Employment / Litigation

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 contractors and do not have to pay employment taxes for their independent contractors. Many workers also prefer to be classified as independent contractors because they believe that they will have more freedom to work on behalf of multiple customers as independent contractors.[1] The actual legal test for whether a worker may be classified as an independent contractor varies...

International Trade / M&A / Securities

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 an exemption for the next two years. These new rules implement changes in U.S. law mandated by Congress in its 2018 Foreign Investment Risk Review Modernization Act (“FIRRMA”). The first rule expands coverage over minority investments by foreign persons in U.S. businesses that involve critical technologies, critical infrastructure, or sensitive personal data (as those terms are defined in...

Securities

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 Form 20-F or 10-K. For more details, see governancecomplianceinsider.com/sec-provides-guidance-on-the-use-of-metrics-in-mda-also-proposes-amendments-to-simplify-and-modernize-mda-and-related-financial-disclosures/.

Corporate / Securities

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 on a Qualified Foreign Exchange (includes the Toronto Stock Exchange, the TSX Venture Exchange and the Canadian Securities Exchange), be an SEC Reporting Company or be a Regulation A Reporting Company. The proposed rules contain several amendments for International Companies, which will be the focus of this update. First, if an International Company applying to trade on the...

Securities

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 to the SEC. The reason – it appears that BCIMC’s investments in Canadian companies that report with the SEC (often referred to as “cross-listed” companies) were inadvertently omitted. The Financial Post reported that this was not the first time BCIMC had made errors in its SEC filings, citing a series of prior amendments filed to correct data from...

Cannabis / Corporate

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/.

Natural Resources / Securities

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 further delay in their preparations. Below are a few of the important steps to get ready to comply with the new standards: Determining whether the company must or should comply with the SEC’s new requirements.  Does the company file a Form 20-F or Form 10-K annual report with the SEC? If the company files on MJDS Form 40-F,...

Capital Markets / Securities

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 both the audit partner and the audit firm in the audit report could require both parties to provide consent to the inclusion of the audit report in an SEC filing. The SEC has recently provided our firm informal guidance that in accordance with the principles of the multijurisdictional disclosure system (“MJDS”), the SEC will not require a separate...

Capital Markets / Securities

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. Not in the United States. Here, there is a long tradition of regulations and stock exchange rules disfavoring companies whose shares trade at low prices, regardless of their total market capitalization. Back in the 1990s, there were three main stock exchanges – Nasdaq, the American Stock Exchange, and for larger companies, the NYSE. While each of the exchanges...

Employment

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 fixed term is designed to create a point in time where the employer can end the employment without having to pay severance. But sometimes employers include a fixed term in an employment agreement without carefully considering the legal consequences. Under U.S. law, those consequences can be significant. One fundamental difference between employment law in Canada and employment law...