British Columbia’s Court of Appeal looks past unregistered trading in ordering payment to investment finder

Many junior resource companies depend on investment finders to help keep the lights on. Working with finders, however, requires navigating the “exempt” market, so named because it involves exemptions from certain securities laws. One company recently found itself in a catch-22: sanction a potential breach of securities law and stock exchange policy by paying a finder’s fee, or be liable for unjust enrichment and legal costs (the eventual result) by declining.

This resulting court case, Birch v. GWR Resources Inc., is of interest to issuers and their advisers for several reasons, including the rare occasion it presented for British Columbia’s highest court to consider the junior capital market. It also contains guidance for issuers and finders in respect of when a fee will be payable. Above all, it highlights that engaging investment finders can attract legal and regulatory headaches, along with needed capital. Diligence and informed advice are critical to managing risks in this area, and to avoiding noxious side effects of an exempt financing.

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Brian Abraham

About Brian Abraham

Brian Abraham’s practice involves all phases of mining from exploration, development and production through to reclamation. He provides advice on all forms of title reviews, options, leases, purchase and joint-venture agreements during the early phases of mineral exploration and permitting.

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