Under Canadian securities laws, reporting issuers are required to make periodic disclosure and timely disclosure upon the occurrence of specific events. One of the timely disclosure obligations is the requirement for a reporting issuer to file a business acquisition report (BAR), in prescribed form, upon the completion of a "significant" acquisition of a "business".
An acquisition is considered significant where the acquisition meets one of the following significance tests: investment, assets or profit or loss. For venture issuers, the relevant tests are assets and investments. Whether the relevant test is met is based on financial statements. Notably, however, if an acquisition qualifies as a reverse takeover or satisfies certain optional tests, a company may not be required to file a BAR.
A company must file a BAR within 75 days of the acquisition unless the acquired business's most recently completed financial year is within 45 days of the acquisition in which case the filing deadline is either 90 or 120 days.
The BAR must include the acquired business's financial statements and such statements must be accompanied by an auditor's report that includes an unmodified or unqualified opinion, unless the opinion relates to inventory, in which case it may be qualified.
In addition to prescribed exemptions, regulators may grant case-by-case exemptions from the requirements to file the BAR or other related requirements. One recent example is seen in Endeavour Silver Corp., Re (36 OSCB 2889). In that case, an auditor was unable to verify certain matters as a result of the acquired business's lack of historical information as well as the passage of time which prevented any verification of such information. As a result, the auditor was unable to provide an unqualified opinion relating to such matters. Nonetheless, the British Columbia Securities Commission, as the principal regulator, provided the applicant relief from the requirement to provide an unqualified opinion on the basis that the applicant (i) could otherwise comply with the requirements for the BAR and (ii) that the BAR would contain sufficient alternative information about the acquisition.
The author would like to thank Nader Hasan, articling student, for his assistance in preparing this legal update.
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