Term
| Advatages of going public |
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Definition
1- objectives and goals: allign with user objective and goals
2- Financing: additional capital and financing
3- Debt Financing: may result in easier access to debt financing due to disclosure requirments
4- Expansion: facilitate mergers and acquisitions |
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Term
| Disadvantages of going public: |
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Definition
1- more owners:
2- controlled interest: alterned ownership structure, and company decision making
3- decision making: less flexability in decision making, formalizes and longer process
4-Resources:
5: More FS users: higher overall FS risk, more sensitive to users
6- More FS disclosures: requires enhanced disclosures esp. under IFRS
7- FS deadline and reporting (must report by April 1, must report op segments,EPS)
8- More costs: admin of IPO, audit and legal, additional compliance and financial reporting result in more salary costs |
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Term
| Regulatory and indpendence requirments |
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Definition
| -public co req to file statments on SEDAR accompanied by "particiapating audit firm" auditors reported in compliance with CPAB |
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Term
| "particiapating audit firm" |
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Definition
| public accounting firm that has entered into written agreemetn with CPAB and has good standing |
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Term
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Definition
| Canadain Public Accountability Board- oversees auditors of CND public co's through inspections and specific req that aduitors must follow |
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Term
| Specific independece requirments for auditors of public companies (ruls of professional conduct 204) |
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Definition
-cannot perform audit engagment if:
accpeted employment in a financial reporting oversight role with the enetity within a period of 1 year from which the FS were filed
-serve as an officer or director of the entity
-lead engagment partner or QRCP on an engagment for more than 7 years in total in which 5 yrs must laps
-registrant provides more than ten hours of assurances services in connection with the FS ob the reporting issuer
-see pg 52 for more
-firm provides a valuation service to the client unless reasonable to conclude that the results of that service will not be subject to audit procedures during the audit |
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Term
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Definition
-several years of FS included
-annual audited FS for each of the three most recently completed years ended more than 90 days before the proespectus
-BS at the end of the 2 most recent completed years per the date above
-interim statements unaudited
-subsequent to the most recent FS year of which the annual FS are included if any
-has to be more than 45 days before the proepectus or 60 if venturer
-FS complete all YTD interim period and comparative of same period in PY
-also requires notes to all FS noted above |
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Term
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Definition
audited annuals required to be filed on or before the 90th day after the end of the most recently completed financial year - 120 for venturer
-interims must be filed by the 45th day after the end of the interim period, 60 for venture issuers |
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Term
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Definition
-aduited annual FS and comparitive year+notes
-must file interim for each interim period ended after company became public
-interim FS report must disclose if reveiwed by auditor or not |
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Term
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Definition
- Loose Small business deduction
- loose GRIP which porduces lower rate taxable dividends (eligible div)
-CDA balanace lost when company goes public, so co. should pay out any dividends before hand.
-demmed yr end immediately before the change in staus occurs and new taxation year end deemed to begin immediatley after status change
-coporate tax return to be filed within 6 months of deemed yr end
-balance owing to be paid by deadline 3 months after deemed year end
-overall many tax advantages lost when tansistion to a public company |
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Term
| Personal tax considerations |
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Definition
-demmed to dispose of shares = to greater of ACB and lesser of FMV of shares and amount designated
-must file election by personal tax filing deadline of year following transaction
-election must be done prior to IPO
available on gains resulting from dispoistion of shares of a qualified SBC
-would only apply before IPO, therefore should use before IPO a public co would bot qualify as QSBC shares |
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Term
| Best approach to minimize taxes when company goes public |
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Definition
-apply ITA S 48.1 election allowing for deemed disposition prior to IPO
-dispose at prescribed amont to use LCGE
-reacquaire shares right after at ACB = to amount of IPO deemed proceeds
-Per ITA S 48.1 adjusted cost based at time of disposal after holding period can be bumped up to proceeds noted in elected |
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