The new amendments are intended to ease some of the current
requirements found in National Instrument 45-101Rights Offerings (NI 45-101). For
example, issuers seeking to rely on the current rights offering
prospectus exemption must have their offering circular reviewed and
accepted by CSA staff. Under the proposed exemption, a circular
would still be prepared; however, prior regulatory acceptance of
the circular would not be required. Rather, issuers would send
security holders a short notice prior to using the exemption
setting out basic disclosure about the offering and informing
security holders how to access the rights offering circular
electronically. A circular would be filed concurrently with the
notice but would not need to be sent to security holders.
The new proposed form of rights offering circular would be in
question and answer format with disclosure focused on information
about the offering, use of funds and the financial condition of the
issuer, and would not require inclusion of information about the
business. In streamlining the information required in the circular,
the CSA recognize that most investors exercising rights would be
existing security holders and, thus, familiar with the issuer's
disclosure record. This will further streamline the process, for
example, by eliminating the need for technical reports in
connection with disclosure in the circular.
The proposed exemption would also increase the current dilution
limit from 25% to 100% assuming the exercise of all rights issued
under the exemption during the preceding 12 months. However, as
opposed to the current exemption, issuers would have to make the
basic subscription privilege available on a pro rata basis
to each holder of the class of securities to be distributed on
exercise of the rights. The subscription price for a security would
have to be lower than the market price at the time of filing the
notice for listed issuers, while issuers not listed on a
marketplace would have to offer securities at a price lower than
"fair value" at the time of filing the notice. The
proposed exercise period would be a minimum of 21 and maximum of 90
days. The proposed rights offering exemption would only be
available to reporting issuers other than investment funds subject
to NI 81-102, as such funds are restricted from issuing warrants
While CSA staff would not review the notice or circular prior to
use, the CSA intend to conduct reviews of circulars for two years
after the adoption of the proposed exemption to ensure compliance
with the exemption's conditions and to gauge how issuers are
using the exemption.
Statutory civil liability for secondary market disclosure is
proposed to apply to the acquisition of securities in a rights
offering under the exemption. The proposal also includes
requirements in respect of stand-by commitments, the need to file a
closing news release, and resale restrictions. An exemption for
issuers with a minimal connection to Canada is also being proposed
in substantially the same form as the current exemption found in
section 10.1 of NI 45-101.
NI 45-101 and the prospectus exemption in NI 45-106 for rights
offerings by non-reporting issuers would both be repealed and the
proposed exemption would be included in National Instrument 45-106
Prospectus and Registration Exemptions. Stakeholder comments,
including in respect of specific questions set out by the CSA, are
being accepted until February 25, 2015.
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.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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