The SEC has announced that it plans to modernize its mining
disclosure rules and reduce regulatory conflict for international
mining companies by better aligning its disclosure regime with
accepted global standards, including Canada's National
Instrument 43-101. The SEC is mindful that its anomalous regime may
be hurting the U.S. capital markets by discouraging mining
companies, particularly junior ones, from raising money in the
United States and listing on a U.S. stock exchange.
Citing the CRIRSCO-based codes, and noting that the U.S. regime
has not been updated in more than 30 years, the SEC is proposing to
rescind Guide 7 and replace it with detailed
regulations.1 The key proposed changes include the
Disclosure about mining operations would be required if they
are material to a company's business or financial condition.
Materiality would be presumed if mining assets constitute 10% or
more of the company's total assets.
The longstanding rule permitting only proven and probable
reserves in SEC reports would be eliminated. Inferred, indicated
and measured resources and exploration results would also be
disclosable within specific constraints.
Internal controls used in estimating exploration results and
mineral reserves and resources, including quality control and
assurance programs, verification of analytical procedures and
comprehensive risk inherent in the estimates, would have to be
Reserves, resources and exploration results would have to be
based on supporting documentation prepared by a qualified mineral
industry professional—a "Qualified Person," who
would be deemed an expert for purposes of U.S. public
Qualified Persons would not have to be independent, but if they
are affiliated with either the company or another entity with an
interest in the mining property, the nature of that relationship
would have to be explained.
A technical report summary, written by a Qualified Person in
plain English, would have to be filed with the SEC.
Determinations of mineral reserves could be based on either a
feasibility study or a preliminary feasibility study.
In addition to aligning the U.S. regime more closely with global
standards, some of the proposed rules reflect a codification of
unwritten requirements of SEC staff. These requirements have
historically been communicated to mining companies through the
comment letter process when staff review and request revisions to a
prospectus or other disclosure document. Codification is meant to
reduce the regulatory uncertainty caused by such informal
SEC-registered mining companies, both U.S. and foreign, would be
subject to the new rules. The only exception is Canadian MJDS
issuers, who would continue to be exempt. Accordingly, the new
rules would apply to Canadian issuers that are not MJDS-eligible.
Although the U.S. and Canadian rules would be substantially
harmonized, they would not be identical, and non-MJDS Canadian
issuers would have to comply with both sets of requirements.
Below is a link to the full text of the SEC's proposed rules
and request for comments. Comments are due within 60 days of the
rule proposal being published in the Federal Register.
1 The Committee for Mineral Reserves International
Reporting Standards, comprised of representatives of mining
standard-setting organizations in Australasia, Brazil, Canada,
Chile, Europe, Mongolia, Russia, South Africa and the United
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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