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Canada's New "Material Contract" Disclosure Obligations

By broc

Canada's New "Material Contract" Disclosure Obligations

On Monday, Canada's disclosure rules - National Instrument 51-102 (go to Appendix H) - will be amended to expand the number and types of agreements that issuers must disclose and file as “material contracts.” In many cases, the amended rules will now require filing of certain types of material contracts even if they were entered into in the ordinary course of business.

Provisions within a contract can be striked only if they would be "seriously prejudicial to the interests" of the company or violate confidentiality provisions - except this isn't allowed under certain circumstances (eg. debt covenants or ratios in credit agreements that are required to be filed). This standard appears pretty high (e.g. Tory's memo notes that "this drafting suggests that it is not enough that the business would be adversely affected, or even materially harmed, by the loss or absence of the contract"). If a provision is struck, the company must provide a brief one-sentence description of the type of information redacted.

We have posted memos regarding this development in our "Canadian Law" Practice Area. And listen to this podcast with Raman Grewal of Stikeman Elliott who explains:

- What was the old standard for Canadian companies to file their "material contracts"?
- What is the new standard? What are the key differences?
- Under what circumstances can Canadian companies seek to exclude provisions that they want to remain confidential?
- How are confidential treatment requests processed in Canada?

Food for Thought: The Canadian confidential treatment standard is interesting - particularly the notion of tying it to a confidentiality agreement. If they had that in the US, I imagine some companies would add a clause to their agreements saying the thing is confidential so they would disclose nothing...or am I just a pessimist?

Practical Guidance on Conducting CEO Evaluations

One of the most challenging tasks that boards face is properly conducting a CEO evaluation. There is not much guidance out there on this topic. In this podcast, Mike Haefner, President & Founder of Perform for Life, explains how to perform CEO evaluations, including:

- Should boards use a written CEO evaluation?
- What is the typical CEO evaluation process?
- What areas should be evaluated in conducting a CEO evaluation?

Form 10-Q Filing Establishes Venue in SEC's Offices

Several months ago, the Fourth Circuit - in US v. Benyo - reversed the District Court's dismissal for lack of venue of the government's charges that a defendant allegedly committed accounting fraud by filing a false Form 10-Q. The Fourth Circuit held that causing the transmission of the allegedly false Form 10-Q established venue in Northern Virginia, which is where the SEC's servers that operate Edgar are located. (Bet you thought the servers were in the SEC's DC headquarters! Also bet you didn't care.) We have posted the opinion in our "Securities Litigation" Practice Area.

- Broc Romanek

Full post as published by The Corporate Counsel.net Blog on March 13, 2008 (boomark / email).