Under Multilateral Instrument 51-105 – Issuers Quoted in
the U.S. Over-the-Counter Markets, a foreign issuer which
undertakes promotional activities in Canada without being listed or
quoted on a designated exchange runs the risk of being deemed a
reporting issuer in Canada, and therefore subject to extensive
Canadian continuous disclosure requirements, if the issuer's
equity securities trade over the counter (OTC) in the United
States. As a result, some dealers undertaking private placement
offerings of foreign securities in Canada have been limiting
Canadian selling efforts to Ontario (which did not adopt MI 51-105)
and Quebec (which issued a blanket order in 2012 exempting issuers from
the rule so long as promotional activities concern only
A recent Alberta Blanket Order follows the Quebec model
to exempt issuers from becoming OTC reporting issuers under MI
51-105 so long as selling efforts and actual sales are only made to
"permitted clients" on a private placement basis. As a
result of the Alberta ruling, issuers and dealers involved in this
type of offering can now add Alberta to the list of Canadian
provinces where promotional activities and sales may be effected
without concern for the unintended effects of MI 51-105.
The Alberta Blanket Order also eliminates certain other
Canada-specific disclosures (known as "connected issuer"
and "related issuer" disclosures) that would otherwise
need to be included in a "wrapper" document to supplement
the foreign offering document, and does away with a related
valuation requirement, as well as prohibitions on exchange listing
representations. These exemptions are only available for private
placement offerings to "permitted clients".
As we discussed in
a previous post, Canada-wide rule changes are being considered
by Canadian securities regulators, the cumulative effect of which
would be to eliminate altogether the need to prepare a Canadian
wrapper document for certain types of foreign offerings to
sophisticated Canadian investors.
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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