Blackbird will acquire all of the issues and outstanding common shares of Pennant.
  • On April 7, 2014, the shareholders of Mercator Minerals Ltd. ("Mercator") will be asked to vote to approve a plan of arrangement with Mercator Intergeo MMC Ltd whereby, among other things, each Mercator shareholder, for every Mercator common share held, will receive one common share of the resulting issuer post-arrangement and one put right effective post-arrangement from the resulting issuer.


Capital Markets

Blog Post: Ending the Shareholder Lawsuit Gravy Train (Harvard Business Review)
By: Greg Hogan

This post from Justin Fox, Executive Editor, New York, of the Harvard Business Review Group, comes as the US Supreme Court hears Halliburton Co. v. Erica P. John Fund, Inc., a case in which the "fraud on the market" doctrine that underlies most securities class-action lawsuits is being put to the test. The post notes among other things that since the original decision in Basic, Inc., v. Levinson was released, there has been a shift in academic thinking on the doctrine, which consensus view describes as "not just flawed, second-best, misdirected, or in need of improvement, but flat-out senseless, mindless, and reasonless" (from University of Pennsylvania law professors William W. Bratton and Michael L. Wachter). Fox is not anticipating any sea change as a result of the decision. However, his "fun facts" do provide a concise history of the developments in United States securities laws and fraud on the market that have led up to this case and that are worth reviewing for issuers in the US market.


Links You Need to See...
By: Greg Hogan


Recent Transactions

We acted for Crocodile Gold Corp. in connection with a $18 million private placement financing with Sprott Asset Management LP on behalf of certain funds and managed accounts, Eric Sprott and Luxor Capital Group. The net proceeds will be used to fund the company's growth projects, such as the Big Hill project and regional exploration programs, as well as for general working capital purposes. Click here for further details.

In the News

Paul Stein was quoted in Listed Magazine in an article titled "Waiting for the Light", which shed some light on the dark place that was the mining sector in 2013. According to the article, industry experts believe that we will be seeing more hostile transactions and proxy fights in 2014. Paul Stein agrees and says that the Goldcorp-Osisko situation - the sector's first major hostile offer in some time - is a signal to expect further consolidation among producers. Explains Paul: "Mining M&A activity will pick up out of necessity because there isn't capital available." For the full article, please click here.

We acted for a syndicate of underwriters co-led by TD Securities Inc. and BMO Capital Markets in connection with an offering of 74,290,000 units of Rubicon Minerals Corporation, an advanced stage gold development company. The proceeds of the offering will be used by the company to further develop its Phoenix Gold project.

Wendy Berman was quoted in the February 18, 2014 edition of the Financial Post in an article titled "Ontario Court Gives Companies More Powers to Fight Proxy Battles", which focused on an Ontario Superior Court decision giving companies greater leeway to defend against dissident shareholders during proxy battles. Explains Wendy: "The ruling says that companies who defend themselves in a press release are not in breach of the rules against solicitation as long as they stop short of asking people to vote for management."

Wendy goes on to say that the decision (Smoothwater Capital Partners v. Equity Financial Holdings) recognizes the reality of shareholder activism in Canada. "It shows that we're growing up in terms of proxy fights and figuring out what the rules are as these battles become more common." For the full story, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions