On March 28, 2024, the Department of Finance Canada announced a one-year extension to the 15% Mineral Exploration Tax Credit (“METC”) available to investors in flow-through shares. The extension means that the METC will be effective until March 31, 2025. This announcement came at a time when uncertainty loomed over the industry and some stakeholders feared that the government would not renew the METC. Over time, this tax credit has become a key component of flow-through share financings. It is intended to enhance the tax deductions already available to flow-through share holders and ultimately help companies raise capital for mineral exploration. The METC was last renewed in 2019 for a five-year period, indicating the government’s long-term commitment to the sector at that time. And while this renewal is welcome news for exploration companies, it should be noted that the shorter one-year horizon of the extension does not provide the same assurance regarding the incentive’s future. It is possible that this one-year renewal reflects the government’s intention to promote the new 30% Critical Mineral Exploration Tax Credit (“CMETC”) instead, on which more information can be found here: Federal Budget 2022: Good News for Mining Exploration Companies! In closing, it is important to note that the one-year extension to the 15% METC will not affect the period during which the 30% CMETC is available for critical mineral exploration, which will end on March 31, 2027, and is subject to renewal. If you were planning on financing non-critical mineral exploration, you may want to complete this transaction in the coming year in order to benefit from the 15% METC. Our team of professionals specializing in securities, mining law and taxation is available to answer any questions you may have concerning this new measure and to guide you in arranging a successful flow-through financing.

On November 25, 2015, the Investment Industry Regulatory Organization of Canada (IIROC) published a White Paper for consultation. It is seeking comment on two proposals which, if approved and implemented, would change the current structure for distributing mutual funds in Canada. A “restricted practice” policy and a policy involving directed commissions are being proposed. RESTRICTED PRACTICE POLICY The proposal would allow an IIROC dealer member to use representatives who would not advise and would only offer mutual funds and exchange-traded funds (restricted dealing representatives). To do so, they would not have to be trained and qualified to advise or trade the other categories of securities normally offered by the dealer. An IIROC dealer member who wishes to hire restricted dealing representatives currently must ask IIROC for an exemption from the proficiency upgrade requirement for a mutual fund representative who will work for it. The considerations described in the White Paper stem from such an exemption request. According to a survey of around forty brokerage firms, the conclusions of which are described in the White Paper, this proposal raises the issue once again of a possible merger between the Mutual Fund Dealers Association of Canada (MFDA) and IIROC. It would also harmonize the respective missions of these self-regulatory organizations (SROs) regarding the regulation of mutual fund representatives, at least those who are registered as restricted dealing representatives by IIROC. DIRECTED COMMISSION POLICY The proposed directed commission policy would allow an IIROC dealer member to pay commissions directly to an unregistered personal corporation controlled by a representative. This proposal is being put forward to support the restricted practice proposal since the survey mentioned above showed that “for many registered firms and individuals, eliminating the proficiency upgrade requirement on the IIROC platform is of limited interest unless directed commissions are also allowed”. The MFDA already allows commissions to be directed to unregistered corporations provided a written agreement is signed by the mutual fund dealer, the representative and the representative’s personal corporation stating that the dealer and the representative must comply with MFDA requirements and the representative and the personal corporation must both provide the mutual fund dealer full access to their books and records. ISSUES SPECIFIC TO QUEBEC In Quebec, the Chambre de la sécurité financière has exclusive responsibility for self-regulating mutual fund representatives under An Act respecting the distribution of financial products and services (Distribution Act). This means that a new IIROC category of restricted dealing representatives would require legislative changes in Quebec to allow a mutual fund representative to only be a member of IIROC through a dealer member of that organi- zation. Such changes to the Distribution Act are unlikely in the foreseeable future, at least until the Department of Finance has completed its review of the enforcement of the Distribution Act. We would also add to this list of conditions the approval of changes to the orders recognizing IIROC as a securities self- regulatory organization and the possible re-examination of exemptions from certain requirements of Regulation 31-103 which are granted to IIROC and MFDA dealer members. Such a re- examination would be required since such orders and exemptions are not issued based on an overlapping of the regulation of mutual fund representatives attached to these respective categories of dealers. MFDA CONSULTATION Further to the publication of the White Paper, the MFDA recently released the results of a consultation held with 79% of its members on the potential impacts of the application of IIROC’s proposed policies. If the restricted practice policy is adopted, most MFDA member firms believe that they would either go out of business or be forced to merge with firms registered with IIROC. Such a step would only benefit MFDA member corporations that are also affiliated with an IIROC member corporation, which would allow them to reduce their operational costs, increase efficiency and be more competitive. MFDA members generally agree that the current SRO structure adequately protects investors and that the inevitable restructuring of this system that would result from the adoption of the restricted practice policy should be aimed at protecting investors, not reducing costs. MFDA members are therefore leaning in favour of the status quo with respect to the new policies discussed in the IIROC White Paper. The White Paper consultation will end on March 31, 2016.

The TSX Venture Exchange (the “TSX-V”) has released a white paper which describes how it intends to become an attractive public market for early-stage companies from fast-growing sectors such as technology, clean technology, renewable energy and life sciences (the “high-growth sectors”) and how it intends to ensure that private equity firms, venture capital (“VC”) funds and angel investors consider the TSX-V as an effective strategy to exit the capital of such early-stage companies. The question remains whether these changes will result in a smaller-size IPO on the TSX-V becoming an attractive exit for the VC funds invested in a large number of these companies. REVIEW OF SOME OF THE CHANGES AND STRATEGIES PROPOSED BY THE TSX-V The TSX-V indicated that it intends to generally review its policies and tailor them to further reflect the needs of the companies from the high-growth sectors, recognizing that such policies were traditionally more adapted to the mining and oil and gas sectors. It also intends to hire a sales team dedicated to bring companies from these high-growth sectors to become listed on the TSX-V. The sales team will notably attempt to introduce the dealers community to companies from these sectors that can grow their business and create wealth for investors. The TSX-V recognizes that the reluctance for such companies to become listed on the TSX-V is in part the consequence of the administrative and compliance costs resulting from such a listing. It therefore proposes specific changes to its rules that are aimed at reducing the costs and simplifying the process for a company wishing to be listed on the TSX-V. One of the affected rules would be the sponsorship requirement. While this requirement can be waived, the TSX-V currently requires that an application to list on the TSX-V be sponsored by an existing member of the TSX-V or of the Toronto Stock Exchange. The TSX-V proposes to eliminate this requirement. Given that obtaining sponsorship typically takes several months and can cost a company between $50,000 and $100,000, the TSX-V believes that this change will allow companies wishing to achieve an IPO to save time and money. Another set of rules that might be reviewed is the escrow requirements. Securities regulators and the TSX-V each impose escrow requirements on the securities of the company completing an IPO held by the directors, officers, principal shareholders and promoters of the company, which typically includes all the VC funds invested in such company. These requirements result in the VC fund that has invested in the capital of the company requesting to be listed being typically required to enter into escrow agreements with an escrow agent whereby the shares or debt securities of the company held by the VC fund are put in escrow with the escrow agent for a period of 18 to 36 months after the IPO. The TSX-V has indicated in its white paper that it will abandon its own requirements and simply impose compliance with the requirements of the Canadian Securities Administrators (to which such companies were already subject to and which are similar to the escrow requirements of the TSX-V). Being subject to only one set of rules will simplify things in that regard. The TSX-V also intends to increase its general use of technological tools, particularly by offering an automated online filing system for additional types of transactions (the white paper does not specify which ones). This is intended to allow companies to file routine transactions themselves rather than having to use the services of external lawyers, and therefore reduce their costs. The TSX-V also seeks to develop mobile and web-based tools to stream summaries of securities offerings by companies listed on the TSX-V in order to facilitate more direct communications between the issuers and their investors. Other changes are proposed and can be found in the full version of the white paper available on the TSX-V’s website. CAN THE TSX-V BE SUCCESSFUL IN ITS APPROACH? All these changes aimed at increasing the listings by early-stage companies from the technology, clean technology, renewable energy and life science sectors should be welcomed by the VC community. IPOs remain an attractive exit for VC funds who often are major shareholders of these companies. It remains one of the best methods for a VC fund manager to establish a track record to attract investors for its follow-on funds in a context where such investors are often forced to rely on very few performance indicators to establish the skills of the VC fund manager and decide whether to invest in its follow-on funds or not. It should also be considered by entrepreneurs as one of the preferred methods of exit that they can provide to the VC funds that have invested in the capital of their company, given that it is one of the rare methods that will ensure to these entrepreneurs that they remain at the helm of the company. Other forms of exit, such as an acquisition or a secondary sale to a private equity fund focused on growth stage companies, will often result in forced changes to the management of the company, making the entrepreneur effectively lose the control of its business. In the context of an IPO, while the entrepreneur will have to report to its shareholders and may be vulnerable in the future to hostile take-over bids, the management team will generally remain in place in the short term (except for some additions to ensure that the necessary skills are present). Further, public markets remain the deepest source of capital, making IPOs being particularly well suited for these high-growth companies. However, to be fully effective, these initiatives will need to receive the support of the Canadian Securities Administrators, given that the major costs associated with an IPO are those associated with the rules imposed by these securities regulators and not by the TSX-V. In the meantime, Lavery intends to fully collaborate with the TSX-V in allowing it to become more attractive for these types of companies.

Equity crowdfunding will soon have a new framework in which to operate in Canada and this is excellent news for investors and startups alike. On November 5, 2015, the Canadian Securities Administrators announced that regulatory authorities in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia published the final version of Multilateral Instrument 45-108 - Crowdfunding (the “Equity Crowdfunding Prospectus Exemption”), which is expected to come into force on January 25, 2016. Crowdfunding will no longer be limited to advance purchases of goods and services in Canada, as the new Equity Crowdfunding Prospectus Exemption will allow startups to raise capital by issuing and selling securities to the public, using online funding portals, without having to file a prospectus. An offering document that meets regulatory requirements will nonetheless have to be prepared and published on the electronic funding portal. The document must contain certain particular information on the corporation, its officers, and the terms of the offering. ISSUER ELIGIBILITY CRITERIA Under the Equity Crowdfunding Prospectus Exemption, eligible issuers may raise a maximum of $1,500,000 per 12-month period. The main eligibility criteria for an issuer are namely that it be incorporated under Canadian laws and headquartered in Canada, that a majority of its directors reside in Canada, and that the issuer is not an investment fund. SUBSCRIPTION LIMITS FOR EACH INVESTOR Subscription limits for investors will vary depending on whether an investor is an accredited investor (as defined in the securities regulations) or not. In Ontario only, another category of investors, “permitted clients” (as defined in the securities regulations), is subject to its own specific investment limits. Investments by non-accredited investors will be limited to $2,500 per private placement (up to an annual maximum of $10,000, only in Ontario). Investments by accredited investors will also be limited, albeit to a greater amount of $25,000 per investment (up to an annual maximum of $50,000, only in Ontario). In Ontario, investors who are classified as permitted clients will not be limited in the amount of capital that they can invest. LEAD INVESTOR INCENTIVES It is no coincidence that accredited investors qualify for higher investment limits. The intention is to encourage them to act as lead investors who can set the pace for less experienced, non-accredited investors, by providing skills and expertise in management for the benefit of all investors. The emergence of lead investors is also encouraged by the fact that issuers will be able to distribute their securities under other prospectus exemptions during the crowdfunding distribution period with different prices, terms and conditions from those being distributed under the Equity Crowdfunding Prospectus Exemption. This type of model has already proven advantageous in the United States, where equity crowdfunding syndicates have been developed. Such syndicates, which are made up of angel investors and venture capital funds, allow small investors to invest their money in tandem with more experienced investors. CONTINUOUS DISCLOSURE Issuers who issue securities pursuant to the Equity Crowdfunding Prospectus Exemption will also be subject to certain continuous disclosure obligations, including the obligation provide the relevant securities commissions with financial statements and to make such financial statements available to investors within 120 days of their financial year end. The extent of such continuous disclosure obligations will vary in accordance with the total amount of funds raised by the issuer pursuant to one or more prospectus exemptions, from its date of formation to the end of its last financial year, based on the following thresholds: $249,999 or less: no requirement Between $250,000 and $749,999: financial statements accompanied by an examiner’s report or an auditor’s report $750,000 or more: financial statements accompanied by an auditor’s report In all cases, if the issuer is already a reporting issuer as defined by securities regulations, it will still be subject to any continuous disclosure obligations that already applied. CONCLUSION The Equity Crowdfunding Prospectus Exemption will open up markets to investors big and small, and allow them to build valuable relationships with startups early on. It will be interesting to see if the Equity Crowdfunding Prospectus Exemption will generate sufficient lead investors for equity crowdfunding syndicates to be put into place, as they have been in the United States.