These amendments make the requirements of the federal and Ontario corporate statutes consistent with the changes to Canada’s securities law regime adopted over a year ago, offering companies that are incorporated in these jurisdictions and listed in the U.S. greater flexibility in their financial reporting options.
Amendments to the regulations under the Canada Business Corporations Act (CBCA) and Ontario Business Corporations Act (OBCA) now allow federally and Ontario incorporated Canadian companies listed in the U.S. and Canada to prepare and file U.S. GAAP interim and annual financial statements in Canada, without having to also prepare Canadian GAAP financial statements. As a result, companies incorporated under these statutes that have in the past prepared two sets of interim and annual financial statements are now able to prepare a single set using U.S. GAAP. Eligible Canadian companies that have been preparing and filing Canadian GAAP statements in Canada and the U.S. now have the option of shifting entirely to U.S. GAAP.
Since the adoption of the Canadian Securities Administrators’ National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency on March 30, 2004, Canadian issuers have had the ability to report their financial results under U.S. GAAP under specified circumstances. Notwithstanding the existence of this option under securities law, the Canadian corporate statutes have varied in their treatment of GAAP and GAAS, and as a result, issuers incorporated under the CBCA and a number of the provincial corporate statutes were until recently nonetheless required to provide shareholders with annual financial statements prepared in accordance with Canadian GAAP and accompanied by an auditors’ report prepared using Canadian GAAS.
The CBCA regulation amendments which came into effect on March 8, 2005, and the OBCA amendments which came into effect on June 1, 2005, have now made the requirements of those statutes consistent with the changes to the securities law regime and put companies incorporated in those jurisdictions in a position to take full advantage of the flexibility offered by NI 52-107.
As a transitional matter, the U.S. GAAP interim and annual financial statements will generally have to be reconciled to Canadian GAAP for the first two years after the issuer ceases filing Canadian GAAP statements. For more information on actions required during the transitional period and other background, see our earlier Osler Update, "CBCA Changes Will Enable Canadian Companies Listed in the U.S. to File U.S. GAAP Financials in Canada. "
Author's credit: Doug Bryce is a partner in Osler's Business Law Department practising in the Mergers & Acquisitions and Corporate Finance Groups. His practice focuses on advising both Canadian and international issuers with respect to mergers and acquisitions, general corporate, securities, and corporate governance matters.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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