Capital Markets / SEC Rulemaking / Securities

The SEC Amends Policy on Economic Projections, and Issues Final Rules and Additional Guidance for SPACs and Shell Companies

As discussed in our eUpdate published today, the SEC on January 24, 2024 adopted final rules amending the disclosure and registration requirements applicable to special purpose acquisition companies (SPACs) and shell companies that register or file reports with the SEC. These amendments impose significant new requirements on SPAC IPOs, as well as de-SPAC and similar transactions for SEC reporting shell companies. The new SEC rules do not apply to Canadian capital pool companies, SPACs, or shell companies unless they register or file reports with the SEC. As part of the final rule package, the SEC also amended its guidance for all SEC reporting companies on how to make economic projections in SEC filings,...

Corporate / Tax

The Corporate Transparency Act: Are You Ready?

On January 1, 2024, new direct reporting requirements to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury, became effective – known as the Corporate Transparency Act (the “CTA”). Who must file? The CTA, and the regulations promulgated thereunder, apply to corporations, limited liability companies, limited partnerships and similar legal entities either formed in the United States (a “Domestic Reporting Company”) or formed outside the United States but registered to do business in the United States (a “Foreign Reporting Company”). Such entities must identify their natural person beneficial owners and “company applicants” (i.e. the person(s) responsible for the formation or registration of the entity), and disclose...

Natural Resources

Interagency Working Group on Mining Laws, Regulations, and Permitting Release Final Report on Proposed U.S. Mining Reforms on Public Lands

In the Fall of 2023, the Interagency Working Group on Mining Laws, Regulations, and Permitting (“IWG”) released its final report containing recommendations to reform how mining is conducted on public lands (the “Final Report”). The IWG was formed to convene experts across various agencies and receive input from the public in order to assess the adequacy of the existing regulatory scheme governing domestic hardrock mining, and to determine whether changes to that scheme were necessary to satisfy the goals set forth in the E.O. 14017 100-Day reviews. 87 Fed. Reg. 18811 (Mar. 31, 2022). The Final Report included a range of recommendations, including those which would require legislative action by Congress, those which...

Corporate / Securities

Corporate Transparency Act: Enforcement Continues to be Halted Pending Further Court Developments

As noted in our post of December 18, 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. On December 23, 2024, the motions panel of the United States Court of Appeals for the...

Benefits / Tax

Canadian Compensation Arrangements – When Do I Need U.S. Counsel?

Imagine a Canadian company adopts a deferred share unit plan (DSU Plan) for its directors.  At the time the plan is adopted, the company does not have the plan reviewed by U.S. counsel, because none of their directors reside in the U.S.  It is not until several years later that the company learns that one of its directors, despite living in Canada, has dual citizenship with the U.S.  Because the typical form of Canadian DSU Plan will not comply with U.S. tax laws governing deferred compensation, particularly U.S. Internal Revenue Code Section 409A (Section 409A), the company has quite a mess on its hands.  You can read our prior articles on common payment timing issues...

SEC Rulemaking / Securities

SEC Amends Schedule 13D/G Requirements

On October 10, 2023, the Securities and Exchange Commission approved amendments to the Regulation 13D-G reporting regime for persons who beneficially own more than 5% of a class of securities (“5% Owners”) that is registered under Section 12 of the Securities and Exchange Act of 1934, as amended.  The amendments accelerate the deadlines by which 5% Owners must file initial reports and amendments on Schedule 13D or 13G, mandate the use of machine-readable language in those reports, and provide for additional amendments and guidance.  The amendments apply to 5% Owners of all Section 12 registered securities, including 5% Owners of Canadian foreign private issuers and MJDS filers listed on Nasdaq, the New York...

SEC Rulemaking

New SEC Cybersecurity Disclosure Rules

Canadian issuers that are reporting issuers with the Securities and Exchange Commission should be aware of new rules that impose disclosure requirements regarding cybersecurity risk management, strategy, governance and incidents. The new rules have two basic components.   First, certain issuers will have new disclosure requirements regarding the registrant’s processes and policies for cybersecurity risk management, strategy and governance.  These disclosures (which we refer to as “risk management disclosures”) will be required in the registrant’s annual report. The new risk management disclosures apply to nearly all domestic SEC reporting issuers (including Canadian issuers that report on domestic forms) and those foreign private issuers that report on Form 20-F. Second, in the event of a material...

Employment

Noncompete Agreements are Slowly Going Extinct in the U.S.

Companies utilizing noncompete agreements in the U.S. in the employment context should reevaluate their practices in light of recent changes to law and a rapidly changing legal landscape that is growing increasingly hostile to noncompete agreements. Early this year, the Federal Trade Commission (“FTC”) proposed a rule that would ban noncompete clauses nation-wide in the U.S. However, there is a long road ahead for the FTC’s proposed noncompete ban, and the proposed ban may very well be struck down by U.S. courts even if it is ultimately adopted. The FTC will not vote on the proposed ban until next April, and while 18 states’ attorneys general submitted a joint public comment letter in...

Employment

The U.S. Equal Employment Opportunity Commission Has Confirmed That Employers Face Potential Liability If They Use AI Tools To Screen Applicants. Employers Should Listen.

The U.S. Equal Employment Opportunity Commission (“EEOC”) has released guidance confirming that employers face potential liability if they use AI tools to screen applicants in a way that disproportionately impacts employees on the basis of a protected class such as race, color, religion, sex, or national origin. While ChatGPT and its competitors are new, the legal framework used to assess other applicant screening tools has been around for quite some time.  Employers and the legal system have struggled for years over whether and to what extent employers should be allowed to take a person’s credit scores or even their criminal record into account when making hiring decisions. Indeed, the system by which a...

Corporate / SEC Rulemaking

Canadian Companies Listed on the NYSE, NYSE American, or Nasdaq Must Adopt Updated Clawback Policies by December 1, 2023

As discussed in our Governance & Compliance Insider blog and a recent Dorsey eUpdate, all companies with securities listed on NYSE, NYSE American, or Nasdaq will be required to adopt and comply with updated clawback policies governing the recovery of erroneously awarded compensation by December 1, 2023, pursuant to rules proposed by each stock exchange and approved by the SEC under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  The new clawback requirements will apply to substantially all listed companies, including foreign private issuers and Canadian MJDS filers.