A professional geoscientist (the
"Professional") agreed to a consent
order with the Association of Professional Engineers and
Geoscientists of British Columbia (APEGBC) in connection with his
unprofessional conduct, incompetence or negligence in preparing
technical reports for two issuers. Under the consent order, the
Professional agreed to pay a fine of $15,000, plus $20,000 towards
legal costs. He is also subject to a number of conditions on his
APEGBC membership. The sanction signals a willingness on the part
of securities regulators and professional organizations to hold
their members and licensees accountable for below standard conduct.
It is also significant that both issuers announced updated resource
estimates in respect of the projects and the filing of, or
intention to file, technical reports documenting the new resource
estimates, in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects
Particulars of the Allegation
The Professional was investigated for his role in preparing
three technical reports for two issuers. In August 2012, he wrote a
technical report about an issuer's project in British Columbia
(the "B.C. Report"). He wrote that
report as the issuer's designated "qualified person",
as defined in NI 43- 101. The other two technical reports he
authored in 2011 about another issuer's Ontario project (the
The Professional admitted to all of the charges against him,
namely that he demonstrated unprofessional conduct, incompetence or
negligence and that the technical reports fell below the standard
expected of a reasonably prudent qualified person and professional
geoscientist in similar circumstances.
In particular, it was alleged that:
the B.C. Report lacked information
required or reasonably expected to be in a "technical
report", as such term is defined in NI 43-101, including,
among other things:
sufficient information regarding the
geological characteristics of the site and their impact on the
resource estimation; and
sufficient disclosure of data
the B.C. Report provided a resource
estimation that was not adequately modelled or constrained;
the resource estimates in the Ontario
Reports were calculated using an inappropriate polygonal
one of the two Ontario Reports used
both "inferred" and "geologically inferred"
resource categories, which were misleading, not permitted by NI
43-101, and contrary to the industry standard; and
the Professional contravened the
APEGBC's Code of Ethics by accepting responsibility
for a professional assignment he was not qualified by training or
experience to undertake, and by failing to keep himself informed to
maintain his competence.
Implications of the Sanction
This sanction illustrates that securities regulators (note that
the British Columbia Securities Commission was the complainant in
the case against the Professional) and professional organizations
are substantively reviewing a qualified person's work
undertaken in connection with the preparation of an NI 43-101
technical report. They are ready and willing to investigate members
and licensees for failing to meet their ethical obligations and
professional standards and best practices. Resources issuers should
carefully review a qualified person's expertise and credentials
before retaining him or her to prepare a technical report. While
the qualified person is responsible for preparing the technical
report, the issuer must ensure that any technical report complies
with all of the requirements of NI 43-101. Hiring a qualified
person that is not sufficiently qualified to undertake the work
performed could lead to significant disclosure issues, restatements
and re-filings of technical reports and significant reputational
damage to both the issuer and its management.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific 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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