On June 1, 2015, Canada proclaimed into force the Extractive Sector Transparency Act (Federal Act). The Federal Act requires mining, oil and gas companies to disclose payments made to Canadian and foreign governments and others, including aboriginal groups.
The Federal Act is the result of a commitment made by Canada at the 2013 G8 summit. The “Publish What You Pay” movement and its supporters have long been lobbying G8 and other “rich country” governments for mandatory payment disclosures to combat corruption and increase governmental accountability in poorer countries. For a discussion of the Federal Act please refer to our post of June 2, 2015. Continue Reading
The Canadian Securities Administrators (CSA) recently published CSA Staff Notice 51-344 Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2015. The notice provides stakeholders with guidance arising from the key deficiencies identified by CSA members in their continuous disclosure reviews of reporting issuers last year and include, in particular, a discussion of mining issuers’ compliance with National Instrument 43-101 Standard of Disclosure for Mineral Projects. While this post focuses on mining issuers’ disclosure practices, we’ve provided a more general summary of CSA Staff Notice 51-344 on CanadianSecuritiesLaw.com.
CSA staff remind mining issuers of the requirement to comply with NI 43-101, including in respect of written disclosures on an issuer’s website such as investor presentations, news articles and even links to third party content. CSA staff also refer mining issuers to CSA Staff Notice 43-309 Review of Website Investor Presentations by Mining Issuers which we have previously discussed. Notably, CSA staff advise specifically that investor presentations: (i) must name the qualified person who approved technical information and disclose their relationship to the issuer; (ii) provide the required cautionary statements regarding preliminary economic assessments; and (iii) clearly state whether mineral resources include or exclude mineral reserves, among other recommendations.
For further information, please consult CSA Staff Notice 51-344.
Yesterday the Government of Canada proclaimed into force the Extractive Sector Transparency Measures Act (the Act). The proclamation comes in advance of the G7 Summit on June 7, 2015, and is a follow-through on the 2013 G8 Summit commitment made by Prime Minister Stephen Harper to establish new reporting standards for Canadian oil, gas and mining companies. The stated purpose is to foster better transparency to ensure that the resource extractive industries support proper development in the countries where they operate, while at the same time making it harder to conceal illicit payments. As discussed in our post last October, the Act will require affected entities to report any payments made in relation to the commercial development of oil, gas or minerals during a financial year that exceed either the amount prescribed by regulation or, if no amount is prescribed, $100,000 of the following nature and whether monetary or “in kind”: Continue Reading
On April 7, 2015, Québec Premier Philippe Couillard and Minister of Energy and Natural Resources Pierre Arcand unveiled The Plan Nord toward 2035, 2015-2020 Action Plan.
This Plan Nord 2.0 is an updated and more sober version of the Plan Nord announced with considerable fanfare by Premier Jean Charest in 2012. Mr. Charest’s plan was long on promise, short on detail and studiously ignored during Ms. Pauline Marois 19-month premiership (2012-2014). Continue Reading
The Canadian Securities Administrators yesterday released a staff review of investor presentations on mining issuers’ websites, providing valuable insights on how the regulators interpret and apply NI 43-101 and other disclosure requirements and ultimately finding that “there is room for improvement” in order to comply with applicable regulatory standards.
The review, which assessed compliance with NI 43-101 Standards of Disclosure for Mineral Projects and the forward-looking information (FLI) requirements of NI 51-102 Continuous Disclosure Obligations, found a number of deficiencies with disclosure in investor presentations posted on mining issuers’ websites. Of the 130 investor presentations reviewed, only 18% were found to be in substantial compliance with disclosure requirements, while 57% suffered from minor non-compliance and 25% had major non-compliance issues. Continue Reading
The Toronto Stock Exchange yesterday proposed amendments to its Company Manual that would adopt a broader deference model in respect of certain exchange requirements where an interlisted issuer is subject to the rules and regulation of another exchange or jurisdiction.
An “interlisted issuer” is an issuer listed on two or more exchanges or marketplaces. According to the TSX, as at November 30, 2014, there were 322 interlisted issuers on the TSX. Of these, 273 (82%) are Canadian-based issuers, while 59 (18%) are foreign incorporated. Currently, the TSX waives certain of its requirements applicable to a transaction where at least 75% of the issuer’s trading volume and value over the six months preceding notification of the transaction occurs on another exchange and the other exchange is reviewing the transaction. Continue Reading
On November 14, Foreign Affairs, Trade and Development Canada announced enhanced guidelines intended to improve corporate social responsibility (CSR) by Canadian companies in their extractive sector activities outside of Canada.
Launched in 2009, Building a Canadian Advantage outlined a strategy to promote CSR for the Canadian extractive sector operating in foreign jurisdictions. Among other things, the document promoted certain international CSR performance guidelines and set up the Office of the Extractive Sector CSR Counsellor to assist in the resolution of CSR issues abroad. Continue Reading
The Government of Canada yesterday introduced legislation to implement the Extractive Sector Transparency Measures Act, following through on the announcement by Prime Minister Stephen Harper in June 2013 that Canada would be establishing new mandatory reporting standards for extractive companies directed at payments made to foreign and domestic governments at all levels, including Aboriginal groups. The Government of Canada has stated that the legislation is intended to be similar to that being implemented in the European Union, and is anticipated to be similar to that expected to be proposed by the United States Securities and Exchange Commission by March 2015.
It is also intended that the Canadian legislation be implemented in a manner that allows for reporting requirements that are uniform across these jurisdictions so as to reduce associated administrative costs for affected companies.
Given that the United States has thus far not introduced comparable legislation, it will be interesting to monitor whether the ultimate orientation and implementation of the Canadian legislation is modified to align with the initiative south of the border. While the SEC introduced a rule under Section 1504 of the Dodd-Frank Act in 2012 to require disclosure of payments by resource extraction issuers, the U.S. District Court for the District of Columbia, in American Petroleum Institute v. SEC, concluded, among other things, that the SEC misinterpreted Dodd-Frank by forcing public disclosure of detailed data on payments, and failed to consider associated competitive effects. Following the ruling the SEC has taken no further regulatory action, although the SEC has indicated that it would issue a new proposal under Section 1504 by March 2015. Continue Reading
In a much anticipated development, the Canadian Securities Administrators provided an update on the status of their proposals to regulate take-over bids and shareholder rights plans. While not publishing any detailed amendments at this time, all CSA members have joined together to announce that they are taking a harmonized approach that will ultimately result in amendments to take-over bid rules across Canada.
Mandatory “permitted bid” features
Specifically, the regulators propose to introduce amendments to the current take-over bid regime that would require all formal bids for Canadian public targets to contain the following mandatory features:
- a minimum bid period of 120 days (60 days longer than the standard permitted bid period);
- an irrevocable minimum tender condition requiring that more than 50% of the outstanding securities owned by persons other than the bidder and any joint actors be tendered and not withdrawn before the bidder can take up under the bid; and
- a 10-day bid extension period after the minimum tender condition is achieved and the bidder announces its intention to take up and pay.
While CSA Notice 62-306 clarifies that the 120-day period could be waived (to a minimum of 35 days) by the target board, provided it is in a non-discriminatory manner in the face of multiple bids, if applicable, it is not clear whether the remaining two features could be subject to a board waiver Continue Reading
In preparing and filing the preliminary prospectus, we have recently noticed that regulators are commonly responding with requests for further disclosure from issuers with mining properties in emerging markets. Often, the information requested is of the nature that you would expect should be included an annual information form (AIF) except that the nature of the information sought is not actually covered by the scope of required AIF disclosure.
As we’ve discussed in previous posts, regulators have in recent years increased the scrutiny over emerging market issuers. Specifically, the OSC undertook a targeted review of issuers with significant business operations in emerging markets in 2011 and released a notice outlining areas of concern in March 2012. Meanwhile, in November 2012, the OSC released a guide to assist boards and management of emerging market issuers in addressing the risks of doing business in emerging markets and satisfying their governance and disclosure obligations. The TSX and TSX-V also issued a consultation paper in December 2012 intended to identify the potential risks with listing emerging market issuers and to provide guidance to issuers with respect to applicable listing considerations. Continue Reading