Going public in Canada requires you to follow the rules and regulations in the provinces you are selling shares in.
Taking your Canadian company public affords many advantages, such as offering increased valuation and utilizing public stock as currency in the business of acquisition and assets. It gives your company credibility and notoriety, enticing potential investors and increasing your chances or raising capital. However, there are many legal and financial requirements to consider right from the beginning of your decision to the process of going public and beyond.
Legal Advice
A company that decides to go public must consult with a lawyer specializing in securities law who will be able to advise the company of their financial and legal obligations of going public, as well as draft the application, if the company does decide to go public.
Application Process
The lawyer will prepare a prospectus, which is a document that sets out the company's public offering of securities. The prospectus is required to describe in full, accurate detail, the company and its holdings, capitalization and other details such as how the sale of shares supported by the prospectus will be used.
Required Documents
The company's audit reports and financial statements are required to support the prospectus, which is pulled together by an accountant. In addition, the prospectus must also include a detailed engineering or technical report. This report will assess the company's business and assets. It is the underwriter or management agent's job to give advice regarding the type of offering and the shares that will be sold according the prospectus. The agent will also perform due diligence in signing the prospectus.
Maintenance
While an IPO, the company has a statutory obligation to maintain updated reports of the company's profile. The company is legally required to follow 'continuous disclosure', a term used to describe the activity of keeping shareholders fully abreast of the company's affairs, whether through news releases and required filings stipulated by the Securities Commission, the Registrar of Companies and the stock exchange on which the company is listed.
The Securities Act
The Securities Act requires the public company to submit audited annual reports, financial statements, quarterly statements, insider reports and any materials that are circulated during shareholder meetings. It also includes takeover bid materials and notifications of material changes in the company's affairs.
Duty of Care
In addition, directors and officers are legally required to adhere to particular duties: that is they must act in the best interest of the company and act honestly, diligently and prudently. Directors and officers are directly responsible to shareholders, employees, creditors, regulatory authorities and the public. Any violation of their duties could make them legally liable, even if they were not aware of the activities of the company or no longer work there.
