Considerations for Awarding Incentive Stock Options

Canadian companies that award stock options to their employees, non‑employee directors and/or other service providers often inquire as to whether they should offer Incentive Stock Options (“ISOs”) to any such individuals who are U.S. taxpayers.  Below is a discussion of some of the tax considerations in awarding ISOs and the main requirements that must be met for an option to qualify as an ISO. Please note, this blog post provides only a high‑level summary of the tax treatment of options as well as some of the notable requirements for an option to qualify as an ISO.  This article does not purport to cover every nuance or situation.  As such, you should consult with...

EDGAR Next – Changes to Filer Access and Account Management

On September 27, 2024, the Securities and Exchange Commission (SEC) approved substantial updates to the EDGAR system’s login, password, and access protocols that will affect Canadian SEC reporting companies and other individuals and entities with EDGAR filing codes including Section 16 filers. (referred to as “EDGAR Next”). Compliance with the new EDGAR Next protocols will be mandatory for new filers starting March 24, 2025, while existing filers must comply from September 15, 2025. Filers have until December 19, 2025, to enroll in the EDGAR Next system. More information is available here.  

Corporate Transparency Act: Enforcement Halted Pending Further Court Developments

Canadian companies with U.S. subsidiaries have been gearing up all year to file beneficial ownership reports with FinCEN pursuant to the Corporate Transparency Act, in advance of a January 1, 2025 deadline for entities that were formed prior to 2024. Many have already completed their analysis and either determined that they qualify for an exemption or filed their initial beneficial ownership reports. On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the January 1, 2025 deadline. More information is available here. Companies that have not yet filed their initial beneficial ownership reports, and that are not exempt, now have a...

Comparison of Canadian and U.S. Securities Laws

Last month, I was invited to speak to the Canadian Securities Administrators, focusing on how U.S. securities exemptions, prospectus forms, and continuous disclosure requirements differ from their Canadian counterparts. One of the handouts was a side-by-side comparison of the different exemptions and forms, that we thought our readers might also appreciate. Here is an updated version you can download and print.

The Corporate Transparency Act: Deadline Approaching

This is a reminder that the deadline to file initial Beneficial Ownership Information Reports with FinCEN is January 1, 2025 for all non-exempt entities formed or registered to do business in the United States prior to December 31, 2023. The deadline is within 90 days of formation for all non-exempt entities formed or registered in 2024 (and within 30 days of formation for all non-exempt entities formed or registered on or after January 1, 2025). In January, we published this summary of the Corporate Transparency Act, in addition to our long form update on the CTA. Our attorneys are ready to assist with any questions you may have.

Companies Subject to U.S. Jurisdiction Should not Restrict Personnel from Being SEC Whistleblowers, or Receiving SEC Whistleblower Awards

SEC rules prohibit taking “any action” to impede an individual from communicating directly with the SEC about a possible securities law violation, including by enforcing, or threatening to enforce, a confidentiality agreement. Previously, the SEC has brought enforcement actions against, and secured large monetary settlements from, companies whose internal agreements and policies included broad confidentiality provisions that would restrict an employee from voluntarily being a whistleblower to the SEC. This month, the SEC announced a new round of settlements with seven different U.S. listed companies, who agreed to pay the SEC penalties totaling $3 million for violating these rules. What is notable about this new round of enforcement is that in each case,...

D.C. Circuit Court Upholds Mill Site Claim Rule Critical to Mining Projects in the United States

Earlier this summer, the District of Columbia Court of Appeals issued a decision affirming the lower court’s decision that the Mining Law of 1872 does not impose a limit on the number of mill sites that a mining claimant may use for ancillary purposes.[1] Section 42 of the Mining Law of 1872 provides that the holder of a mining claim may also locate nearby non-mineral-bearing-land for the purposes of “mining” and “milling” activities.[2] In 1997, the Department of the Interior then-Solicitor John Leshy issued a legal opinion concluding that Section 42 prohibits a claim holder from locating more than a total of five acres of mill site land with respect to any one...

SEC Staff Provides Welcome Guidance to Resource Extraction Issuers

As discussed in our January 10, 2024 webinar, new SEC rules require resource extraction issuers that file reports with the SEC to file a Form SD within 270 days after each fiscal year end to report their payments to the U.S. federal government and foreign governments. An issuer’s initial filing deadline in 2024 will therefore depend upon its fiscal year end, with reports from many companies already due, and others’ deadlines fast approaching. For an issuer with a December 31 fiscal year end, the Form SD will be due no later than September 26, 2024. In informal discussions, the SEC’s staff has provided our firm with welcome guidance on a number of related...

The Perils of Finder’s Fees (Revisited)

Way back in 2017, one of our earliest posts discussed the legal and financial risks to both the issuer and the finder if an issuer pays a finder’s fee in connection with a sale of securities in the United States, and the person receiving the fee is not a U.S. registered broker-dealer. In many cases, this type of fee violates U.S. securities laws. However, this continues to occur from time to time, especially in deals where U.S. counsel is not consulted prior to the closing. For a brief summary of the risks of paying this type of finder’s fee, and an example of one issuer that declared bankruptcy as a result, read on....

The U.S. Federal Trade Commission Votes to Ban Non-Compete Agreements, But the Issue is Far From Settled

Early last year, the U.S. Federal Trade Commission (“FTC”) proposed a rule banning non-compete agreements nationwide. Yesterday, the FTC voted 3 to 2 in favor of adopting this rule. The FTC’s newly adopted rule bars for-profit employers from entering into new non-compete agreements with employees, including highly compensated and executive employees. Existing non-compete agreements with senior executives are still enforceable under the new rule, but employers must, by the rule’s effective date, notify all other employees with non-compete agreements that those agreements are unenforceable. The rule defines a “senior executive” as a worker who was in a policy-making position and earns at least $151,164 per year. The rule does not apply to agreements...