The Jumpstart Our Business Startups Act (known as the
JOBS Act), which became law in 2012, was intended to encourage
investment in small businesses by easing securities
regulation. Among other things, it amended Section 12(g)(1)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which, until recently,
required an issuer to register a class of equity securities with
the Securities and Exchange Commission (the
"SEC") if, on the last day of a fiscal
year, it had total assets of (US)$1,000,000 and a class of equity
securities held of record by 500 or more shareholders. The
JOBS Act increased these thresholds to (US)$10,000,000 and 2,000
shareholders, or 500 shareholders who are not "accredited
Although the JOBS Act amended the Exchange Act, it left a few
details to the SEC under its rulemaking authority and the SEC just
adopted a final rule on May 3, 2016 (to take effect on June 9,
2016). As amended, Exchange Act Rule 12g-1 carries the definition
of an "accredited investor" over from Rule 501(a) of the
SEC's Regulation D. However, the rule requires that
issuers determine the status of accredited investors as at the last
day of their most recently completed fiscal year. In other
words, an issuer cannot assume that a person that was an accredited
investor at the date of the original investment is still an
accredited investor at the end of each fiscal year. As the
SEC observed in its Final Rule Release [No. 33-10075; 34-77757],
outdated information can be unreliable. But as a practical
matter, the final rule requires that an issuer with more than
(US)$10,000,000 in assets and more than 500 shareholders of record
at the end of its last fiscal year must either register or be in a
position to establish that, based on facts and circumstances
available to it at the end of that fiscal year, it had less than
500 shareholders of record that were not, or that
it reasonably believed were not, at the time, accredited
This effort to ease securities regulation adds a layer of
complexity for companies that have between 500 and 2,000
shareholders of record.
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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