Natural Resources

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 industry. On December 1, 2017, EPA released a pre-publication version of a final rule determining that imposing CERCLA 108(b) financial responsibility requirements on the hardrock mining industry was unwarranted.[1] The Final Rule satisfies a court-ordered timeline and rejects a proposed rule, published in January 2017,[2] which proposed regulations imposing CERCLA 108(b) financial responsibility requirements on operators of hardrock...

Cannabis

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 Act (MAUCRSA), which creates the general framework for the regulation of both commercial medicinal and adult-use (recreational) cannabis. The State agencies that regulate cannabis, the Bureau of Cannabis Control (distribution, testing, retail and microbusiness), Department of Food and Agriculture (cultivation) and Department of Public Health (manufacturing), established new regulations under an “emergency” rule-making process for commercial medicinal and...

Securities / Tax

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 of certain border adjustments. Canadian corporations with U.S. operations may want to consider including a risk factor in their periodic reports or offering documents regarding the potential impact of U.S. tax reform. A sample risk factor (based on the current iteration of the tax bills) is below. As the tax bills are amended during the legislative process, the...

Securities

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 of any period ending after December 15, 2017 (i.e., for a December 31 company, beginning with any Form 20-F or Form 40-F for the fiscal year ending December 31, 2017). The following is a link to a Dorsey blog posting about this topic from earlier this year: https://governancecomplianceinsider.com/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-1/. Foreign private issuers who file their financial statements in accordance...

Capital Markets / Securities

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 changed, and previously vetted forms may not be current. Indications that your U.S. law compliance practices in offering and selling securities could use a good scrub include the following: You don’t know the definition of a “foreign private issuer” or whether your company is one; You don’t know if your company has a “substantial U.S. market interest” in...

Benefits / Tax

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 deferred share units (DSUs) to individuals who are subject to U.S. federal income tax on compensatory income. You can read the DSU blog entry here and the RSU blog entry here. Let’s assume careful review and drafting have addressed potential U.S. tax issues in terms of the written documents. What are common mistakes that can arise in administering...

Natural Resources

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 in the rulemaking process to assure that their interests are represented. In 2015, the U.S. Environmental Protection Agency (EPA) and the U.S Army Corps of Engineers (Corps) (collectively the Agencies) adopted final regulations redefining the term “waters of the United States,” which defines the scope of federal regulatory jurisdiction under the CWA. States, industry groups, and environmental organizations...

Securities

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, but before the news was publically announced. While Equifax has stated that the executives had “no knowledge of the intrusion at the time they sold their shares,” the developing story illustrates some of the risks attendant to sales of securities by insiders of public companies. Canadian issuers registered with the SEC or trading in the U.S. markets will...

Capital Markets / Securities

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 current reporting requirements of Tier 2 of Regulation A+. The Act is now being considered by the U.S. Senate. If the Act becomes law, it will increase the alternatives available to SEC reporting companies in seeking additional capital. Smaller public companies that are not listed on Nasdaq or the NYSE, and are therefore subject to state securities regulation...

Employment / Litigation / M&A

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 requirements if they meet certain criteria. However, such exemptions under U.S. law are frequently more complicated than their Canadian counterparts, and even sophisticated U.S. employers frequently get them wrong. In 2016, U.S. employers spent nearly $700 million on class-action settlements of wage and hour claims. This does not include amounts U.S. employers spent paying judgments and attorneys’ fees....