SEC Rulemaking / Securities

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 company and which do not have $100 million in revenues in their most recent fiscal year for which audited financial statements are available. As a result, the amendments will expand the number of Form 10-K filers which are exempted from having to provide an auditor attestation report on internal control over financial reporting in the annual report they...

Capital Markets / General / SEC Rulemaking / Securities

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 (Rule 3-16 will continue to exist during the transition period). The Commission stated that the amendments are intended to: Improve existing Rules 3-10 and 3-16 by requiring disclosures that focus investors on the information that is material given the specific facts and circumstances and by making the disclosures easier to understand; Reduce the cost of compliance for registrants...

Capital Markets / General / Securities

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 its business and operations resulting from the coronavirus can be material to investors, and companies are encouraged, to the fullest extent practicable, to keep investors and markets informed of material developments. As a reminder, under the federal securities laws: When a company has become aware of a risk related to the coronavirus that would be material to its...

Capital Markets / Securities

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 Service or, if an SEC reporting company, on the SEC’s EDGAR reporting system, of the securities purchase agreement(s) or similar agreement(s) setting forth the terms of such arrangement, any related promissory notes or similar evidence of indebtedness, and any irrevocable transfer agent instructions. These new listing requirements will apply to OTCQB issuers even if applicable Canadian and U.S....

Natural Resources

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. 1684. NEPA documentation is generally required for any project, public or private, that requires approvals from the federal government. The proposed revisions to the NEPA regulations are part of the Trump administration’s efforts to streamline their NEPA review processes. The proposed regulatory revisions include the following changes, among others: More Exemptions from NEPA Review – The proposed rules...

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...