On July 13, 2015, the TSX published guidance on what is an
Emerging Market Issuer ("EMI") and what an EMI faces in
terms of special risks, what would be required for an initial
listing of an EMI, and what ongoing listing requirements will exist
for EMIs beyond what is required for other issuers.
Generally, TSX will consider the following factors in
determining whether an applicant or an issuer may be an EMI: (i)
residency of "mind and management"; (ii) jurisdiction of
the principal business operations and assets; (iii) jurisdiction of
incorporation; (iv) nature of the business; and (v) corporate
structure. The presence of any one or more of these factors may
lead to an issuer being considered as an EMI. TSX considers any
jurisdiction outside of Canada, the United States, the United
Kingdom, Western Europe, Australia and New Zealand may be an EMI.
Given the large number of potential jurisdictions and the
infrequency of applications from such jurisdictions, TSX will
assess other jurisdictions on a country-by-country basis.
Issues indicated as particular risks for EMIs include: knowledge
of Canadian regulatory requirements, communication where English is
not the common language, qualification of auditors, qualifications
of CFO and audit committee, adequacy of internal controls,
non-traditional capital structures, title to assets, and foreign
legal requirements. These items need to be addressed by EMIs to
ensure investors have full knowledge of the risks and steps are
taken to mitigate them.
EMIs will have to demonstrate to the TSX that they possess
public company experience, have independent board oversight of
management, have appropriate local business knowledge in the
jurisdiction of operations, and have a suitable CFO and audit
committee. The EMI also requires that its auditors have experience
in the EMI's jurisdiction of operations and have the resources
to work in the complex trans-national sphere. Internal controls for
EMIs will have to be comprehensive.
Most EMIs will require a TSX member firm sponsorship in order to
list. Any related party transactions will get very close scrutiny,
and the TSX may require an EMI to have a related party policy.
Capital structures that are at all unusual will also face
considerable review and the TSX must be convinced of the
structure's legality and ability for capital and shares to move
freely. The TSX will conduct background searches on key management,
board members and significant security holders.
While there is not much completely new in the TSX policy on
EMI's, the TSX has given notice with this policy that EMIs must
be ready with a complete package and satisfactory responses to all
these issues before it attempts to list.
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.
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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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