Many junior resource companies depend on investment finders to help keep the lights on. Working with finders, however, requires navigating the "exempt" market, so named because it involves exemptions from certain securities laws. One company recently found itself in a catch-22: sanction a potential breach of securities law and stock exchange policy by paying a finder's fee, or be liable for unjust enrichment and legal costs (the eventual result) by declining.

This resulting court case, Birch v. GWR Resources Inc., is of interest to issuers and their advisers for several reasons, including the rare occasion it presented for British Columbia's highest court to consider the junior capital market. It also contains guidance for issuers and finders in respect of when a fee will be payable. Above all, it highlights that engaging investment finders can attract legal and regulatory headaches, along with needed capital. Diligence and informed advice are critical to managing risks in this area, and to avoiding noxious side effects of an exempt financing.

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