Amendments to NI 51-102 Continuous Disclosure Obligations Related to Business Acquisition Reports

Written By Jon Truswell and Kristopher Hanc

The Canadian Securities Administrators recently published amendments to National Instrument 51-102 Continuous Disclosure Requirements (NI 51-102) related to the Business Acquisition Report (BAR) requirements. The amendments are intended to reduce the regulatory burden on reporting issuers that are not venture issuers (i.e., issuers that are listed on the TSX and not the TSXV) by changing the criteria under which an acquisition is considered a significant acquisition.

Under Part 8 of NI 51-102, if a reporting issuer completes a significant acquisition, it must file a BAR within 75 days of the acquisition date. Three tests are considered in determining whether an acquisition is a significant acquisition:

1. The Asset Test: the reporting issuer's proportionate share of the consolidated assets of the business or related businesses exceeds 20 percent of the consolidated assets of the reporting issuer;
2. The Investment Test: the reporting issuer's consolidated investments in and advances to the business or related businesses as at the acquisition date exceeds 20 percent of the consolidated assets of the reporting issuer; and
3. The Profit or Loss Test: the reporting issuer's proportionate share of the consolidated specified profit or loss of the business or related businesses exceeds 20 percent of the consolidated specified profit or loss of the reporting issuer.

Under the current rules for a reporting issuer that is not a venture issuer, only one of the three tests must be triggered to require a BAR. 

The amendments will require that at least two of the significance tests be triggered and that the significance threshold in the tests be increased from 20 percent to 30 percent.

The amendments are expected to become effective on November 18, 2020, subject to ministerial approval, and will not be retroactive in their application.

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