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Mergers & Acquistions

  • Recent Hart-Scott Rodino Developments

    Canadian companies engaged in M&A transactions with connections to the United States should be aware of recent changes to the rules under the Hart-Scott Rodino (HSR) Act. On February 2, 2021, the US Federal Trade Commission (FTC) announced the annual adjustment of the thresholds that trigger premerger reporting obligations (and the mandatory waiting period) under... Read More »
  • Covid-19 Tax Relief Makes Winners out of Losses (for some)

    Covid-19 Tax Relief Makes Winners out of Losses (for some)

    The CARES Act, signed into law on March 27, 2020 in the wake of the onset of the Covid-19 pandemic, contained numerous changes to U.S. federal income tax law. One such change applied to the deductibility of net operating losses (“NOLs”). Legislation enacted in December 2017 commonly known as the “Tax Cuts and Jobs Act”... Read More »
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Recent Posts

  • States Expand Pay Transparency Requirements, Including for Remote Job Postings

    States Expand Pay Transparency Requirements, Including for Remote Job Postings

    In order to address income disparities and employer discrimination, a growing number of jurisdictions in the U.S. have implemented salary transparency laws that not only require disclosure of certain salary information during the hiring process upon request, but require public disclosure of salary ranges in all posted job advertisements.  Canadian companies with U.S. employees should... Read More »
  • Dorsey releases Updated Guide for Canadian issuers to trade on the OTCQX and OTCQB

    Dorsey releases Updated Guide for Canadian issuers to trade on the OTCQX and OTCQB

    In conjunction with the OTC Markets, Dorsey has updated its Guide to Joining the OTCQX or the OTCQB Markets for Canadian and other Foreign issuers. Canadian issuers who trade on a qualified foreign stock exchange (which include the Toronto Stock Exchange, TSX Venture Exchange, Canadian Securities Exchange and the NEO Exchange) and who meet certain... Read More »
  • Plan Ahead to Reduce (or Eliminate) U.S. Withholding Tax when Selling or Transferring U.S. Subsidiaries holding U.S. Real Property

    Plan Ahead to Reduce (or Eliminate) U.S. Withholding Tax when Selling or Transferring U.S. Subsidiaries holding U.S. Real Property

    Many Canadian companies and individuals own U.S. real property interests through a U.S. corporation. The Foreign Investment in Real Property Tax Act (“FIRPTA”) regime imposes a withholding tax (currently at a rate as high as 15%) on the gross proceeds realized by Canadians upon the sale or transfer of a U.S. real property interest. This... Read More »
  • Share Buyback Transactions: U.S. Tax Consequences may differ for each U.S. Shareholder

    Share Buyback Transactions: U.S. Tax Consequences may differ for each U.S. Shareholder

    On Thursday, November 4, 2021, the Office of the Superintendent of Financial Institutions announced that, subject to approval by the superintendent, Canadian banks and other financial institutions may begin repurchasing their own shares. Share buyback transactions by Canadian companies are not novel. However, the U.S. federal income tax treatment of U.S. shareholders participating in a... Read More »
  • Canadian Corporations Acquiring U.S. Target Companies in Tax-Deferred Transactions: When Business Activities Outside the U.S. Matter

    Canadian Corporations Acquiring U.S. Target Companies in Tax-Deferred Transactions: When Business Activities Outside the U.S. Matter

    In transactions in which a Canadian corporation seeks to acquire a U.S. target entity for shares of the Canadian acquiror in a transaction intended to be tax-deferred for U.S. federal income tax purposes, the ability of U.S. shareholders of the U.S. target to qualify for tax-deferral may depend on the activities the Canadian acquiror conducts... Read More »
  • OTCQX International Rule Changes Will Push Certain Canadian Companies to the OTCQB Tier

    OTCQX International Rule Changes Will Push Certain Canadian Companies to the OTCQB Tier

    The OTC Markets has published proposed rule changes that would, effective September 23, 2021, require that in order to be quoted on the OTCQX International, a company must either be an SEC reporting company, file reports with the SEC under the Regulation A+ reporting system, or be exempt from SEC reporting requirements by virtue of... Read More »
  • OSHA Releases Updated Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace

    OSHA Releases Updated Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace

    On August 13, 2021, the United States Occupational Safety and Health Administration (“OSHA”) released updated guidance on mitigating and preventing the spread of COVID-19 in the workplace to reflect changes in the Centers for Disease Control and Prevention (“CDC”) guidance for fully vaccinated individuals in response to the spread of the Delta variant.  The guidance... Read More »
  • New NASDAQ Board Diversity Disclosure Rules

    As discussed in more detail here, on August 6, 2021, the United States Securities and Exchange Commission (the “SEC”) approved NASDAQ Rules 5605(f) and 5606, which require each NASDAQ listed company (subject to certain narrow exceptions) to (i) publicly disclose, to the extent permitted by applicable law, information on the voluntary self disclosed gender, racial... Read More »
  • The Lights Could Go Out on Over-the-Counter Companies on September 28, 2021

    The Lights Could Go Out on Over-the-Counter Companies on September 28, 2021

    On September 28, 2021, companies trading in the United States over-the-counter securities markets (“OTC Markets”) that do not comply with amended Rule 15c-211 will no longer be eligible for quotation on the OTC Markets, effectively eliminating their public quotation in the United States. Amended Rule 15c-211 requires that broker-dealers obtain and review basic information about... Read More »
  • New EEOC Guidance on COVID-19 Vaccinations in the Workplace

    New EEOC Guidance on COVID-19 Vaccinations in the Workplace

    On May 28, 2021, the United States Equal Employment Opportunity Commission (“EEOC”) released new guidance regarding COVID-19 vaccinations in the workplace.  The new guidance clarifies some significant issues, including whether employers may require U.S. employees to be vaccinated (at least as a matter of U.S. federal law) and the types of incentives they may provide... Read More »
  • President Biden’s Made in America Tax Plan Would Treat More Cross-border Transactions as Inversion Transactions

    President Biden’s Made in America Tax Plan Would Treat More Cross-border Transactions as Inversion Transactions

    Generally, an “inversion” is a transaction in which a non-U.S. corporation directly or indirectly acquires substantially all of the properties held by a U.S. corporation or partnership, after which the former owners of that U.S. corporation or partnership are in control of the acquiring non-U.S. corporation. Inversion transactions can take many different forms.  Over the... Read More »
  • COVID-19 Safety Precautions Expose American Employers to New Wage and Hour Claims

    COVID-19 Safety Precautions Expose American Employers to New Wage and Hour Claims

    Two former employees of Cresco Labs have filed a collective and class action complaint in Illinois federal court, alleging that their employer failed to compensate its employees for time spent putting on and taking off personal protective equipment (“PPE”). Similarly, two employees of Walmart, Inc. filed a class and collective action complaint in California federal... Read More »
  • SPAC Talk:  Important Considerations for Private Companies Evaluating a SPAC Going-Public Transaction

    SPAC Talk: Important Considerations for Private Companies Evaluating a SPAC Going-Public Transaction

    One of the hottest going-public trends in 2020 and 2021 has been the rise of SPACs – Special Purpose Acquisition Companies – as a vehicle for private companies to go public. SPACs are shell companies that are formed, funded and taken public for the purpose of later acquiring an operating company. By merging with a... Read More »
  • UK to Adopt New Powers Over M&A Activity to Protect National Security

    UK to Adopt New Powers Over M&A Activity to Protect National Security

    Draft legislation currently being debated in the UK Parliament will introduce a new regime similar to that of the Committee on Foreign Investment in the United States (“CFIUS”) while maintaining the UK’s position as an attractive forum for business and an openness to foreign investment. While the National Security and Investment Act (“NSIA”) will not... Read More »
  • Critical Reporting Obligation: Canadian-Owned U.S. Corporations and Disregarded Entities

    Critical Reporting Obligation: Canadian-Owned U.S. Corporations and Disregarded Entities

    Canadian persons and entities owning a significant interest in a U.S. corporation or U.S. entity classified as a “disregarded entity” for U.S. federal income tax purposes should ensure they are compliant with IRS Form 5472 filing requirements to avoid substantial U.S. federal income tax penalties. IRS Form 5472, “Information Return of a 25% Foreign-Owned U.S.... Read More »
  • Managing Workplace Safety in the COVID-19 Era

    The workplace safety framework in the United States is difficult to navigate at its best.  Since the beginning of the COVID-19 global health emergency, employers have faced increasingly complex challenges involving inconsistent and conflicting guidance regarding workplace safety regulations and best practices.  Since taking office in January 2021, the Biden administration has initiated the process... Read More »
  • FINRA Provides Informal Guidance for Canadian Issuers

    FINRA Provides Informal Guidance for Canadian Issuers

    The Financial Industry Regulatory, Inc. (“FINRA”) has recently provided our firm with informal guidance that, in accordance with the principles of the multijurisdictional disclosure system (“MJDS”), a Canadian issuer that is undertaking a U.S. registered public offering may count its reporting history in Canada (along with any reporting history in the United States) toward the... Read More »
  • Recent Hart-Scott Rodino Developments

    Canadian companies engaged in M&A transactions with connections to the United States should be aware of recent changes to the rules under the Hart-Scott Rodino (HSR) Act. On February 2, 2021, the US Federal Trade Commission (FTC) announced the annual adjustment of the thresholds that trigger premerger reporting obligations (and the mandatory waiting period) under... Read More »
  • Often Overlooked Exception to Withholding and Reporting Requirements under FATCA

    Often Overlooked Exception to Withholding and Reporting Requirements under FATCA

    An often overlooked exception to U.S. withholding taxes may result in a lower overall U.S. tax burden. The Foreign Account Tax Compliance Act (“FATCA”) was enacted in an effort to ensure that U.S. taxpayers could not avoid U.S. federal income tax on investment income through the use of non-U.S. accounts or entities. FATCA requires that... Read More »
  • The COVID-19 Vaccine – Next Steps for Canadian Employers with U.S. Operations

    The COVID-19 Vaccine – Next Steps for Canadian Employers with U.S. Operations

    The United States is currently experiencing the largest surge in COVID-19 cases since the global health emergency began.  In the past several weeks, the United States Food and Drug Administration (“FDA”) granted emergency-use authorization to the Pfizer and Moderna COVID-19 vaccines, prompting employers to ask whether they may require employees to be vaccinated. It is... Read More »
  • U.S. Department of Labor Rule Broadens the Classification of Independent Contractors

    The United States Department of Labor (DOL) has issued a proposed rule addressing the definition of “independent contractor” in the context of the Fair Labor Standards Act (FLSA). Canadian companies with a presence in the United States should monitor the proposed rule and its impacts on their American operations.  If adopted, the proposed rule would... Read More »
  • “ECI” and its Trap for Unwary Canadian Investors in Partnerships and LLCs

    “ECI” and its Trap for Unwary Canadian Investors in Partnerships and LLCs

    A Canadian which holds a partnership interest in a U.S. or non-U.S. partnership that has “effectively connected income” (“ECI”) is subject to U.S. tax withholding with respect to the Canadian partner’s allocable share of the partnership’s ECI.  That withholding tax must be remitted by the partnership to the IRS irrespective of whether any distributions are... Read More »
  • Revised Definition of an “Accredited Investor”

    Revised Definition of an “Accredited Investor”

    Effective December 8, 2020, the SEC’s definition of an “accredited investor” that is eligible to purchase securities in a private placement will be expanded to cover additional categories of investors, including investment advisers, individuals with certain professional certifications, and certain family offices, Indian tribes, governmental bodies, LLCs, funds and others.  For more details, click here.... Read More »
  • Proposed SEC Exemption for Certain Finders

    On October 7, 2020, the Securities and Exchange Commission (”SEC”) proposed a new limited, conditional exemption from broker-dealer registration requirements of Section 15(a) of the Securities and Exchange Act of 1934, as amended (“Exchange Act”) for “finders” who assist issuers with raising capital in private markets from accredited investors. The proposed exemption would permit natural... Read More »
  • Dorsey releases new Guide for Canadian issuers to trade on the OTCQX and OTCQB

    Dorsey releases new Guide for Canadian issuers to trade on the OTCQX and OTCQB

    In conjunction with the OTC Markets, Dorsey has updated its Guide to Joining the OTCQX or the OTCQB Markets for Canadian and other Foreign issuers. Canadian issuers who trade on a qualified foreign stock exchange (which include the Toronto Stock Exchange, TSX Venture Exchange, Canadian Securities Exchange and the Aequitas NEO Exchange) and who meet... Read More »
  • At-the-Market (ATM) Offerings for Canadian Issuers

    At-the-Market (ATM) Offerings for Canadian Issuers

    2020 is shaping up to the be the biggest year ever for at-the-market (ATM) financing programs, and Canada-US cross-listed companies are getting their share of the financing.  In the last three months alone, at least 14 Canadian issuers that are listed on a NYSE or Nasdaq exchange have filed with the SEC for at-the-market (ATM)... Read More »
  • The “Pot” Thickens – IRS Releases Marijuana Industry Resources

    The “Pot” Thickens – IRS Releases Marijuana Industry Resources

    The IRS has released a new webpage dedicated to the marijuana industry to help growers, processors, researchers and retailers understand and comply with their U.S. federal income tax responsibilities. The IRS Marijuana Industry webpage covers numerous topics that may be relevant for businesses directly engaged in, or related to, the cultivation, processing and sale of... Read More »
  • Mining Companies: Don’t Let Your QP Refuse to Provide Required SEC Consents

    Mining Companies: Don’t Let Your QP Refuse to Provide Required SEC Consents

    We are seeing a significant increase in cases where a qualified person (QP) or related engineering firm has prepared a technical report or other required disclosure for a mining company, but then resisted, or outright refused, to provide the written consent that the mining company is required to obtain in order to be permitted to... Read More »
  • Trump Administration Re-imposes Sec. 232 Tariff on Canadian Primary Aluminum

    On August 16, 2020, the United States re-imposed Section 232 tariffs on Canadian-origin primary aluminum imports, adding another twist to the long-standing trade dispute with Canada over its aluminum exports to the United States.  This tariff action followed a proclamation issued by President Trump dated 6 August 2020.[1]  Citing an 87% surge in imports of... Read More »
  • Covid-19 Tax Relief Makes Winners out of Losses (for some)

    Covid-19 Tax Relief Makes Winners out of Losses (for some)

    The CARES Act, signed into law on March 27, 2020 in the wake of the onset of the Covid-19 pandemic, contained numerous changes to U.S. federal income tax law. One such change applied to the deductibility of net operating losses (“NOLs”). Legislation enacted in December 2017 commonly known as the “Tax Cuts and Jobs Act”... Read More »
  • COVID-19 Delays EIN Process for Canadian Applicants

    Current closures at the Internal Revenue Service (“IRS”) have caused significant delays in obtaining an Employer Identification Number (“EIN”) for some U.S. businesses formed by Canadians, including new U.S. subsidiaries formed by Canadian companies. An EIN is a nine-digit number that the IRS assigns to businesses, which is necessary for many essential tasks, including making... Read More »
  • SEC Clarifies the Compliance Deadline for New Mining Disclosure Rules

    On April 29, 2020, the SEC issued new Compliance & Disclosure Interpretations (the “New C&DIs”) that clarified the compliance deadline for many mining companies that file with the SEC on non-MJDS forms such as Form 10-K or Form 20-F to comply with the SEC’s new mining disclosure rules in Subpart 1300 of Regulation S-K. The... Read More »
  • NASDAQ and NYSE Provide Temporary Relief from Certain Continued Listing Requirements

    In response to the COVID-19 pandemic, NASDAQ and NYSE are providing temporary relief from certain continued listing standards. As of now, NYSE American has not provided similar relief from its continued listing standards as a result of COVID-19. Specifically, NASDAQ is providing relief from the continued listing bid price ($1.00) and market value of publicly... Read More »
  • OTC Markets Provides Temporary Relief to OTCQX and OTCQB Issuers Due to Covid-19

    The OTC Markets Group Inc. (the “OTC”) has announced that due to the Covid-19 pandemic, it is providing relief to certain OTCQB and OTCQX issuers until June 30, 2020. Until June 30, 2020, no new compliance deficiency notices will be sent related to having a low bid price, low market capitalization, or low market value... Read More »
  • SEC Filing Deadlines for Canadian Issuers

    During the current coronavirus crisis, the SEC has issued an Order providing filing extensions that apply to Canadian issuers. The following is a summary of the SEC’s new filing requirements. Form 40-F For Canadian issuers eligible to file their SEC annual report on Form 40-F under the Canada-U.S. Multi-jurisdictional Disclosure System (“MJDS”), Form 40-F continues... Read More »
  • Stranded Canadians Taxed in the Time of Covid-19

    As Covid-19 continues to spread, many countries, including the United States and Canada, are increasingly closing their borders in an attempt to slow the rate of infection. This precaution may, however, have unintended tax consequences for Canadians who find themselves stranded on the U.S. side of the border for the duration of the shutdown. Under... Read More »
  • SEC Issues Guidance on COVID-19 Disclosures and Other Matters

    On March 25, the SEC issued CF Disclosure Guidance Topic No. 9 that provides the Division of Corporation Finance’s current views regarding disclosure and other securities law obligations that companies should consider with respect to COVID-19 and related business and market disruptions. In the guidance, the SEC recognizes that it may be difficult to assess... Read More »
  • New SEC Proposed Amendments Seek to Improve and Harmonize Private Offering Exemptions

    On March 4, 2020, the Securities and Exchange Commission (the “Commission”) proposed amendments to the private offering exemptive framework under the Securities Act of 1933, as amended (the “Securities Act”) to “simplify, harmonize, and improve certain aspects of the framework” with the goal of promoting capital formation while maintaining investor protections. The current private offering... Read More »
  • 20-F and 40-F Filers Don’t Get Many of the Benefits of the Amended Accelerated Filer Definition

    For Form 10-K filers, the SEC’s March 12 amendments to the “accelerated filer” definition made sense and helped better coordinate the “smaller reporting company” definition with the “accelerated filer” definition. The amendments would, in part, exclude from the definition of “accelerated filer” and “large accelerated filer” issuers that are eligible to be a smaller reporting... Read More »
  • SEC Seeks to Encourage Registered Debt Offerings by Amending Financial Statement Requirements

    On March 2, the Securities and Exchange Commission adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The final amendments amend Rule 3-10 of Regulation S-X and partially relocate its provisions to new Rule 13-01 and completely relocate Rule 3-16 into new Rule 13-02... Read More »
  • SEC Reminds Companies of Disclosure Obligations Relating to Coronavirus

    In connection with the order issued by the Securities and Exchange Commission on March 4 providing filing relief for companies that are affected by the coronavirus, the Commission reminded all companies to be vigilant regarding their disclosure obligations related to the evolving coronavirus scenario. A company’s assessment of, and plans for addressing, material risks to... Read More »
  • New Disclosure Requirements for OTCQB Quoted Issuers

    Issuers quoted on the OTCQB are now required to promptly disclose the issuance of any promissory notes, convertible notes, convertible debentures, or any other debt instruments that may be converted into a class of the issuer’s equity securities. In addition, OTCQB issuers are now required to promptly post copies on the OTC Disclosure & News... Read More »
  • Trump Administration Proposes Revisions to Streamline Environmental Review Process under National Environmental Policy Act

    For many mining and infrastructure projects in the United States, a primary cause of permitting uncertainty, expense, and delay is compliance with the environmental review process under the National Environmental Policy Act (NEPA). On January 10, 2020, the Council on Environmental Quality (“CEQ”) proposed comprehensive revisions to the regulations implementing the NEPA. 85 Fed. Reg.... Read More »
  • Independent Contractors Under U.S. Law: Knowing Your ABCs

    A recent trend in U.S. employment law has been the adoption of stricter and stricter tests for when a worker may be classified as an independent contractor rather than an employee. Independent contractor relationships are often less expensive and easier for employers to administer since employers are not responsible for providing healthcare benefits to independent... Read More »
  • CFIUS Expands Foreign Investments Subject to Scrutiny with Significant Carve-out for Canadian, Australian and U.K. Investors

    On January 17, 2020, the Committee on Foreign Investment in the United States (“CFIUS”) published two new rules that will greatly expand the scope of minority investments by foreign persons in U.S. businesses that are subject to CFIUS review. The rules take effect on February 13, 2020. Importantly for certain Canadian investors, the rules include... Read More »
  • SEC Provides Guidance on the Use of Metrics in MD&A; Also Proposes Amendments to Simplify and Modernize MD&A and Related Financial Disclosures

    On January 30, 2020, the SEC issued new guidance on the use of metrics in a company’s MD&A, as well as proposed amendments that would significantly simplify and modernize the requirements for MD&A and related financial disclosures. The guidance and proposed amendments will be of most interest to companies that file with the SEC on... Read More »
  • OTCQX Proposed Rule Changes

    The OTC Markets Group published this week proposed amendments to the OTCQX Rules for U.S. Companies, U.S. Banks and International Companies. The rules will become effective on December 12, 2019; comments will be accepted until December 11, 2019. To qualify for the OTCQX, International Companies must, among other qualifications, have a class of securities traded... Read More »
  • When Canadian Investors Must Report Investments (including those in Canada!) to the SEC

    On September 17, 2019, the Financial Post reported that British Columbia Investment Management Corporation (BCIMC), one of Canada’s largest pension funds, inadvertently failed to report to the U.S. Securities and Exchange Commission (SEC) $2.46 billion of its holdings in 98 Canadian companies, accounting for more than 20 percent of the investments required to be reported... Read More »
  • Delaware Takes Action Against Formation of Cannabis Companies

    As reported earlier today on our Cannabis blog, the Delaware Secretary of State’s office is now threatening to prevent the formation of companies that it identifies as having the purpose of being involved in the cannabis industry. For more information, see dorseycann.com/delaware-takes-action-against-formation-of-cannabis-companies/. Read More »
  • What Mining Companies Need to Accomplish Before 2021

    In November 2018, the U.S. Securities and Exchange Commission (SEC) adopted new mining disclosure standards applicable to all SEC reporting companies, except those that report exclusively under the Multijurisdictional Disclosure System (MJDS). While the new rules will not take effect until 2021, that date is quickly approaching. Mining and mineral royalty companies should brook no... Read More »
  • How to Avoid Being Required to Obtain Audit Partner Consents

    SEC registration statements and certain annual reports require consents of experts (e.g., technical experts, audit firms, and investment banks that provide fairness opinions) named in the disclosure document. A recent development in Canada is that audit partners are now named in audit reports filed with audited financial statements. From an SEC perspective, the naming of... Read More »
  • Stock Price Flexibility on the NYSE American

    Many of our Canadian clients have decided to list their stock in the United States on the NYSE American exchange, instead of Nasdaq. Why? Stock price flexibility is a big factor. In Canada, it’s considered perfectly normal for a company to have stock with a price of $2, $1, $0.50 or even $0.10 per share.... Read More »
  • Employment Terms and Terminations: It’s Different in the States

    Employers sometimes include fixed terms of employment in their employment agreement. Sometimes a fixed term is meant to prompt the parties to renegotiate at the end of the term. Sometimes a fixed term is meant to document the point in time where the parties have, in fact, agreed that the employment will end. Sometimes a... Read More »
  • Inline XBRL for Foreign Private Issuers – New SEC Guidance

    Yesterday, the SEC published guidance regarding Inline XBRL. The SEC adopted rules for Inline XBRL in June 2018. For those of you whose first question is “what is Inline XBRL?”, Inline XBRL allows the XBRL data to be embedded directly into an “EDGARized” HTML document. This eliminates the need to prepare a separate XBRL exhibit.... Read More »
  • SEC Proposes to Greatly Expand Exemption from SOX 404 Auditor Attestation Requirement

    The SEC has proposed revisions to the definition of an “accelerated filer” that would exempt most companies that have both a public float of common equity of less than $700 million and annual revenues of less than $100 million from the requirements of Section 404 of the Sarbanes-Oxley Act (SOX 404). If adopted, these revisions... Read More »
  • Trump Administration Targets Canadian and other Foreign Companies Involved in Cuba

    Canadian companies with interests in Cuba should take note of our recent eUpdate, Trump Administration Allows Lawsuits Against Persons Who Have Used Assets Confiscated by the Cuban Government, Imposes More Sanctions on Venezuela and Nicaragua, regarding new potential exposure to litigation in the United States. On April 17, 2019, the Trump Administration announced that U.S.... Read More »
  • US-Mexico-Canada Agreement Faces Uncertain Path Through U.S. Congress

    The governments of the United States, Mexico, and Canada signed a trade agreement (“USMCA”) in November 2018, which would replace the existing North American Free Trade Agreement (“NAFTA”). The Trump administration has begun seeking support in the U.S. Congress for USMCA. The path for the agreement, however, remains uncertain, with criticisms leveled against USMCA from... Read More »
  • Upcoming Webinar on the SEC’s New Mining Disclosure Rules – 2/26

    You are invited to join us on February 26, 2019, at 11 am PT/2 pm ET, for a webinar discussing the SEC’s new mining disclosure rules. On October 31, 2018, the SEC adopted final rules effecting a complete overhaul of the technical disclosure requirements applicable to companies engaged in material mining operations, including royalties. Upon... Read More »
  • A WARN Act Warning

    Under U.S. law, large employers have an obligation to notify their employees at least 60 days before a “plant closing” or “mass layoff.” This requirement can have serious implications for Canadian companies engaged in M&A deals with U.S. companies. The U.S. Federal Worker Adjustment and Retraining Notification Act (“WARN Act”) requires employers with 100 or... Read More »
  • What Cross-listed Canadian Companies Need to Know About the Impact of the U.S. Government Shutdown on SEC Operations

    As a result of the partial U.S. government shutdown that began on December 22, 2018, the U.S. Securities and Exchange Commission (SEC), one of nine federal agencies affected, recently published its Operations Plan Under a Lapse in Appropriations and Government Shutdown (sec.gov/files/sec-plan-of-operations-during-lapse-in-appropriations-2018.pdf), which went into effect on December 27, 2018. The Operations Plan offers important... Read More »
  • Canada-U.S. Trade in Marijuana-Related Products is Fraught with Peril

    Now that Canada allows using and producing marijuana and marijuana-related products, and bordering U.S. states like Washington, Maine, and Michigan have similarly relaxed marijuana-related laws, it seems natural that industries on both sides of the border will look for cross-border business opportunities. But cross-border transactions between the Canadian and U.S. marijuana industries face a potentially insurmountable... Read More »
  • Clarifying “Muddy Waters:” EPA and Army Corps Propose Revisions to the Scope of CWA Jurisdiction

    Canadian companies interested in cross-border natural resource projects should be aware of a regulatory development in the United States that significantly revises the jurisdictional scope of the Clean Water Act. On December 11, 2018, two federal agencies, the Environmental Protection Agency and the U.S. Army Corps of Engineers, proposed a new rule dramatically altering federal... Read More »
  • Reviewing Compensation Arrangements for Employees Subject to U.S. Income Tax Before Year-End Could Avoid Costly Tax Penalties

    We have written about this in the past [here], but the message bears repeating each year. It is easy to overlook that employment agreements, change-in-control agreements, and severance agreements with U.S. taxpayers frequently contain provisions that subject them to U.S. Internal Revenue Code Section 409A (“Section 409A”), and failure to comply can result in onerous tax... Read More »
  • The SEC Adopts New Rules Regarding Mining Disclosure

    On October 31, 2018, the United States Securities and Exchange Commission (the “SEC”) announced that it adopted rules to modernize mining property disclosure in order to harmonize SEC disclosure requirements with international standards. The SEC had proposed rules in June 2016 which received numerous comments and as a result a number of changes were made... Read More »
  • Canadians Involved in Cannabis Industry Should be Careful Crossing the U.S. Border

    With the legalization of marijuana going into effect in Canada tomorrow, October 17, we encourage our Canadian contacts to be careful when crossing the U.S. Border. For more information, see the recent article authored by Dorsey’s Immigration Practice Group posted on our Cannabis Blog here: dorseycann.com/at-the-intersection-of-cannabis-and-u-s-immigration-law-issues-that-canadians-and-other-non-citizens-should-be-aware-of/. Read More »
  • NAFTA Replacement Announced

    On Sunday, September 30, 2018, the U.S. and Canadian governments announced that they had reached agreement on a new trilateral trade agreement with Mexico, which will replace the North American Free Trade Agreement (NAFTA). This long-awaited text, released late in the day as the “United States-Mexico-Canada Agreement (USMCA),” is now available for public inspection.[1] The... Read More »
  • The SEC’s Recent Settlement with Tesla and Elon Musk Teaches Us a Valuable Corporate Governance Lesson

    The SEC’s settlement with Tesla and Elon Musk teaches us some important corporate governance lessons on monitoring and vetting executive use of social media. As background, on August 7, 2018, the markets were surprised by a series of tweets initiated by Elon Musk, the CEO of Tesla, Inc., in which Musk mused about taking Tesla... Read More »
  • Hostile Work Environment Harassment: It’s Whatever a Jury Says it is

    When one thinks of the law, one often thinks of hard and fast rules. Employers cannot fire employees for a discriminatory or a retaliatory reason. Employees must be paid at least minimum wage. And so on. The law governing hostile work environment claims in the United States, however, is not so easily defined and applied.... Read More »
  • What if You Miss the Deadline to File a Form D?

    As a continuation of our August 9 post regarding the deadline for Canadian companies to file a Form D for a private placement in the United States, we now address the questions, “What if our company missed the deadline to file a Form D with the SEC?” And, more importantly, “Have we lost our ability to... Read More »
  • Could Your Form D Already be Late by the Date of Closing?

    Canadian companies that sell securities to U.S. investors under Regulation D must file a Form D with the SEC within 15 days after “the date of first sale.” Most people would assume that the closing of the offering is the date of sale. However, in the instructions to Form D, the SEC explains that the... Read More »
  • U.S. Employment in the #MeToo Era

    The United States isn’t the only country addressing its history of gender inequality, sexual abuse, and sexual harassment. However, the United States is having its own unique experience in doing so. For U.S. employers, the current focus on these issues poses challenges, but also opportunities to address problems of diversity and harassment in the workplace.... Read More »
  • Proposed Rulemaking to Update Environmental Review Process under National Environmental Policy Act – How Your Company Can Participate

    One of the principal sources of uncertainty, expense, and delay in the permitting process for many mining and infrastructure projects in the United States, especially those generating public controversy, is compliance with the environmental review process under the National Environmental Policy Act (NEPA). On June 20, 2018, the Council on Environmental Quality (CEQ) issued an... Read More »
  • Analysis of the 60 Most Recent SEC Comment Letters Issued to Canadian Form 40-F Filers

    Since January 1, 2016, the SEC has publicly released its correspondence relating to 60 comment letters sent to Canadian issuers with respect to annual reports filed on Form 40-F pursuant to the Canada-U.S. Multi-Jurisdictional Disclosure System (MJDS). We have analyzed the content and key takeaways from these letters, including: The SEC’s most common areas of... Read More »
  • SEC Guidance on Cybersecurity Disclosure and Policies – Recap of Dorsey Webinar Presentation

    Earlier this week, a panel of Dorsey attorneys presented a webinar on the SEC’s recent guidance on cybersecurity disclosures and policies, which included a detailed walk-through of the SEC’s 2018 guidance, including issues related to enhanced disclosure, insider trading, and Reg FD policies. The panel also discussed the impact of the SEC’s guidance within the... Read More »
  • Canadian Cannabis Companies Begin to Trade on National Stock Exchanges in the United States

    With the listing on May 24th of Canopy Growth Corporation (Canopy) on the New York Stock Exchange (NYSE), both NASDAQ and the NYSE have permitted Canadian cannabis companies to trade on their respective exchanges. Canopy, the first Canadian cannabis company to list on the NYSE, follows Cronos Group Inc. (Cronos), which was the first Canadian... Read More »
  • U.S. Subsidiaries of Canadian Companies Face Imminent Reporting Deadline For Federal Survey

    Canadian companies with U.S. subsidiaries and investments should note upcoming deadlines for filing reports required by U.S. Department of Commerce rules. These mandatory reports are required to be filed with the Bureau of Economic Analysis (“BEA”) within the U.S. Department of Commerce by May 31, 2018, if made by hardcopy, or by June 30, 2018, if made... Read More »
  • Recent NYSE and NYSE American Announcements

    The NYSE has made a few recent announcements affecting the obligations of NYSE and NYSE American listed Canadian companies with respect to providing information to the exchange. An NYSE listed company that files its shareholder meeting materials (e.g., proxy, management information circular, proxy card, etc.) on EDGAR is no longer required to provide physical copies... Read More »
  • Foreign Corrupt Practices Act Requires More Than a Policy

    The recent settlement agreement between Kinross Gold Company and the Securities and Exchange Commission is a reminder to Canadian cross-listed companies that it is not enough to adopt a parent-company level anti-corruption policy designed to promote compliance with the Foreign Corrupt Practices Act (FCPA). Effective implementation and monitoring at the operating level is also needed.... Read More »
  • The Americans with Disabilities Act: A Brief Primer on the ADA

    Like Canada, the United States has federal legislation protecting employees with disabilities. While Canada has the Canadian Charter of Rights and Freedoms and the Canadian Human Rights Act, the United States has the Americans with Disabilities Act (“ADA”). While both Canadian and U.S. laws protect disabled employees from discrimination, the ADA has very specific procedures and... Read More »
  • A Reminder to Track Rule 701 Equity Awards to U.S. Residents

    Canadian companies relying on Rule 701 under the Securities Act of 1933 to exempt their U.S. awards of stock options and other types of compensatory equity (such as RSUs and PSUs), need to track on an ongoing basis the amount of grants being made in the United States. If they anticipate that the aggregate dollar... Read More »
  • Common U.S. Securities Problems with Canadian Stock-Based Compensation Plans

    We are frequently asked to review Canadian companies’ stock option, restricted share unit (RSU), performance share unit (PSU), deferred share unit (DSU), and other stock-based compensation plans for U.S. securities law purposes, because awards are expected to be made to U.S. residents. For companies that are cross-listed and file reports with the Securities and Exchange... Read More »
  • SEC Issues New Cybersecurity Guidance

    On February 26, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. The SEC’s new guidance reinforces and expands on its October 2011 guidance, emphasizing the importance of adopting sound cybersecurity policies and procedures and safeguards against insider trading in the event of a potentially material cybersecurity breach.... Read More »
  • Tax Reform to Impact Compensation Deduction Claimed by Foreign Private Issuers

    While the recently enacted U.S. tax reform legislation did not overhaul executive compensation to the extent proposed in early forms of the bill, Section 162(m) of the U.S. Internal Revenue Code was dramatically revised in a way that affects Canadian companies that file reports with the SEC and that employ, or may in the future... Read More »
  • Termination for Cause in the United States: It’s Whatever You Want it to Be

    The default rule in most U.S. states is at-will employment. This means that either the employee or the employer may terminate the employment relationship at any time, without notice, for any reason—other than a discriminatory or retaliatory reason. A reason is discriminatory if it is based upon an individual’s status as a member of a... Read More »
  • Status Check on the SEC’s Proposed Overhaul of the Mining Disclosure Regime (Part 2)

    The SEC is aiming to finalize its new mining disclosure rules within the next year, according to statements made last week by William Hinman, Director of the SEC’s Division of Corporation Finance, at the Securities Regulation Institute. For more details regarding the SEC’s original 2016 proposal to revamp the rules, and reactions by industry, see... Read More »
  • Changes to Upcoming Auditor’s Reports

    The United States Public Company Accounting Oversight Board (PCAOB) issued new standards for auditor’s reports that will effect Canadian issuers who are SEC registered. The initial changes go into effect for issuers with fiscal years ending after December 15, 2017. Our understanding is that some Canadian auditors for issuers who are MJDS eligible will try... Read More »
  • Status Check on the SEC’s Proposed Overhaul of the Mining Disclosure Regime

    About 18 months have passed since the U.S. Securities and Exchange Commission (SEC) published its bold attempt to modernize the disclosure requirements for mining companies that are listed on U.S. stock exchanges or otherwise report to the SEC. With final rules not yet adopted, the fight for a streamlined reporting regime continues. The SEC’s proposed... Read More »
  • California Opens Applications for Temporary Cannabis Licenses

    California is now accepting applications for temporary cannabis licenses. For more information, see www.dorsey.com/newsresources/publications/client-alerts/2017/12/ca-opens-applications-for-temporary-cannabis. Read More »
  • A Win For The Mining Industry: EPA Declines To Impose CERCLA 108(b) Financial Responsibility Requirements

    Financial assurance and reclamation bond requirements can be a significant cost and regulatory burden for Canadian issuers with mining projects in the United States. Over the last several years, companies with U.S. mining projects have waited while the U.S. Environmental Protection Agency (EPA) has considered expanding the financial responsibility requirements applicable to the hardrock mining... Read More »
  • California Adopts Emergency Cannabis Regulations for Licensing Beginning on January 1, 2018

    On November 16, 2017, California published the long awaited rules and regulations to implement voter approved Proposition 64, the Adult Use of Cannabis Act of 2016, which legalized adult use of cannabis in the State of California. The California Legislature passed and the Governor signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety... Read More »
  • Do You Need a Risk Factor for Proposed U.S. Federal Income Tax Reform?

    Tax reform efforts by Congress are ongoing, and the substance of the tax bills remains fluid. However, for foreign corporations with U.S. operations, there are some specific potential risks to consider, such as additional limitations on the deductibility of interest, the migration from a “worldwide” system of taxation to a territorial system, and the use... Read More »
  • Annual Report Reminders for Foreign Private Issuers

    There are a couple of recent developments that we would like to remind issuers to keep in mind for their upcoming annual reports. Foreign private issuers who prepare their financial statements in accordance with the International Financial Reporting Standards (“IFRS”) will be required to file their annual audited financial statements in XBRL format in respect... Read More »
  • Are Your Private Placement Documents Up To Date?

    Over the last few years, many Canadian junior resource companies and startup companies have cut back on their legal spend, not necessarily undertaking a legal review of each new private placement of securities, or limiting their review to a Canadian one. Yet over this same time frame, the applicable U.S. rules and relevant interpretations have... Read More »
  • Common U.S. Tax Withholding and Reporting Errors with Respect to Certain RSUs

    A Canadian company (the employer) historically has not issued equity-based awards to employees of its U.S. subsidiaries, but it now is considering doing so. Past posts have addressed potential U.S. income tax pitfalls and the need for careful review of the plan and award agreements prior to the grant of restricted stock units (RSUs) and... Read More »
  • Trump Administration Rulemaking Process to Redefine Scope of Clean Water Act – How Your Company Can Participate

    One of the most difficult and costly aspects of developing mining projects in the United States is the permitting requirements under the Clean Water Act (CWA). The Trump administration is currently undertaking a rulemaking process to examine and redefine the scope of the CWA. Companies with mining projects in the United States should consider participating... Read More »
  • Equifax Data Breach: Preliminary Lessons for the Adoption and Implementation of Insider Trading Policies

    The recent data breach at Equifax, a major credit rating agency, has provided an unexpected reminder of the importance of well-structured insider trading policies. Following last week’s announcement of the data breach, it was disclosed that certain Equifax executives, including its Chief Financial Officer, sold a portion of their holdings after the cyberattack was discovered,... Read More »
  • Regulation A+ May Become Available To SEC Reporting Issuers

    On September 5, 2017, the U.S. House of Representatives overwhelmingly passed (by a vote of 403-3) the Improving Access to Capital Act. The Act directs the SEC to amend Regulation A+ to allow SEC reporting issuers to use Regulation A+ when raising capital, and to deem their SEC periodic reports to satisfy the periodic and... Read More »
  • Exempt or Non-Exempt Employee Under U.S. Law? Even U.S. Employers Frequently Get it Wrong

    In the United States, employers are required to pay employees overtime (1.5 times the employee’s hourly rate) for hours worked over 40 per week. In some states, such as California, employers are required to pay overtime if employees work more than 8 hours in a day. Like Canada, U.S. employees may be exempt from overtime... Read More »
  • Loans to U.S. Subsidiaries Should Be Carefully Structured and Documented to Obtain U.S. Tax Benefits

    Canadian companies should carefully structure and document loans and advances to their U.S. subsidiaries. If loans to U.S. subsidiaries are not properly structured and documented, such loans may be recharacterized as equity investments for U.S. federal income tax purposes, and important U.S. tax benefits will be lost. Properly structured loans are treated as debt for... Read More »
  • NYSE Rule Change For Dividends and Distributions

    Readers listed on the NYSE will want to note a recent rule change. Effective immediately, notification of public announcements regarding dividends or stock distributions must be provided to the NYSE at least ten minutes prior to public release, even after market close. Read more in the post from our partner Jason Brenkert here: https://governancecomplianceinsider.com/nyse-rule-change-requires-ten-minutes-advance-notice-of-public-announcement-of-dividends-or-stock-distributions/ Read More »
  • Interesting Facts About U.S. Private Placements

    This week the SEC Division of Economic and Risk Analysis published a new report including a wealth of data regarding recent trends in public offerings and private placements of securities. The report includes a number of interesting facts about U.S. private placement practice, including: In the last few years, issuers have raised 2-3 times more... Read More »
  • Unexpected Risks of Early Exercise Incentive Stock Options

    Canadian companies and their outside counsel occasionally ask about the ability to grant early exercise incentive stock options (“ISOs”) to limit the impact of the U.S. alternative minimum tax (“AMT”) to their U.S. employees. However, due to fairly counterintuitive U.S. federal tax regulations, structuring options in this manner may expose optionees to negative tax consequences... Read More »
  • Trump Seeks to Uproot the Obama Climate Change Agenda

    Citing concerns over economic harm, President Trump has targeted his predecessor’s climate change agenda. He has sought reversal of a number of key Obama regulations, directives, and other actions, including the Clean Power Plan and the U.S. participation in the Paris accords. The overall blueprint for these actions is found in his March 2017 Executive... Read More »
  • Delaware Corporations – Don’t Authorize Too Many Shares, or “No Par Value” Shares

    Occasionally, we will see Canadians or Canadian companies assume that they can authorize as many shares for issuance as they want when forming a Delaware corporation, or that they can authorize shares without par value. That’s technically true, but Delaware will make you pay dearly for it, up to $180,000 per company per year. A... Read More »
  • Damages: Making Anti-Harassment Policies Work in the United States

    Harassment has been in the news a lot lately in the United States, with several high-profile terminations at well-known companies. Companies are losing millions of dollars, not just in settlements and verdicts, but in lost customers and bad publicity. The Equal Employment Opportunity Commission, or EEOC, is the administrative agency responsible for enforcing laws prohibiting... Read More »
  • Foreign Private Issuer Calculation Date for Calendar Year-End Foreign Issuers is June 30, 2017

    As a reminder to all foreign issuers that have a December 31 fiscal year end, the upcoming end of their second fiscal quarter, June 30, 2017, will be the calculation date for their status as a foreign private issuer (“FPI”) for purposes of both the United States Securities Act of 1933, as amended (the “Securities... Read More »
  • Exporting Products Across the Border – Avoiding Product Liability and Other Litigation Risks in the United States

    Canadian companies exporting products across the border into U.S. markets face significant risks of litigation or regulatory action arising from products sold and distributed in the United States. In a recent article, our colleague Kent Schmidt outlines ideas for managing these risks and creating a litigation risk profile around the four key areas of vulnerability:... Read More »
  • Trump Administration Announces NAFTA Renegotiation

    After months of public pronouncements on the future, including threatened withdrawal from, the North American Free Trade Agreement (NAFTA), the Trump Administration announced on May 18, 2017, its intention to begin negotiations with Canada and Mexico. Signed by Robert Lighthizer, the newly confirmed U.S. Trade Representative, the notification letters to Congressional leaders do not contain... Read More »
  • Tax Consequences to U.S. Shareholders of Holding Shares in a Passive Foreign Investment Company or PFIC

    If a non-U.S. corporation (the “Company”) is a “passive foreign investment company” or “PFIC” for any tax year during which a U.S. shareholder owns shares in the Company, certain adverse U.S. federal income tax consequences of the acquisition, ownership, and disposition of shares will generally apply to such U.S. shareholder. A U.S. shareholder will be... Read More »
  • State Securities Laws – Granting Options and Equity Comp in the United States

    A Canadian company that proposes to grant stock options or other types of equity compensation to persons in the United States must comply with the securities laws of the state in which the recipient is located, unless the type of equity being issued (e.g., the underlying common shares, in the case of options to purchase... Read More »
  • Protect Your Intellectual Property in Cross-Border Distributor Relationships

    Canadian manufacturers who sell products through U.S. distributors should ensure that they take appropriate action to establish their U.S. intellectual property rights, and to deal clearly with those rights in their cross-border distribution agreements. In a recent post on Dorsey’s IP blog, The TMCA, Sandra Edelman discusses the difficulties encountered by Covertech Fabricating, a Canadian... Read More »
  • Compensation to Newsletter Writers Must Be Disclosed

    On April 10, 2017, the SEC’s Division of Enforcement brought enforcement actions against 27 individuals and entities behind various alleged stock promotion schemes. These actions arose when public companies, through promoters or communications firms, hired newsletter writers to generate publicity for their securities without publicly disclosing that the writers were being paid. While it is... Read More »
  • RSU Awards to U.S. Taxpayers Require Careful Review Before Grant

    Recently we blogged about pitfalls and potential adverse tax consequences for U.S. taxpayers with respect to deferred share unit awards that pay out following the participant’s termination of services. Read that blog entry here. But what about restricted share units (RSUs) that are subject to vesting based on continued service and that are settled/paid out... Read More »
  • Despite Trump Approval, Keystone XL Pipeline Still has Hurdles to Cross

    The Trump administration recently issued a presidential permit to TransCanada to operate and construct the Keystone XL pipeline. The presidential permit grants permission to construct, connect, operate, and maintain the pipeline facilities at the international border between the United States and Canada, covering approximately 1.2 miles of pipeline. The remaining 1,200 miles of Keystone XL... Read More »
  • The Danger of Paying Finder’s Fees to Unregistered Broker-Dealers

    We get asked from time-to-time whether it is advisable for issuers to pay fees to unregistered “finders” for introducing potential investors in the United States to the issuer in connection with securities offerings. The short answer is “no.” Most finders are engaged by issuers under finder’s, advisory, or other arrangements, which typically require payment of... Read More »
  • Damages: The Dark Side of Having Employees in the United States

    Canadian employment law is, in many ways, far more employee favorable than U.S. employment law. With the exception of a few states, employment in the United States is “at-will.” This generally means that either the employer or the employee may terminate the employment relationship without cause and without notice, so long as the reason for... Read More »
  • United States Moves to T+2 Securities Settlement

    This week, the SEC approved a rule that would require broker-dealers to settle most securities transactions on a T+2 basis (shortening the current regime from T+3), effective September 5, 2017. See additional information in the post from our partner Jason Brenkert here. Will Canadian regulators follow suit? Read More »
  • Cross-Border Loan Transactions: Supplementing Canadian Law Governed Loan Documents with Collateral and Guaranty Documents Governed by U.S. Law

    Many cross-border loan transactions involve subsidiaries that are organized in the United States and/or U.S. based collateral. To the extent that the underlying loan is made to a Canadian borrower by a Canadian lender, these transactions are typically documented with loan agreements governed by Canadian law (often under the law of the Province where the primary... Read More »
  • Compliance with XBRL for Foreign Private Issuers that Prepare their Financial Statements in Accordance with IFRS Required Beginning with Annual Reports for Fiscal Periods Ending on or after December 15, 2017

    On March 1, 2017, the United States Securities and Exchange Commission (SEC) published the taxonomy for the eXtensible Business Reporting Language (XBRL) for financial statements prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board (IFRS). Accordingly, foreign private issuers that prepare their financial statements in accordance with IFRS... Read More »
  • When Will a Canadian Corporation be Treated as a Passive Foreign Investment Company?

    A Canadian corporation will generally be a passive foreign investment company or “PFIC” if, for a tax year, (a) 75% or more of its gross income is passive income (the “PFIC income test”) or (b) 50% or more of the value of its assets either produce passive income or are held for the production of... Read More »
  • Resource Extraction Disclosure Requirements are Dumped

    Canadian miners and oil & gas companies should be aware that on February 14, 2017, President Trump approved a joint resolution of Congress that disapproved a recent SEC rule requiring specific disclosure by resource extraction issues. The obligation to report was imposed by Rule 13q-1 under the Exchange Act. The rules would have required resource... Read More »
  • Impact of New Administration on Natural Resources Development in United States

    Anyone who has owned or operated a project involving public lands in the United States knows of the complex jigsaw puzzle of land ownership that defines the landscape of the United States. Jurisdictional governance is divided among Federal, state, Indian, and private ownership, resulting in regulatory tides to which natural resources, energy, and mining projects... Read More »
  • SEC Issues No Action Letter Regarding Canadian Companies’ Registration of Rights Offerings on MJDS Form F-7

    In December 2015, the Canadian Securities Administrators (CSA) announced an amended regime for a prospectus-exempt rights offering in Canada. This amended regime allows certain public companies in Canada to conduct a prospectus-exempt rights offering without prior CSA review of the rights offering circular, and using a greatly simplified rights offering circular that assumes, without incorporation... Read More »
  • OTCQX Update

    In recent years, many Canadian companies have sought to create a U.S. market for their shares by listing on the OTCQX. Qualifying Canadian companies that have their primary listing on the Toronto Stock Exchange, the TSX Venture Exchange or the Canadian Securities Exchange may generally obtain a quotation on the OTCQX or the next lower... Read More »
  • DSU Plans Require Careful Review to Avoid Adverse U.S. Tax Treatment

    A Canadian company is planning to adopt a deferred share unit plan (DSU plan) for its directors. Only one or two of its directors are U.S. citizens or U.S. residents (“U.S. Directors”). With only one or two U.S. Directors, you wonder whether it is important to consider U.S. tax implications. The answer is a resounding... Read More »
  • New Approach for the Assumption of Options in M&A

    A Canadian SEC reporting company that looks to acquire a company with outstanding equity grants in the United States will frequently need to address the question: What alternatives are available for the assumption of the target’s outstanding options or other equity-based compensatory awards? Under U.S. law, both the grant of the equity award and the... Read More »
  • Reductions in Force and the Older Workers Benefit Protection Act

    It is generally a good idea for companies not to disclose biographical information about their employees, such as marital status, religion, or age. Good HR professionals counsel managers not to ask for such information during interviews, for example, in order to avoid claims of discrimination in hiring. Under U.S. law, however, there is an important... Read More »
  • Reminder of Required IRS Cost Basis Reporting for Canadian Companies

    Canadian companies should be aware that if they engage in certain “organizational actions” that affect the tax basis of shares held by U.S. persons (including many types of acquisitions and business combinations where shares are issued to U.S. persons), they are required by the U.S. tax laws to evaluate the effect of the action on... Read More »
  • SEC Provides Clarification of Foreign Private Issuer Calculation

    For Canadian issuers and their advisers, compliance with U.S. securities laws generally begins with the question: Is the issuer a “foreign private issuer”? The FPI definition, which is set out in Rule 405 under the Securities Act and 3b-4(c) of the Exchange Act, involves the following four inquiries: Are more than 50% of the issuer’s... Read More »
  • What “At-Will” Employment Means for Canadian Companies with U.S. Employees

    One of the biggest differences between employment in Canada and employment in the United States is the fact that, with the exception of a few jurisdictions, employment in the United States is “at will.”  While in Canada employees who are terminated without cause often must be paid severance, in the absence of a contract requiring... Read More »
  • The Importance of Monitoring Your Foreign Private Issuer Status

    Being a “foreign private issuer” is very important to a Canadian company’s treatment under U.S. securities laws.  If a Canadian company ceases to qualify as a foreign private issuer under the rules of the U.S. Securities Exchange Commission (SEC), it must generally: Change the way in which it offers and sells its own securities to... Read More »
  • Staying Onside the Regulation D Bad Boy Disqualifications

    Most non-underwritten private placements of securities by Canadian companies to U.S. investors are made in reliance upon Rule 506 of Regulation D. Since September 2013, this exemption has been subject to “bad boy disqualifications.” Generally speaking, a company is prohibited from relying on Rule 506 if the company, any of its predecessors, any of its... Read More »
  • Canadian Plan of Arrangement – Do I Need U.S. Counsel?

    You’re a Canadian public company with no U.S. operations.  You don’t file reports with the SEC.  You plan to merge with another Canadian public company in a share-for-share exchange, structured as a Canadian plan of arrangement.  Do you need to hire U.S. counsel to assist on this Canadian deal? Yes. Canadian public companies invariably have... Read More »