On August 20, 2020, the Canadian Securities Administrators announced amendments to the business acquisition report (BAR) requirements set out in Part 8 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) for reporting issuers that are not venture issuers. The amendments are aimed at reducing the regulatory burden imposed by the BAR requirements by limiting the circumstances in which a reporting issuer must file a BAR.
A reporting issuer must file a BAR if it completes a significant acquisition. Under the current regime, an acquisition is considered significant for a reporting issuer that is not a venture issuer where the acquisition of a business or related businesses triggers at least one of the three significance tests set out in Part 8 of NI 51-102:
- The asset test;
- The investment test; and
- The profit or loss test (the Significance Tests). To satisfy a Significance Test, the results of any of the Significance Tests must exceed 20 per cent (the Significance Threshold).
The amendments to NI 51-102 create a two-triggered test and raise the Significance Threshold. The amendments:
- Require an acquisition to trigger at least two of the three Significance Tests in order to be considered a significant acquisition; and
- Raise the Significance Threshold under any of the Significance Tests from 20 per cent to 30 per cent.
Therefore, a reporting issuer that is not a venture issuer will only have to file a BAR for an acquisition of a business or related businesses where the results of at least two of the three Significance Tests exceed the 30 per cent Significance Threshold.
There are no changes with respect to the BAR requirements for venture issuers. Provided all necessary ministerial approvals are obtained, the amendments will be effective on November 18, 2020.
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