By Sharon Kretchmar and Linda Raffaghello on April 7th,
Effective April 6, the OSC is implementing amendments to OSC Rule 13-502 –Fees (the "New
Rule"). While largely consistent with the basic
framework under the previous version of the fee rule (the
"Old Rule"), the New Rule changes the
basis for the calculation of participation fees by removing the use
of a "reference fiscal year", introduces nominal
increases to certain activity fees, and introduces new management
certification requirements for participation fee forms.
The two main types of fees charged under the Old Rule are
participation fees and activity fees. Participation fees are set
based on estimates of OSC operating costs for upcoming periods and
fee levels are set using a tiered structure. Participation fees for
issuers are based on average market capitalization in a fiscal
year. Participation fees for registrant firms and unregistered
capital market participants are based on their Ontario
Since the Old Rule was introduced in 2013, participation fees
had to be calculated based on historical data or a reference fiscal
year ("RFY"). Accordingly, under the Old
Rule, market participants who had a decline in their Ontario
revenue or market capitalization across the fee cycle did not see
any reduction in their participation fees, and those market
participants who experienced growth in Ontario revenue or market
capitalization did not see any increase in the fees.
The New Rule removes the use of the RFY such that market
participants will calculate participation fees using the most
recently completed financial year end data. In the case of
registrant firms and unregistered capital market participants, the
participation fee under the New Rule will be calculated using the
most recent financial year ending in the calendar year. This means
that participation fees payable will increase or decrease based on
actual changes in business conditions and performance. The
participation fees payable under the New Rule are meant to more
closely track current market conditions. The New Rule does not
increase participation fee levels.
Activity fees are generally charged where certain documents,
such as prospectuses or applications for discretionary relief, are
filed with the OSC. Activity fees are based on the average cost to
the OSC of reviewing documents of the particular class. The New
Rule introduces nominal increases to the prospectus filing fees,
application fees and registration-related activity fees.
Certification of Participation Fee Forms
The New Rule introduces new certification requirements in
connection with the filing of participation fee forms. In the case
of a corporate finance participant, the management certification
will require an officer of the reporting issuer to certify that the
participation fee form data is complete and accurate. In the case
of a capital market participant, the certification must be
completed by the Chief Compliance Officer.
Although there is no specific guidance in the New Rule, the OSC
has confirmed that issuers with a year-end prior to April 5, 2015
are to prepare their participation fees based on the Old Rule and
issuers with a year-end following April 5, 2015 are to prepare
their participation fees under the New Rule.
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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