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Updates
Miners Beware: Regulators Read Your Investor Presentations
April 28, 2015
On April 9, 2015, the Canadian Securities Administrators (CSA) published CSA Staff Notice 43-309 - Review of Website Investor Presentations by Mining Issuers (the Staff Notice), which summarizes the findings of a review of 130 investor presentations (the Reviewed Presentations) posted on websites of pre-production stage mining issuers. The Staff Notice reminds mining issuers that investor presentations and other information found on an issuer's website constitute "written disclosure" for the purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) and, therefore, must comply with NI 43-101's disclosure requirements as well as the forward looking information (FLI) requirements of National Instrument 51-102 – Continuous Disclosure Obligations. The Staff Notice also suggests ways to improve compliance in designing investor presentations and websites to meet disclosure obligations.
The CSA Proposes Amendments to the Passport System
April 23, 2015
On April 16, 2015, the Canadian Securities Administrators (CSA), except for the Ontario Securities Commission (OSC), published a notice and request for comments on proposed amendments to Multilateral Instrument 11-102 - Passport System.
Canadian Securities Administrators Publish Comment Letters on Proposed National Policy 25-201 Guidance for Proxy Advisory Firms
April 20, 2015
On April 24, 2014, the Canadian Securities Administrators (CSA) published for comment proposed National Policy 25-201 Guidance for Proxy Advisory Firms. Issuers, law firms and other market participants submitted comment letters which were recently published by the CSA. The proposed policy, including the comment letters received, may be downloaded from the website of the Alberta Securities Commission (PDF).
Theratechnologies Inc. v. 121851 Canada Inc.: The Supreme Court Gives the Leave Test Teeth
April 20, 2015
For the first time, the Supreme Court of Canada has weighed in on the threshold for granting leave for plaintiffs to commence statutory causes of action for secondary market misrepresentation cases. In contrast to recent decisions from several courts of appeal that had set a remarkably low standard, the Supreme Court has clearly stated that the statutory requirement to seek leave before commencing such actions reflects a legislative objective of creating a "robust deterrent screening mechanism" that should be "more than a speed bump". The Court explained that claimants must have both a plausible analysis of the applicable legislative provisions and some credible evidence in support of the claim before being granted leave to proceed.
Give and Take: Canadian Securities Regulators Ease Disclosure Burdens on Venture Issuers but Enhance Audit Committee Member Requirements
April 13, 2015
On April 9, 2015, the Canadian Securities Administrators announced
amendments to the continuous disclosure and governance obligations of
venture issuers in three national instruments: National Instruments
51-102 Continuous Disclosure Obligations (NI 51-102), 52-110 Audit Committees (NI 52-110), 41-101 General Prospectus Requirements
(NI 41-101) and related companion policies, which are expected to come
into force between June 30, 2015 and January 1, 2016. The amendments,
initially proposed in May 2014, were previously discussed in our
article, Streamlining Disclosure for Venture Issuers, published on May 29, 2014.
Use of Competitor's Trademarks in Metatags does not Constitute Infringement
March 09, 2015
A recent decision of the Federal Court of Canada has addressed issues that have received little judicial consideration in Canada, specifically whether use of a competitor's registered trademark in metatags constitutes infringement, and whether copyright subsists in metatags. The short answer to both questions is no.
IIROC Releases Final Guidance for Underwriting Due Diligence in Public Offerings
March 06, 2015
On December 18, 2014, the Investment Industry Regulatory Organization of Canada (IIROC) published, with immediate effect, Rules Notices 14-0299 and 14-0300 in connection with the release of final guidance (Final Guidance) with respect to underwriting due diligence.
The Final Guidance incorporates limited changes from the draft guidance previously published on March 6, 2014, to reflect comments received from market participants. This article summarizes the key changes in the Final Guidance and outlines certain implications of the Final Guidance.
Getting a Deal to Closing with Transaction Insurance
March 02, 2015
The M&A field has begun to find a lot of upside in use of representation and warranty insurance (RWI) – sometimes referred to as transaction insurance – to get a deal to closing. In the past five years the RWI market has matured greatly and has served as a valuable tool in a number of transaction situations. Whether aiming to improve indemnity protection or survival of representations and warranties, improving a bid in a competitive auction process, or being forced into a RWI policy when no vendor indemnity is possible, there are various ways RWI can give comfort to both vendors and purchasers.
Bennett Jones Winter 2015 Economic Outlook
February 18, 2015
Oil prices have fallen sharply since the release of our Fall 2014 Economic Outlook. While this shock should have relatively little effect on our outlook for global growth, in part because of other offsetting developments in the short run, it will entail a major redistribution of income from oil-exporting countries to oil-importing countries. Most notably, it will depress overall growth in Canada as a result of a marked slowdown in the growth rates of oil-producing provinces. This Winter 2015 Update provides revised projections of the global and Canadian economies along with a brief discussion of the policies that need to be pursued by governments in Canada in this new context.
Feedlot Health Management Services Ltd v The Queen, 2015 TCC 32
February 17, 2015
Bennett Jones LLP represented Feedlot Health Management Services Ltd. (FHMS) in the recent Tax Court of Canada proceeding, Feedlot Health Management Services Ltd v The Queen (2015 TCC 32). The case concerned certain fundamental principles with respect to the interpretation of the definition of scientific research and experimental development (SR&ED), as set out in the Income Tax Act (Canada), as well as the interpretation of one of the most important SR&ED expenditure rules.
Reserves Reports and Asset Write-Downs – Legal Consequences for Public Companies
February 12, 2015
Low oil prices may have a significant impact on reserves reports, financial statements and reserves based credit facilities of oil-weighted energy companies in Canada. How will reserves reports and write-downs impact reporting issuers' 2015 continuous disclosure obligations under Canadian securities laws? What other legal consequences could result?
CSA Publishes Progress Report on Review of the Proxy Voting Infrastructure
February 10, 2015
On January 29, 2015, the Canadian Securities Administrators (CSA) published CSA Staff Notice 54-303?Progress Report on Review of the Proxy Voting Infrastructure. The report outlines the progress made to date by the CSA in its review of the network of organizations, systems, legal rules and market practices that support the solicitation and tabulation of proxy votes in Canada. In the CSA's view, its efforts have revealed that the "current proxy voting infrastructure is antiquated and fragmented and needs to be improved". As the proxy voting infrastructure needs to support accurate, reliable and accountable vote reconciliation, the report identifies areas for improvements and, for entities that play key roles in vote reconciliation, sets out steps for them to take for the 2015 and 2016 proxy seasons.
Amendments to the Canadian Patent Act – Bill C-43
February 10, 2015
On December 16, 2014, amendments to the Canadian Patent Act contained in Bill C-43, known as the Economic Action Plan 2014 Act, No. 2, received Royal Assent. The amendments seek to fulfill Canada's undertakings to adhere to the Patent Law Treaty adopted in Geneva on June 1, 2000. The Treaty aims to simplify and harmonize administrative practices among national intellectual property offices with respect to the patent application process. In addition to Canada, the United States and the European Patent Organisation are among the 36 contracting parties.
OSC Proposes New Whistleblower Program, with Financial Awards
February 04, 2015
Ontario may soon become the first Canadian jurisdiction to implement a whistleblower program for suspected securities law violations.On February 3, 2015, the Ontario Securities Commission (OSC) issued Staff Consultation Paper 15-401 – Proposed Framework for an OSC Whistleblower Program seeking comment on the proposed whistleblower program. The program, which would offer the potential for substantial financial awards to individuals who come forward with possible breaches of Ontario securities law, would be the first of its kind for securities regulators in Canada and has similarities to the widely-publicized whistleblower program adopted by the United States Securities and Exchange Commission (SEC).
SCOTUS Changes the Rules for Patent Claim Construction on Appeal
January 29, 2015
For almost 100 years, Canadian Courts have consistently held that the interpretation of a patent claim is a question of law. In almost every context, questions of law are reviewed on a de novo basis, without deference. As the Canadian courts of appeal routinely describe claim construction purely as a "question of law,"1 in practice it is unclear whether the factual findings of the trial judge are afforded deference in claim construction (for example, in the assessment of the common general knowledge that informs the meaning of claim terms). In light of the United States Supreme Court opinion in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.2 and recent developments in Canadian law, this principle is ripe for reconsideration in Canada.
REITs Cautioned on Disclosure Practices
January 28, 2015
On January 26, 2015, the Ontario Securities Commission published OSC Staff Notice 51-724 – Report on Staff's Review of REIT Distributions Disclosure. The Report presented the findings of the OSC's recent review of the disclosure practices of 30 publicly-listed REITs, primarily in the area of distribution sustainability and accounting disclosure. As investors expect REITs to provide predictable and regular distributions, the OSC is concerned that REITs may not always be providing their investors with a complete picture of the stability and sustainability of distributions. Though Staff's review found the disclosure of the subject REITs to be generally satisfactory with respect to distributions, Staff did note that many REITs are falling short of the OSC's expectations for disclosure set out in National Policy 41-201 – Income Trusts and Other Indirect Offerings. In particular, Staff found that certain REITs were deficient in their disclosure of distributions paid in excess of cash generated by operating activities, and in their disclosure relating to the use of certain non-IFRS measures.
Canadian Importers May Now Seek Import Duty Refunds
January 19, 2015
Since the introduction of the Transaction Value System of customs valuation by Canada on January 1, 1985, the Canada Border Services Agency (CBSA) has maintained a stated policy of denying refund claims of related party importers who seek to amend declared values for duty to account for adjustments that decrease transfer prices after importation. The CBSA's interpretive proposition that value for duty reduction is precluded is based on its statutory exclusion as "rebates or decreases in the price paid or payable effected after goods are imported." In contrast, if transfer prices are adjusted such that they are increased after importation, Canadian importers face the compliance obligation to amend entries and pay additional duties and taxes as applicable. Bending under the pressure of adverse findings by the Canadian International Trade Tribunal (CITT) and the Federal Court, the CBSA has corrected this imbalance by effecting a major change in policy. Subject to meeting evidentiary requirements, Canadian importers may now seek refunds of customs duties in cases where transfer prices are adjusted downward after importation if the adjusted prices paid or payable were the subject of an agreement in writing at or prior to importation.
Bayens v Kinross Gold Corporation – Misrepresentation Claims in Securities Class Actions
December 18, 2014
Ontario's statutory regime for secondary market liability came into effect in 2006 as a result of amendments to the Securities Act (Ontario) (the OSA), creating a statutory cause of action for deficient market disclosure. Part XXIII.1 of the OSA creates a statutory cause of action against reporting issuers, their officers and directors, and related parties for misrepresentations made in secondary market disclosures.
The case law for this secondary market liability is followed closely by both plaintiffs and defendants counsel, as each decision continues to mould this statutory regime. In Bayens v Kinross Gold Corporation, the Court of Appeal expanded upon its analysis in Green v Canadian Imperial Bank of Commerce and in so doing, provided further clarity on a couple of critical issues related to misrepresentation claims in securities class actions.
Canadian Securities Regulators Publish Amendments to Required Oil and Gas Disclosure
December 09, 2014
The Canadian Securities Administrators, or CSA, have published amendments (the Amendments) to National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities and Companion Policy 51-101 – Standards of Disclosure for Oil and Gas Activities (together, the Instrument). The Amendments are intended to enhance disclosure of resources other than reserves, to provide increased flexibility for oil and gas issuers that operate and report in various jurisdictions and recover product types not previously recognized by the Instrument, and to align the Instrument with the recently amended Canadian Oil and Gas Evaluation Handbook.
Canadian Securities Regulators Propose Significant Changes to the Rights Offering Regime
December 04, 2014
The Canadian Securities Administrators, or CSA, have published for comment proposed rule changes which would create a streamlined prospectus exemption for rights offerings conducted by reporting issuers other than investment funds (the Proposed Exemption). The Proposed Exemption is intended to benefit reporting issuers by removing the current regulatory review process, which will reduce the time and associated costs of conducting a rights offering.
Bennett Jones Fall 2014 Economic Outlook
November 27, 2014
We expect a modest strengthening of global growth over the next two years relative to 2013 and 2014, largely originating from the advanced economies, and the U.S. in particular. Growth in the emerging economies as a whole will increase somewhat in 2015 and 2016 relative to 2014, but progress will be constrained by a further projected slowdown in China. Even though this outlook shows much the same growth dynamics as before, it embeds a slightly more pessimistic view of growth prospects in the short term. Indeed, global growth remains lower than in our spring outlook all the way to 2016 in spite of projected lower oil prices.Section I presents recent world economy dynamics and the global outlook for 2014-2016, including prospects for Canada. Section II outlines a base-case scenario for global growth over 2017-2020. Our purpose is twofold: to draw attention to factors or developments that are likely to shape growth prospects beyond the short-term horizon and to give an idea of the most probable range of growth rates to be expected as the medium term starts unfolding. Section III briefly examines prospects for global trade growth and discusses where things stand with respect to international trade arrangements and negotiations, including Canada's North American trade agenda and U.S. trade policy after the recent mid-term elections.
Bennett Jones