The Canadian Securities Administrators (CSA) on August 20, 2020 announced amendments and changes to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) (Amendments). The Amendments which are expect to be effective on November 18, 2020 are being made to the business acquisition report requirements. A reporting issuer that is not an investment fund is required to file a business acquisition report (BAR) after completing a significant acquisition. The BAR requirements were introduced in 2004 to provide investors with relatively timely access to historical financial information on a significant acquisition. They also require a reporting issuer that is not a venture issuer to include pro forma financial statements in a BAR.
Part 8 of NI 51-102 sets out three significance tests: the asset test, the investment test and the profit or loss test. An acquisition of a business or related businesses is a significant acquisition that requires the filing of a BAR under Part 8 of NI 51-102 for a reporting issuer that is not a venture issuer, if the result from any one of the three significance tests exceeds 20%; and for a venture issuer, if the result of either the asset test or investment test exceeds 100%.
The Amendments alter the determination of significance for reporting issuers that are not venture issuers such that an acquisition of a business or related businesses is a significant acquisition only if at least two of the existing significance tests are triggered (the Two-Trigger Test); and
increase the threshold of the significance tests for reporting issuers that are not venture issuers from 20% to 30%.
The Amendments are available at: https://www.osc.gov.on.ca/documents/en/Securities-Category5/ni_20200820_51-102_business-acquisition-report-requirements.pdf
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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