On December 8, 2015, amendments to rights offering rules finally
make rights offerings a viable financing option for Canadian
reporting issuers. Gone are the prospectus-like disclosure
documents and long reviews by the Securities Commissions. Rights
offerings will be simpler and quicker, including:
a new rights offering circular in a question and answer format
that is intended to be easier for issuers to prepare and more
straightforward for investors to understand – it must be
filed but not sent to security holders; the Rights Offering
Circular Form is Form 45-106F15;
a new notice that reporting issuers must file on SEDAR and send
to security holders informing them about how to access the rights
offering circular electronically – the Rights Offering Notice
Form is Form 45-106F14; and
a dilution limit of 100% of share capital, up substantially
from the current 25%.
The new rules remove the current requirement for a regulatory
review of the rights offering circular while replacing it with
statutory secondary market civil liability. This change means that
investors under the rights offering will have a right of action
against the issuer if there is a misrepresentation in the rights
offering circular or other part of the issuer's continuous
Some other changes include that the offering period must be open
for at least 21 days but not more than 90 days, and that the
offering must be priced below the market price at the time the
rights offering notice is filed.
If the issuer has been a reporting issuer in Canada for at least
four months prior to the issuance of rights offering securities,
and other conditions of Section 2.6 of National Instrument 45-102
are in place, the rights offering securities will be freely
tradable on issuance.
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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