Canadian immigration laws and procedures. Guide for foreign and Canadian immigration law.

The judgment of the court has already had a number of practical implications on how securities offerings are conducted. Justice Lederman acknowledged that the existing regime under securities law required the filing and delivery of prospectuses and amendments to them. After filing the final prospectus, the law requires that it be delivered to purchasers, together with any amendment required by the occurrence of a "material change" after the filing of the final prospectus. This delivery requirement runs to the end of the second day after the particular purchaser has entered his or her agreement of purchase and sale (evidenced by receipt of the confirmation of the sale). The purchaser has a right to withdraw from the purchase for two days following the receipt of the latest prospectus or any amendment.

This regime does not require that prospectuses be continuously updated to reflect new "material facts" occurring with respect to an issuer after the date of the final prospectus. Note however that in Quebec, an amendment to the final prospectus must be made whenever a material change occurs "in relation to the information presented in the prospectus,?which may include the occurrence of new material facts. The term "material fact" encompasses significantly more information than the term "material change." Justice Lederman found, however, that s.130 of the Securities Act operates independent of the prospectus filing and delivery regime and gives purchasers a right of action if the prospectus contains a misrepresentation at the time of closing. He found that in the 14 days between the date of the final prospectus and the date of the closing, facts had come to the attention of the executives of Danier, and for this reason the prospectus contained a misrepresentation at the date of closing, giving rise to a claim for liability under s.130.

The conduct of public offerings has undergone some changes as a result of the Danier decision, including the following:

• Underwriters are generally reviewing their forms of underwriting agreements to ensure that the issuer represents to them that the prospectus contains no misrepresentation as of the closing date (or later if the distribution has not been completed at that time), that there is an ongoing obligation on the part of the issuer to update the prospectus with respect to changes in material facts and that the indemnities in the agreement provide adequate coverage;

• consistent with U.S. practice, underwriters, directors and others who have a due diligence defence are now seeking confirmation as to the accuracy of the prospectus at the time of closing, not just the date upon which their certificate is signed or the prospectus is filed; and

• participants are generally trying to close offerings more quickly than the usual seven to ten days following filing of the final prospectus. Canadian practice varies from the U.S. practice of three-day closings, primarily because of the two-day withdrawal period following receipt of the final prospectus, which is not a feature of U.S. law. There is now a renewed incentive to distribute the prospectus as quickly as possible after filing and to tighten up the time to closing.

A further practical consideration is the matter of dealing with information that materializes between filing the final prospectus and closing. Should the closing be delayed while purchasers are advised of the new information? Is a press release sufficient to inform purchasers and eliminate s.130 liability? Should the prospectus be amended even if not required under the Securities Act because the new information does not constitute a material change? Should a new withdrawal period be granted even though not contemplated by the Securities Act? These are all concerns with which issuers, underwriters and other participants in the offering process will have to contend, given the broad reach of the decision.

We also anticipate that Danier will result in fewer prospectuses containing financial forecasts. This, we expect, will be particularly the case for issuers where their financial forecast differs very significantly from their historical financial results. These situations, of course, are precisely those in which a forecast is most valuable from a marketing perspective. Danier may also lead issuers to resist the current encouragement of Canadian securities regulators to include more forward-looking information in their disclosure documents.

Conclusion

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