DLA Piper (Canada) LLP

On May 21, 2026, the Supreme Court of Canada granted leave to appeal in two cases that, while arising in different contexts, both grapple with a fundamental tension in Canadian law: the boundary between private action and state power, and the consequences when that boundary is blurred. In R. v. Pham, the British Columbia Court of Appeal ordered a new trial after finding the trial judge erred in assessing whether courier company employees became “state agents” when they set aside packages at police request. If parties are found to have been “state agents”, their actions become subject to Charter scrutiny since they essentially acted as an extension of the government. In McCormack v. Evans, the Ontario Court of Appeal upheld the admissibility of wiretap evidence, obtained through police deception, at a civil trial, while dismissing claims against officers for malicious prosecution and related torts. Both cases involve police investigative conduct that blurred proper boundaries, enlisting private actors in Pham and misrepresenting sources in McCormack, and raise questions about how such shortcuts affect evidence admissibility. Both will require the Supreme Court to clarify principles at the intersection of Charter rights, police powers, and the distinct objectives of criminal and civil proceedings. The cases also illustrate the divergent treatment of evidence in criminal versus civil proceedings. In Pham, the issue was whether a s. 8 Charter breach had occurred and whether evidence should be excluded under s. 24(2). In McCormack, the Court emphasized that civil trials are governed by different principles, the “pursuit of truth” is paramount, and Charter-based exclusion operates differently where there is no jeopardy or potential loss of liberty. Together, these cases offer a window into how Canadian courts navigate the competing demands of constitutional compliance, truth-seeking, and fair process across different legal domains. R. v. Pham, 2025 BCCA 324 In May 2019, CBSA officers intercepted two packages containing methamphetamine at the Vancouver International Airport, one bearing the appellant’s fingerprint. The packages had been shipped by a courier company in Nanaimo by someone named William McGuire on behalf of a fictitious company. After the RCMP alerted the courier company employees, Mr. McGuire delivered further packages on May 15, 17, and 23, 2019. The employees processed the packages in accordance with their usual procedure but then set them aside for warrantless seizure by the RCMP. The packages were subsequently searched pursuant to a warrant and found to contain multiple kilograms of methamphetamine. On May 23, the RCMP arrested the appellant. Subsequent searches yielded cash, waybills, phones, fentanyl, cocaine, and firearms. The appellant was convicted of ten offences. The trial judge dismissed his s. 8 Charter challenges and declined to exclude the evidence under s. 24(2). On appeal, Mr. Pham argued, among other grounds, that the trial judge erred in finding the courier company employees did not act as “state agents.” Analysis of the British Columbia Court of Appeal Writing for a unanimous Court, Justice DeWitt-Van Oosten held that the trial judge committed reversible error. The Court confirmed the legal test: whether the impugned conduct “would have taken place, in the form and manner in which it did take place, but for the intervention of the state or its agents.” Rather than applying this test, the trial judge asked whether there was anything wrong generally with police “enlisting the assistance of members of the public in the investigation, detection and prevention of crime.” The Court held this was an error of law reviewable on a standard of correctness. The Court also found that the trial judge misapprehended the evidentiary record. The courier company employees testified that the RCMP asked them to notify police if the suspected shipper returned, set aside packages for RCMP retrieval, take photographs, and obtain vehicle licence plate numbers. The employees testified that they took these steps because the police asked them to, that these actions were outside their regular duties, and that, but for the RCMP’s involvement, the packages would have remained in the mail stream. The trial judge’s finding that the employees “were simply going about their normal business” failed to account for this evidence. The Court allowed the appeals and ordered a new trial. On May 21, 2026, the Supreme Court of Canada granted the Crown leave to appeal. The Supreme Court’s consideration of this case may provide further guidance on the test for state agency under s. 8 of the Charter and the circumstances in which police interactions with private actors transform those actors into agents of the state. McCormack v. Evans, 2025 ONCA 767 The appellant, William McCormack, was a plainclothes officer with the Toronto Police Service responsible for Liquor Licence Act enforcement. An organized crime investigation, implicated him in bribery and corruption. The lead investigator, Evans, obtained judicial authorization to intercept the appellant’s private communications based on an affidavit that deliberately misdescribed two individuals as confidential informants (CIs) when they were not. The intercepted communications captured the appellant engaging in highly incriminating conversations about receiving payments and warning bar owners of inspections. The appellant was charged with numerous criminal offences. The corruption charges were stayed for delay under s. 11(b) of the Charter, and the remaining charges were withdrawn by the Crown, who opined that a s. 8 breach would be “inevitable” given the misdescription. The appellant commenced a civil action alleging malicious prosecution, negligent investigation, misfeasance in public office, intentional infliction of emotional distress, and Charter damages. The trial judge dismissed the action, and the appellant appealed. Analysis of the Ontario Court of Appeal On the admissibility of wiretap evidence, the Court held that, absent a judicial determination of invalidity, the wiretap authorization was presumed to be valid. The Crown’s opinion that a s. 8 breach was “inevitable” was a lawyer’s submission, not a judicial finding. Critically, the Court held that even if the evidence would have been excluded at a criminal trial, this would not dictate admissibility in civil proceedings. The Court emphasized that “the analysis of whether or not to exclude evidence for a Charter breach is entirely different in the civil context than in the criminal context.” In criminal proceedings, constitutional principles may override truth-seeking objectives where the state wields coercive power against an individual facing jeopardy and potential loss of liberty. In civil proceedings, the parties do not face such risks. The Charter does not determine admissibility; instead, admissibility is governed by the common law, balancing probative value against prejudicial effect, as informed by Charter values. The Court found the intercepted communications highly probative and their exclusion would have marked “a departure from factual reality, common sense, and the pursuit of justice.” On reasonable and probable grounds, the Court upheld the trial judge’s finding that Evans’ deception did not negate a genuine belief in the appellant’s guilt. The deception related to the status of the sources as confidential informants, not the content of their evidence. The charges were based on the appellant’s own incriminating utterances captured by the wiretap. The Crown’s withdrawal of charges was based on the potential for Charter exclusion, not the unreliability of the investigators’ grounds. The Court dismissed the appellant’s remaining civil claims. Malicious prosecution and negligent investigation failed because the appellant could not establish the absence of reasonable and probable grounds to prosecute him. Misfeasance in public office failed because the respondents were not motivated by animus. Intentional infliction of emotional distress was dismissed because, although Evans’ misdescription was “improper,” the appellant had “not shown that it was calculated to cause harm.” The Charter damages claim failed because the appellant did not establish that the wiretap authorization was invalid. On May 21, 2026, the Supreme Court of Canada granted leave to appeal this decision. The grounds for appeal remain to be seen. Looking ahead: Why these cases matter The simultaneous grants of leave in Pham and McCormack signal the Supreme Court’s interest in clarifying the boundaries of state agency and the consequences of investigative irregularities. While the cases arise in distinct procedural contexts (one criminal, one civil), they share a common thread: police investigative conduct that blurred established boundaries, and the legal implications when that conduct is later scrutinized. In Pham, the Supreme Court will have an opportunity to provide authoritative guidance on the test for state agency under s. 8 of the Charter. The Court of Appeal’s decision reaffirmed the Buhay framework, asking whether the private actor’s conduct would have occurred “in the form and manner in which it did” but for police intervention, while highlighting how easily that test can be misapplied. The Supreme Court’s decision may clarify the threshold at which police requests for assistance transform cooperative citizens into agents of the state. In McCormack, the central issues are the admissibility of evidence obtained through investigative deception and the standard for establishing reasonable and probable grounds. The Court of Appeal held that wiretap evidence remains admissible in civil proceedings, even where the underlying authorization may have been tainted by police misconduct. This reflects a fundamental distinction: in criminal cases, the state wields coercive authority against an individual facing potential loss of liberty, and constitutional rights may override truth-seeking objectives; in civil cases, “pursuit of truth” remains paramount. The Supreme Court’s consideration of this case may further develop the jurisprudence on how Charter values are balanced against truth-seeking objectives outside the criminal context. Together, these cases will shape how police engage with private actors, how courts assess the fruits of those engagements, and how the constitutional protections against unreasonable search and seizure apply across different legal contexts. Practitioners in both criminal and civil litigation should watch these appeals closely.

The British Columbia Court of Appeal has unequivocally held that a third party notice must be filed before the expiry of the limitation period for claim for contribution or indemnity, or else it will be set aside as being barred under the Limitation Act, regardless of when the application for leave to file a third party notice is filed. On May 22, 2026, in Oldcastle Building Products Canada Inc. v. Division 8 Consulting Corp., 2026 BCCA 223, the Court of Appeal upheld the chamber judge’s decision to set aside a third-party notice for a claim for contribution or indemnity because it was filed after the expiry of the limitation period, even though the application for leave to file was filed months before the limitation period expired. The Limitation Act, S.B.C. 2012, c. 13, treats contribution and indemnity claims differently than other third-party claims. While s. 22(1) allows third-party proceedings for a related claim to be brought in an ongoing court proceeding after the expiry of a limitation period, s. 22(2) specifically sets out that nothing in s. 22(1) gives a person a right to “commence a court proceeding” by bringing a third-party proceeding in relation to a claim for contribution or indemnity after expiry of the applicable limitation period. In this case, the application for leave to file a third-party notice (Application) was filed before the limitation period had expired; however, the third-party notice itself was filed after the limitation period had expired. As s. 22(2) does not permit a person to “commence a court proceeding” for a claim for contribution or indemnity after the expiry of the limitation period, the pertinent issue before the Court was when the third-party claim for contribution or indemnity was commenced. If it was upon filing the Application, then the claim was not statute barred, but if was upon filing the third-party notice, then it was. The Court of Appeal held that both the jurisprudence and the modern principle of statutory interpretation, which requires a contextual and purposive approach, supported the interpretation of “to commence a court proceeding” as being the filing of the third-party notice. Essentially, a third-party claim is considered a court proceeding, and a third-party notice commences the court proceeding. This interpretation was found to be consistent with the whole Limitation Act, and the definition of “originating pleading” in Rule 1-1 in the Supreme Court Civil Rules, B.C. Reg. 168/2009 [Rules]. The Court of Appeal determined that the purpose behind treating claims for contribution or indemnity in the Limitation Act differently than other third-party claims is to ensure that a defendant address claims for contribution or indemnity early in the litigation. For this reason, s. 16 of the Limitation Act sets one of the dates that a claim for contribution or indemnity is considered to be discovered as the date one is served with a pleading in respect of a claim on which the claim for contribution or indemnity is based. If filing an Application was sufficient to avoid the consequence of s. 22(2), then a party could take as long as it wished to file the third-party notice, which would not achieve the end of addressing claims for contribution or indemnity early in the litigation. Based on these reasons, which were supported by the jurisprudence, the Court of Appeal upheld the chamber judge’s decision, and unequivocally held that a third-party notice for claim for contribution or indemnity must be filed before the expiry of the limitation period, or else it will be set aside as being barred under the Limitation Act.   We note that from the above, there are two important practice points: The version of the Rules in this case provided for a third party notice to be filed as a right within 42 days of being served with a notice of civil claim or counterclaim, which would be within the two-year limitation period set out in the Limitation Act. However, the current version of the Rules, has changed and provides for a third-party notice to be filed as a right within 42 days after the filing of the response, which, depending on when a response is filed, could be after the limitation period expires. While the Rules may now allow the filing of the third-party notice after the limitation period, it is unlikely that the Rules will be considered to override the limitation period and other provisions set out in the Limitation Act.Therefore, a third-party notice should be filed before the expiry of the limitation period, regardless of whether it is permitted to be filed later under the Rules. While the Rules may effectively permit the filing of a third-party notice after expiry of the limitation period, the third-party notice may still be set aside, as is what occurred in this case. In this case, there was no dispute that the third-party notice was permitted to be filed, as it was filed in accordance with an order after application, but as it was filed after the limitation period, it was set aside.   If there is a risk that a third-party notice for a claim for contribution or indemnity cannot be filed before the limitation period expires because, for example, leave of the court is required, then a notice of civil claim seeking contribution or indemnity in a separate action can be filed before the limitation period expires. As set out in this case by the Court of Appeal, to avoid a multiplicity of proceedings, if the third-party notice is ultimately filed in time then the separate action can be discontinued, or an order can be obtained to have the two actions heard together.Therefore, the most important thing about a claim for contribution or indemnity is to file the originating pleading before the expiry of the limitation period.

On May 14, 2026, the Canadian Securities Administrators (CSA) released a comprehensive package of proposed amendments and accompanying policy changes targeting the issuer bid, take-over bid, and early warning reporting regimes under Canadian securities law (Proposed Amendments). The proposals span amendments to National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104), National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (NI 62-103), National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), and related companion policies, National Policies, and consequential instruments. Stakeholder comments are invited until August 12, 2026. The Proposed Amendments touch nearly every corner of the bid and beneficial ownership reporting landscape. In the CSA’s words, the objectives are to “provide issuers with greater flexibility to repurchase their own securities, enhance transparency of ownership of derivative interests in specified circumstances, and reduce regulatory burden”. The Proposed Amendments are relevant to public companies, private companies, institutional investors, and parties engaged in take-over bids, issuer bids, and proxy solicitations. This article sets out the principal elements of the proposals and offers initial observations for market participants.   A new private repurchase tool for issuers: The selective repurchase exemption At present, Canadian securities law does not provide a “private agreement” exemption from the issuer bid requirements, a notable gap vis-à-vis the take-over bid regime, which permits purchases from a limited number of sellers under section 4.2 of NI 62-104. The CSA has long received representations that this restriction places Canadian issuers at a competitive disadvantage relative to the United States, where selective repurchases are generally permissible, and that it can lead to potential market dispositions by blockholders, creating downward pricing pressure on the affected securities. In an attempt to address this gap, the CSA has proposed a new Selective Repurchase Exemption (SRE) permitting issuers to buy back securities outside the formal issuer bid framework, subject to a set of carefully calibrated conditions: Repurchase limit. The issuer may acquire no more than 5% of the outstanding securities of the relevant class in any 12-month period. Counterparty and transaction limits. Purchases may be made from a maximum of five persons in no more than five transactions during any 12-month period. Discount and timing requirements. The value of consideration paid, inclusive of any brokerage fees and commissions, must be less than the closing price of the class on its principal trading market on the date of the bid. In addition, the bid must be made outside of regular trading hours of that market. Liquid market. A liquid market, determined in accordance with criteria derived from section 1.2 of MI 61-101, must exist for the class at the date of the bid. The CSA estimates that approximately 75% of TSX-listed issuers, but fewer than 10% of those on the TSX Venture Exchange, would satisfy this standard. Board determinations. The issuer’s board must conclude that the repurchase would not reasonably be expected to make the market for the class materially less liquid, or to have a significant negative effect on the market price or value of the securities. Disclosure requirements. The issuer must issue and file a news release after making the bid and before the opening of trading on the next trading day, disclosing the name of the selling securityholder, the number of securities acquired, the value of the consideration paid per security and in total, the market price of the security at the date of the bid and the aggregate number of securities acquired by the issuer in reliance on the SRE within the preceding 12-month period. No material undisclosed information. Neither the issuer nor (to the issuer’s knowledge after reasonable inquiry) the selling securityholder has knowledge of any undisclosed material facts or material changes concerning the issuer or its securities at the date of the bid. Importantly, securities acquired under the SRE will not count towards the limits available under the normal course issuer bid (NCIB) exemption or the employee, officer, director, and consultant exemption, meaning that, in the aggregate, an issuer could potentially repurchase up to 20% of securities of a class in a 12-month period through a combination of these exemptions. The CSA has indicated it will engage with the designated exchanges on potential corresponding amendments to their rules or guidance.   Increased transparency of equity equivalent derivative positions in specified circumstances The second major pillar of the Proposed Amendments addresses the use and disclosure of equity equivalent derivatives during take-over bids and contested proxy solicitations for which an information circular is required to be sent. Generally, equity equivalent derivatives do not have to be counted for the purposes of determining whether an investor has triggered early warning reporting obligations, unless the investor can obtain the voting or equity securities or direct the voting of securities held by derivative counterparties. The CSA recognized that insiders of reporting issuers are already required to disclose their aggregate economic positions through insider reporting obligations, yet there is no express comparable requirement for bidders or soliciting securityholders who are not insiders to disclose their aggregate economic positions in an information circular or otherwise. The result is that, at the commencement of a take-over bid or contested proxy solicitation, the bidder or soliciting securityholder may be the only party aware of the existence, terms, and duration of its derivative arrangements, which gap the CSA views as undermining the quality of information available to securityholders who are being asked to make tendering or voting decisions. Notwithstanding this concern, the CSA has opted against requiring aggregation of beneficial ownership and derivative interests for general early-warning threshold purposes, concluding that there is insufficient evidence of misuse in Canadian markets with any regularity and that full aggregation could impose disproportionate burdens relative to potential concerns. Instead, the proposed new disclosure requirements would apply only in the context of a formal bid or contested proxy solicitation – what the CSA describes as “a formal, public overture for control”. The newly defined concept of “equity equivalent derivative” captures derivatives, whether individually or in combination, that provide economic exposure substantially equivalent to beneficial ownership. The CSA’s proposed guidance in NP 62-203 indicates that a rate of return between 90% and 110% of the reference security would generally meet this standard. A cash-settled equity total return swap or substantially similar derivative would be captured by the proposed definition of “equity equivalent derivative”.   For bidders Take-over bid circulars would be required to include prescribed disclosure of interests in equity equivalent derivatives and related arrangements affecting economic exposure to the target, with a six-month look-back period, in order to provide enhanced transparency of trading activities that may have impacted the price of the offeree issuer’s securities in the period preceding a bid. Offerors would also be required to issue a news release before the opening of trading on the next business day if, during the currency of a bid, they acquire or dispose of such interests or enter into, amend, or terminate related arrangements. A notable feature is the requirement to describe any past or present relationships between the offeror (and its joint actors) and counterparties (or their affiliates) that, to a reasonable person, could be perceived to affect the counterparty's investment or voting decisions, or, if no such relationship exists, to include a statement to that effect. Relationships that terminated more than 24 months before the bid was commenced would generally not require disclosure. For soliciting securityholders New deeming provisions would treat reference securities underlying equity equivalent derivatives as being controlled by a soliciting securityholder for the purposes of sections 5.2 and 5.4 of NI 62-104 during a proxy solicitation campaign, so that changes in a soliciting securityholder's aggregate economic position, whether arising from beneficial ownership of securities or from economic interests in equity equivalent derivatives, are disclosed through the early warning system following the filing of its proxy circular, where its aggregate economic position is equivalent to beneficial ownership of 10% or more of the outstanding securities of the class. Amendments to NI 51-102 would also extend a more limited disclosure obligation to persons soliciting proxies in reliance on the public broadcast, speech, or publication exemption. In addition, new information circular disclosure requirements would apply to solicitations made other than by management, requiring prescribed disclosure of (i) beneficial ownership of, or control or direction over, voting securities, (ii) interests in related financial instruments (including equity equivalent derivatives), and (iii) other agreements or arrangements affecting such persons’ economic exposure to the company.   Guidance on disclosure and use of derivatives The CSA has also proposed guidance which indicates that the disclosure or use of equity equivalent derivatives in a manner that is abusive of the capital markets may engage the regulators’ public interest jurisdiction. For example, public interest concerns may arise where public disclosures do not clearly differentiate between beneficial ownership and economic interests, or express them as an aggregated interest, or where a holder accumulates substantial derivative positions and seeks to influence a counterparty's handling of reference securities by communicating expectations of commercial incentives or disincentives tied to a take-over bid or matter subject to securityholder approval.   Sharpening the early warning reporting regime Plans and future intentions The CSA has observed a pattern of acquirors relying on broad, boilerplate language in their early warning reports, potentially allowing them to avoid filing updates when their intentions evolve or they take concrete steps toward a transaction, and only file updated reports upon entering into a definitive agreement in respect of securities. Proposed guidance in section 3.3 of NP 62-203 would clarify that acquirors must reassess the accuracy of their plans-and-future-intentions disclosure each time a reporting obligation is triggered, and must update that disclosure as soon as a change in plans or future intentions occurs, or where irrevocable steps have been taken in connection with a transaction, notwithstanding existing boilerplate reservations. New deemed acquisition triggers The Proposed Amendments include two targeted changes to the early warning system designed to close gaps in existing reporting obligations: Securities held by any person who beneficially owns or controls 10% or more of the outstanding voting or equity securities of a class at the time an issuer becomes a reporting issuer would be deemed to have been acquired at that time, thereby triggering an early warning report filing requirement. However, the associated news release and moratorium requirements would not apply in these circumstances. The establishment (or cessation) of a joint actor relationship would trigger the early warning filing obligation, without any requirement for a concurrent acquisition or disposition of securities. However, the CSA clarifies that the crystallization of a joint actor relationship would not, in itself, constitute a take-over bid in the absence of a subsequent acquisition by one or more of the joint actors. Subsequent filing triggers and AMR clarifications The Proposed Amendments introduce the defined term “securityholding percentage” and clarify the prior language that the trigger for filing a subsequent early warning report is a 2% or greater change in the acquiror’s post-event ownership, measured against the percentage reported in its most recently filed report. For eligible institutional investors (EIIs) filing under the alternative monthly reporting (AMR) system, the threshold is confirmed as based on fixed 2.5% increments starting at 10% (i.e., 12.5%, 15%, 17.5%, and so forth). EIIs that have been disqualified from the AMR system (for example, in connection with a formal bid, business combination, or proxy solicitation) would be permitted to re-enter the system once the disqualifying circumstances have ended, subject to the issuance of a news release and the filing of a report. EWR threshold calculations Proposed guidance has been included, along with illustrative examples, for determining whether the early warning requirements have been triggered. The guidance specifically addresses the treatment of convertible securities that are not exercisable within 60 days, and confirms that beneficial ownership may be calculated on a fully diluted basis in limited circumstances, such as subscription receipt offerings or fully backstopped rights offerings.   Codifying common discretionary exemptive relief and amending exemptions The CSA proposes to codify several forms of discretionary exemptive relief that have become routine in practice, while simultaneously removing an exemption which lacks a compelling policy basis to retain. Elimination of the 5% market purchase exemption The exemption currently allowing offerors to make market purchases of up to 5% of the outstanding securities of a class during a pending take-over bid would be repealed. The CSA notes that the exemption was relied upon in only a single disclosed instance between January 2021 and December 2023, and expresses concern that it could be used tactically to frustrate an open take-over bid process, particularly given the 50% minimum tender requirement adopted in 2016. Modified Dutch auction issuer bids Exemptive relief from the extension take-up requirement under subsection 2.32(4) of NI 62-104, which has been routinely granted to accommodate the mechanics of modified Dutch auction issuer bids, would be codified, subject to safeguards protecting securityholders where the bid is not undersubscribed, or the market price exceeds the highest price offered. Proportionate tenders Discretionary relief from the proportionate take-up requirement, previously granted only in the Dutch auction context, would be codified and extended to issuer bids generally, allowing securityholders to elect to tender a number of securities that preserves their pro rata interest following completion of a bid. Non-reporting issuer exemptions The categories of persons excluded from the 50-securityholder threshold under the non-reporting issuer exemptions for both take-over bids and issuer bids would be expanded to include officers, directors, consultants, and their spouses where the relevant person has control or direction over the securities that are beneficially owned by the spouse. The Proposed Amendments would codify positions previously taken in frequent individual exemptive relief decisions. Convertible securities Issuers conducting issuer bids would be permitted to acquire securities convertible into the class subject to the bid in reliance on the exemptions in paragraph 4.6(a), (b) or (c) of NI 62-104 (certain repurchase or redemption exemptions).   Settlement timing Currently, the settlement period for securities trades in Canada is a T+1 settlement cycle. The settlement cycle and take-over bid and issuer bid tendering process payment periods historically have not been linked, as it generally takes up to three days for an offeror’s designated depositary to coordinate payment to registered holders whose securities are taken up after it receives the necessary funds from the offeror. Under the Proposed Amendments, the existing three-business-day payment window following take-up would be replaced with a general requirement to pay “promptly,” accompanied by guidance that one business day from take-up is the expected standard in a T+1 settlement environment.   What this means for market participants The Proposed Amendments, if adopted in their current form, would represent a meaningful overhaul of the regulatory framework for certain Canadian capital markets transactions. Taken together, they pair expanded flexibility for issuers and investors, most notably through the SRE and the codification of previously ad hoc exemptive relief, with heightened transparency obligations at key junctures. The new derivative disclosure and counterparty identification requirements, coupled with the tightened expectations around plans-and-future-intentions reporting, materially raise the bar for the specificity expected in early warning filings. At the same time, the CSA’s decision not to require full aggregation of derivative and beneficial ownership positions for general early warning purposes, while simultaneously introducing deeming provisions that treat derivative positions as owned securities during proxy solicitations, creates a nuanced and context-dependent regime that will require careful navigation. The cumulative effect of the Selective Repurchase Exemption, along with the existing NCIB exemption and the employee/officer/director/consultant exemption, which could in theory permit an issuer to repurchase up to 20% of a class in a single 12-month period (assuming, in the case of the NCIB, that the public float equals the total issued and outstanding securities), is also likely to attract market attention and may itself become a focal point of the comment process. The CSA has posed 22 specific questions alongside the Proposed Amendments. Market participants with a stake in these issues are well advised to engage with the consultation process before the August 12, 2026, deadline.   Please contact a member of our Capital Markets group for further guidance on how the Proposed Amendments may affect your specific circumstances. The foregoing is for general information purposes only and does not constitute legal advice.     Written by:Sydney KertDerrick AuchRobbie GrossmanCatherine Kay

The Hong Kong Stock Exchange (HKEX) has re-emerged as a leading global IPO venue, offering Canadian companies, particularly those in the technology, industrial, mining, and consumer sectors, a compelling opportunity to access a broader pool of Chinese and Asian institutional and retail capital. Whether as a dual listing alongside the TSX or as a primary listing, HKEX offers meaningful liquidity, strong aftermarket support, and a regulatory framework that is increasingly accommodating to international issuers. This note summarizes key developments in Hong Kong capital markets in 2025 and outlines why Canadian boards and management teams should consider the HKEX as part of their broader capital markets strategy.   Hong Kong’s record-breaking numbers in 2025 HKEX was the top global IPO venue in 2025, raising approximately US$37.4 billion in IPO proceeds across 115 IPOs, including eight transactions exceeding US$1 billion, which included two of the five largest IPOs globally. The HKEX ranked as the third-largest market for equity fundraising in 2025, with 570 transactions raising approximately US$103.4 billion, behind only NASDAQ and the NYSE. The HKEX was also the second most active market for follow-on offerings, where listed companies raised approximately US$66.0 billion through secondary share sales.   Strong IPO aftermarket One of the most notable features of the Hong Kong market in 2025 was the strength of the IPO aftermarket. The average share price performance of Hong Kong IPOs (with deal sizes of US$500 million or above) significantly outperformed equivalent IPOs on US, European, and broader Asia-Pacific exchanges (Bloomberg). Hong Kong IPOs delivered an average return of approximately 32.2% from IPO to current price compared to 20.5% for the broader Asia-Pacific region (excluding Hong Kong and Chinese Mainland), 13.0% for Europe, and 10.2% for the United States (Bloomberg).   Sectors aligned with Canadian issuers HKEX’s 2025 pipeline was concentrated in sectors that closely align with the strengths of many Canadian issuers, particularly energy, mining, and technology. Metals and mining were one of the most active sectors on the HKEX in 2025, driven by strong Asian institutional investor demand for precious metals, battery materials, and critical minerals linked to electrification. The exchange hosted the largest mining IPO since 2012, which raised $3.7 billion for a Chinese gold producer with principal mining assets across Central Asia and Africa. The Hong Kong retail tranche of this IPO was reportedly more than 240 times oversubscribed, while institutional demand exceeded 20 times the shares available, highlighting strong investor appetite for mining companies on the HKEX. For Canadian mining issuers, particularly those with producing assets, offtake counterparties, or strategic investors in Asia, HKEX provides the opportunity to diversify their shareholder base. A HKEX listing may also enhance visibility with Chinese and Asian investors for potential M&A, strategic investments, and joint ventures at a time when global competition for critical minerals and supply chain security has intensified. Industrials and energy accounted for approximately 38% of HKEX IPO volume in 2025, making it the largest sector on the exchange by issuance volume. This included two of the largest industrial IPOs globally in 2025, which raised US$2.0 billion and US$1.4 billion, respectively (Dealogic and Bloomberg). This signals investor demand for capital-intensive and infrastructure-oriented businesses, sectors that are well represented on the TSX. Consumer HKEX was the leading global market for consumer-sector IPOs in 2025, raising approximately US$4.9 billion in IPO proceeds. For Canadian consumer brands, particularly those with existing operations, distribution networks, or brand presence in Asia, HKEX provides access to a large and active retail investor base with an appetite for consumer brands, while also serving as a platform for enhanced brand visibility and supporting regional growth initiatives across Asia. Technology, media, and telecommunications (TMT) represented approximately 21% of 2025 IPO volume, with an additional pipeline of approximately 114 TMT companies and 32 biotech companies. For Canadian technology and life science companies, particularly those with commercial partnerships, manufacturing relationships, and growth strategies tied to Asia, the HKEX could be an ideal listing platform for raising growth capital. In addition, for life science companies specifically, a HKEX listing may also provide greater proximity to the Chinese pharmaceutical market, one of the world’s largest and fastest-growing healthcare markets, as well as increased visibility with Asian healthcare investors, strategic partners, and commercial partners. The launch of the Technology Enterprises Channel (TECH) in 2025, a joint initiative by the Securities and Futures Commission (SFC) and HKEX, is aimed at specialist technology and biotech companies seeking a listing under Chapters 18A and 18C of the listing rules. The initiative introduces a streamlined listing process, including dedicated regulatory review teams, confidential filing options, and simplified requirements for qualifying innovation companies (HKEX and SFC).   International issuers Hong Kong is no longer a market focused exclusively on Greater China issuers. Seven international issuer IPOs were completed in 2025, representing companies domiciled in Indonesia, Singapore, Thailand, Kazakhstan, the UAE, and the United States. These international listings cover a range of sectors, including mining, biotech, consumer goods, and healthcare, and have delivered strong aftermarket performance. HKEX also expanded its international connectivity and issuer reach. In 2025, HKEX added the Stock Exchange of Thailand as a Recognised Stock Exchange, signed an MOU with the Abu Dhabi Securities Exchange, and opened its Middle East office in Riyadh (HKEK). The exchange now has 20 recognised stock exchanges, 33 reviewed overseas jurisdictions, and six overseas offices. For Canadian issuers, this trend is relevant given the established regulatory co-operation and listing recognition framework between Canada and Hong Kong. Canada is a recognized acceptable jurisdiction under HKEX’s overseas issuer regime, and issuers listed on the TSX and TSXV may leverage their existing Canadian corporate governance, continuous disclosure, and securities law compliance framework when pursuing a Hong Kong listing. This recognition framework has historically been important for Canadian issuers seeking access to Asian capital, particularly where there is a strong nexus to Asia through assets, operations, strategic investors, or end-market demand. In practice, the protocol and regulatory co-operation between Canadian securities regulators and HKEX have helped streamline the listing process for eligible Canadian issuers by reducing duplication in certain disclosure and governance requirements and providing greater familiarity to Hong Kong regulators and investors with Canadian reporting standards. For Canadian companies with international growth ambitions, this framework continues to position HKEX as a credible secondary or dual-listing venue alongside an existing Canadian listing.   Institutional and retail depth The depth of investor participation on HKEX is a key differentiator. Over 270 investors across multiple categories participated as cornerstone investors in Hong Kong IPOs in 2025, with 40 IPOs, including international cornerstone investors (HKEX, Bloomberg, and Dealogic). Approximately 50% of the most active investors were international participants, which included Asian and Middle Eastern sovereign wealth funds that have been among the most active investors in HKEX IPOs. Retail investor participation in Hong Kong IPOs has remained exceptionally strong. For the IPOs completed in 2025, average retail subscription levels reached approximately 1,514 times, with aggregate retail demand totalling approximately US$2.1 billion (HKEX and Dealogic). This depth of retail participation provides important support for IPO execution, valuation, and secondary market liquidity.   Access to Mainland Chinese capital through Stock Connect One of HKEX’s key advantages is its connectivity to Mainland Chinese investors through the Stock Connect program. Eligible Hong Kong-listed companies can be traded directly by investors in Mainland China through the Shanghai and Shenzhen exchanges, providing access to one of the world’s largest pools of retail and institutional capital. For Canadian issuers, potential inclusion in Stock Connect can materially expand the investor base, enhance trading liquidity, and increase visibility with Asian investors.   Post-IPO capital raising and an active follow-on market One of the more attractive features of the Hong Kong market is the depth of its post-IPO follow-on financing market. Of the 41 IPO issuers since 2024, with deal sizes above US$100 million, approximately 37% completed follow-on offerings after listing with several issuers raising more capital in subsequent financings than in their IPOs (HKEX, Bloomberg, and Dealogic). On average, issuers accessed the follow-on market approximately eight months after listing, shortly after the expiry of IPO lock-up periods. For issuers, this demonstrates that a Hong Kong listing can serve not only as an initial capital raise, but also as an established platform for future follow-on and secondary fundraising.   Recent regulatory reforms HKEX has undertaken a series of significant regulatory reforms that enhance the attractiveness of the market for prospective issuers: IPO price discovery and retail allocation: Following a consultation process that concluded in early 2025, HKEX has implemented reforms to the IPO pricing and allocation mechanism, including a requirement that at least 40% of shares be allocated to the bookbuilding tranche and a new option for issuers to adopt a fixed retail allocation ranging from 10% to 60% (HKEX Consultation Conclusions). Revised public float requirements: HKEX has introduced a tiered public float threshold based on expected market value at listing: 25% for issuers with market capitalisation up to HK$6 billion; the higher of 15% or HK$1.5 billion for market capitalisations between HK$6 billion and HK$30 billion; and the higher of 10% or HK$4.5 billion for market capitalizations exceeding HK$30 billion. This tiered approach provides significantly greater flexibility for larger issuers. A new free float requirement of at least 10% (with a market value of the free float portion of at least HK$50 million) has also been introduced. Alternative fund listing: In February 2025, the SFC issued a circular clarifying the regulatory requirements for authorizing closed-ended alternative funds for listing under Chapter 20 of the Main Board Listing Rules, effectively creating a new listing category. Confidential filing: Following the launch of the TECH in May 2025, Chapter 18A (Biotech) and Chapter 18C (Specialist Technology) issuers may now submit application proofs on a confidential basis, reducing premature disclosure of proprietary technologies and business strategies during the pre-listing process.   Renewed China and Canada engagement The recent stabilization in diplomatic and trade relations between Canada and the People’s Republic of China may create a more constructive environment for renewed cross-border investment activity, particularly through the HKEX. As relations between the two countries continue to improve, companies with both Canadian and Chinese ownership may have greater opportunities to pursue listings on the HKEX. Historically, a number of Canadian companies, particularly in the mining, energy, and financial services sectors, have successfully completed listings on the HKEX. These transactions demonstrated Hong Kong’s role as an effective gateway for Canadian issuers seeking access to Asian capital, particularly where there is a meaningful China or broader Asia-related business nexus. The precedent established by these listings may serve as a useful framework for renewed Canada–China cross-border investment and capital markets activity as bilateral relations continue to improve. From a broader investment perspective, improving geopolitical relations may also lead to a more balanced regulatory approach toward minority Chinese investments in Canadian businesses, including in sectors that have previously faced scrutiny under the Investment Canada Act and on the basis of national security considerations. While careful structuring will remain important, current conditions suggest a more favourable environment for Canadian and Chinese companies to pursue joint investment opportunities across capital markets, technology, industry, and natural resources.   Key considerations for Canadian issuers Several factors make this an attractive time for Canadian issuers to consider a Hong Kong listing. Most notably, HKEX provides access to a deep and increasingly international pool of capital tied to Asia’s long-term economic growth, including investors focused on China, Southeast Asia, and the broader Indo-Pacific region. For Canadian issuers, this can provide exposure to sources of institutional, sovereign, and strategic capital that are less accessible through traditional North American markets. The alignment between Canada’s strengths in mining, technology, energy, and industrial sectors and the sectors currently attracting capital on HKEX is also significant, particularly for companies with operations, customers, supply chains, or growth ambitions in Asia. In addition, recent regulatory reforms, including more flexible listing requirements and streamlined processes for technology and biotech companies, should improve market accessibility for international issuers. With a strong IPO pipeline and continued investor demand supporting new issuance activity, HKEX remains well-positioned as a complementary capital markets pathway for Canadian companies seeking broader international investor access and diversification beyond North America.   DLA Piper and next steps DLA Piper’s global platform, with offices in Canada, Hong Kong, and across Asia (including Mainland China), is uniquely positioned to advise Canadian issuers on cross-border listing transactions. Our capital markets team has experience in structuring and executing dual listings for Canadian and international issuers, navigating HKEX’s regulatory framework, and coordinating with underwriters in Hong Kong. We would be pleased to discuss how a Hong Kong listing could fit within your broader capital markets strategy.   For further information, please contact Raj Dewan or Stephen Wortley.   Authors:Rajeev (Raj) DewanStephen Wortley

DLA Piper advised Valhalla Metals Inc. (TSXV: VMXX) (OTCQB: VMXXF), a mineral exploration and development company, on its acquisition of Teck Resources’ Smucker copper‑gold‑silver‑zinc project in the Ambler Mining District of Alaska. The transaction integrates Valhalla’s Sun Project and the Smucker Project and includes a concurrent financing for an aggregate value of $30 million. The transaction was completed pursuant to a purchase and sale agreement under which Teck agreed to transfer 100% of its interest in the Smucker Project to Valhalla in exchange for equity consideration, royalty interests, and offtake-related rights, subject to customary regulatory approvals and closing conditions. DLA Piper’s corporate and mining teams provided comprehensive legal counsel on all aspects of the transaction, with a team led by Partner Denis Silva and including Associates Trevor Simpson and Beatriz Albuquerque (all Vancouver). With more than 1,000 corporate lawyers globally, DLA Piper helps clients execute complex transactions seamlessly while supporting clients across all stages of development. The firm has been rated number one in global M&A volume for 16 consecutive years by Mergermarket and ranked number one in VC, PE, and M&A in combined global deal volume by PitchBook.

DLA Piper has expanded its presence in the Canadian Legal Lexpert Directory, earning an increased number of lawyer recognitions in the 2026 report across key practice areas. The results further demonstrate the firm’s strong position in the Canadian legal market. The Canadian Legal Lexpert Directory identifies leading law firms and practitioners through a comprehensive peer-review process involving tens of thousands of lawyers and industry professionals nationwide. This year’s results include a notable gain of 12 total additional rankings across several core practice areas, including Mergers and Acquisitions, Corporate Finance, Commercial Litigation, Mining, Data Privacy, and Property Development. “Our expanded presence in this year’s directory underscores the strength and momentum of our Canadian platform,” said Russel Drew, Canada CEO. “The recognition speaks to the quality of our lawyers and their commitment to delivering exceptional outcomes for clients in Canada and globally.” The following DLA Piper lawyers are recognized in the 2026 edition of the directory: Paul Albi, K.C. – Family Law Jennifer Arndt – Corporate Mid-Market Derrick Auch – Corporate Mid-Market, Mining Kate Bake-Paterson – Charities Derek Bell – Litigation Corporate Commercial Ian Bendell – Infrastructure Law Ryan Black – Computer & IT Law, Technology Transactions Wally Braul – Aboriginal Law, Environment Colin Brousson – Insolvency: Financial Restructuring and Litigation, Insolvency: Insolvency Litigation Craig Brusnyk – Litigation Corporate Commercial Andrew Burton – Infrastructure Ruby Chan – Corporate Mid-Market, Mining, Corporate Finance Jeffrey Citron – Property Development Rosalie Clark – Construction Jennifer Cleall, K.C. – Corporate Commercial, Corporate Mid-Market Max Collett – Environment, Aboriginal, Property Development, Property Leasing Antony Cortese – Corporate Commercial Jordan Deering – White Collar Crime Russel Drew – Mergers & Acquisitions, Corporate Mid-Market Robert Fonn – Mergers & Acquisitions, Corporate Finance & Securities, Corporate Mid-Market, Mining Michael Ford – Employment Bentley Gaikis – Intellectual Property Catherine Gibson – Property Development, Property Leasing Noam Goodman – Corporate Mid-Market David Hawreluk, K.C. – Construction, Corporate Commercial Brian Hiebert – Forestry Law, Corporate Mid-Market Roy Hudson – Corporate Mid-Market Samantha Ip – Litigation Commercial, Insurance Michelle Isaak – Estate & Personal Tax Planning Jarrod Isfeld – Corporate Mid-Market Daniel Kenney – Corporate Mid-Market Howard Krupat – Construction Law, Infrastructure Edmond Lamek – Insolvency & Financial Restructuring John Landry, K.C. – Transport Roger Lee – Estate & Personal Tax Planning (Estate Litigation) Alan Macek – Intellectual Property, Litigation: Intellectual Property Vaughn MacLellan – Corporate Mid-Market, Mining Ted Maduri – Corporate Mid-Market Garry Mancell, R.P.F. – Forestry Law Jamie Mandell – Corporate Finance (Lawyers to Watch) Elizabeth Mayer – Infrastructure Law, Project Finance Robert McDonald – Intellectual Property Carly Meredith – Data Privacy (Lawyers to Watch) Alan Monk – Mining Veronica Monteiro – Pensions (Employer) James Padwick – Banking Catherine Pawluch – Aviation, Transportation Marc Philibert – Corporate Mid-Market Brian Poston – Aviation Sangeetha Punniyamoorthy – Intellectual Property, Litigation: Intellectual Property David Reid – Mining Ian Reynolds, K.C. – Corporate Mid-Market Robert Seidel, K.C. – Corporate Mid-Market Daniel Shapira – Property Development Derek Sigel – Corporate Finance, Corporate Mid-Market Bruce Stratton – Intellectual Property, Litigation: Intellectual Property Jeff Waatainen – Forestry Trevor Wong-Chor – Corporate Mid-Market, Mining Stephen Wortley – Corporate Finance, Mergers & Acquisitions, Mining Kevin Wright – Competition Law

Boards face new risks as political decisions, not markets, reshape global business oversight Boards have always understood market volatility. Interest rates move, currencies swing, and commodity prices rise and fall. What has evolved is not the existence of risk, but its source. Presently, some of the most decisive threats to enterprise value arise not from markets, but from political decisions taken by governments and regulators across multiple jurisdictions. National security reviews, energy-related policy decisions, sanctions designations, forced labour prohibitions, export controls, and tariff escalation can close markets, freeze assets, derail transactions, and disrupt supply chains with little notice. These are no longer peripheral compliance issues. They are strategic forces that shape corporate outcomes and demand sustained board attention. The rise of economic statecraft Governments are increasingly using economic tools to advance national security (including energy security) and foreign policy objectives. In Canada, national security reviews under the Investment Canada Act ("ICA") operate through two distinct review streams. Under the net benefit review, the Minister may require undertakings and impose conditions as a term of approval. Under the national security review, which can apply even to completed investments, the Governor in Council can block a proposed investment outright, require divestiture, or impose conditions without any obligation to approve. Both streams carry penalties for non-compliance, but the risk profile, timeline, and available outcomes differ materially. In the U.S., the expansion of the Committee on Foreign Investment in the United States’ ("CFIUS") jurisdiction following the Foreign Investment Risk Review Modernization Act ("FIRRMA") has widened its scope. The UK has introduced mandatory notification and standstill obligations under the National Security and Investment Act ("NSIA"), while the EU has established a framework for foreign investment screening and encouraged Member States to adopt their own. [1]  

Written by:Derek SigelDesron HarryThaarane Sethunathan (Articling Student) On February 12, 2026, the Canadian Securities Administrators (CSA) published its 2025 Systemic Risk Committee Annual Report on Capital Markets (Annual Report). The Annual Report is issued annually by the CSA's Systemic Risk Committee to assess key risks and emerging trends affecting Canadian capital markets and to provide guidance for issuers and market participants. The Annual Report emphasizes that Canadian capital markets remained broadly resilient in 2025 despite geopolitical trade shifts, episodic volatility, and the growing integration of artificial intelligence. In this article, we discuss five key findings from the Annual Report that Canadian issuers should be aware of as they navigate evolving market conditions. Artificial intelligence and implications for financial stability AI is increasingly being adopted across financial markets for functions such as asset allocation, trading, and fraud detection, with the potential to enhance productivity and market competition. The CSA notes that the sector is highly concentrated among a small number of major providers and that these players control a majority of critical cloud infrastructure, GPU computing, and other core AI models. The Annual Report further states that this concentration creates systemic dependencies and exposes issuers to technical disruptions or cyberattacks that could impact large sectors of the AI market. The CSA believes issuers should be mindful that the widespread reliance on AI systems, combined with growing cyber threats, including social engineering and deepfakes, may amplify market volatility and expose financial systems to new forms of instability. Impact of geopolitical tariffs on corporate bonds The Annual Report notes that Canadian non-financial corporate bonds demonstrated resilience despite US tariff shifts in 2025. That said, the CSA acknowledges uncertainty surrounding trade policy reversed the credit upgrades seen in early 2025, with downgrades modestly outpacing upgrades by mid-year, particularly in the materials and technology sectors. Net issuance patterns were similarly volatile. The Annual Report discloses a sharp mid-year decline in bond issuances followed by a year-end rebound, driven by issuers seeking financing for supply chain adjustments and trade diversification strategies. The CSA believes the outlook for capital markets participants remains uncertain if market conditions do not improve in 2026. Given these market dynamics, the CSA notes that refinancing pressures are expected to intensify in 2026 as many firms approach their refinancing deadlines. The Annual Report advises issuers to be aware of elevated refinancing pressures in industrials and consumer cyclical sectors and recommends issuers consider extending the duration of near-term debt maturities to reduce exposure to refinancing risk. Key role of stablecoins in the crypto ecosystem The Annual Report also highlights the fact that the crypto asset sector expanded significantly in 2025, with global market capitalization reaching approximately USD4.4 trillion and stablecoins exceeding USD300 billion. In response to this growth, the Annual Report notes that regulatory frameworks are developing across international jurisdictions. In Canada, the federal government introduced the Stablecoin Act, which aims to make stablecoins safer to hold and use by requiring issuers to maintain proper reserves, offer redemption at par, and meet governance and data security standards. As the stablecoin sector grows, the CSA believes the concentration of market share among a small number of issuers has the potential to heighten cyber, operational, and financial stability risks. A sudden loss of confidence in a major stablecoin, for instance, could prompt large-scale government securities sales and disrupt money market liquidity. Despite this, the Annual Report notes that stablecoins do not currently pose a systemic risk globally. However, issuers are encouraged to evaluate the risk of contagion if redemptions spike, particularly given the growing link between stablecoin reserves and traditional securities markets. The Annual Report also discusses the progression of regulatory developments at the provincial level. In November 2025, the Ontario Securities Commission (OSC) approved a final prospectus for QCAD Digital Trust to distribute a fiat-backed stablecoin pegged to the Canadian dollar on a 1:1 basis. In connection with the transaction, the OSC granted QCAD exemptive relief from certain prospectus and continuous reporting requirements, establishing a tailored framework for stablecoin distribution in Canada. Building on this development, the Annual Report affirms that the CSA views fiat-backed crypto assets as generally securities and/or derivatives. This regulatory classification has significant implications for market participants. Keeping this regulatory evolution in mind, the CSA believes Canadian issuers should focus on how future regulations under the proposed Stablecoin Act may govern them, including rules and exceptions for reserve assets and disclosure requirements. Fixed-income market liquidity: Mutual funds and exchange-traded funds The Annual Report highlights that liquidity in Canadian fixed-income markets remained stable in 2025 despite episodes of volatility and selling pressure in some markets. According to the report, trading volumes and bid-ask spreads in both government and corporate bond markets returned to normal levels following fluctuations triggered by US tariff announcements in April 2025. Fixed-income mutual funds experienced steady and positive net flows in 2025. While underlying markets may be less liquid during times of economic uncertainty, the Annual Report notes that credit quality declined only minimally, remaining stronger than in the post-COVID-19 period. Looking ahead, the Annual Report discloses the fact that the CSA will continue to monitor market-quality indicators. In light of this ongoing oversight, the Annual Report advises issuers to remain prepared for market developments that may impact debt issuance, refinancing options, or liquidity conditions. Liquidity pressure on private asset funds The Annual Report also notes the rapid expansion of the Canadian private asset fund sector in 2025, with the number of investment fund managers (IFMs) offering these products rising 40 percent since 2020, and total net assets reaching USD152 billion by the end of 2024. This growth was concentrated primarily in private equity, private debt, and real estate. During this growth, however, some funds, especially real estate funds, experienced liquidity pressures that led several IFMs to suspend or limit redemptions. The Annual Report notes these pressures arose from mismatches between the redemption terms offered to investors and the liquidity of underlying assets. The CSA believes these liquidity challenges highlight potential effects on capital availability, investor demand, and secondary market conditions in the growing private fund market. The Annual Report advises issuers to assess their exposure to private asset funds and consider the liquidity profiles of the funds in their portfolios. The CSA reminds issuers to monitor potential secondary market impacts, such as new legislative restrictions or geopolitical developments, to ensure any related liquidity risks are properly disclosed to investors in a timely and transparent manner. For assistance in navigating how these developments may affect your obligations as a Canadian issuer, please contact a member of our Equity Capital Markets team.

The Patent Appeal Board has issued a redetermination to provide a preliminary review in connection with Canadian Patent Application No. 2,701,028, led by Barry Dusome and Wyatt Dusome, which relates to a method of playing a wagering poker card game. The redetermination was issued on May 5, 2026, and follows a redetermination ordered by the Federal Court. The ‘028 Application is directed to methods of playing a wagering poker game in which players split their starting hand into two hands and play consecutive sub-games as part of the overall game, combining elements of Texas Hold'em and Pai Gow poker with additional features including a showdown round against the dealer. The ‘028 Application was rejected following a Final Action dated November 22, 2018, which found that the claims were not directed to patentable subject matter under section 2 of the Patent Act, and indefinite under subsection 27(4). On May 29, 2024, the Commissioner refused to grant the ‘028 Application, considering the "actual invention" was the rules of a wagering poker game rather than the physical elements of the claims. On appeal, the Federal Court held that the Commissioner’s approach was incorrect: the focus must be on the claims as purposively construed, and the Commissioner must then consider whether the subject matter "add[s] new knowledge to affect a desired result which has commercial value.". The focus should not be on an independently identified "actual invention". Further, the Federal Court stated that "determining what in good faith the inventor actually discovered is a question that forms part of purposive construction", and that the Commissioner should consider whether the rules of the game and the use of playing cards and a computer are not the whole invention but only one of a number of essential elements in a novel combination. Accordingly, the Federal Court directed the Commissioner of Patents to consider the ‘028 Application afresh based on proposed amended claims and in accordance with the Federal Court's reasons. This decision was the latest in a line of Federal Court decisions that overturned the Commissioner's subject-matter eligibility determinations. On March 24, 2026, CIPO published a Practice Notice updating its framework for assessing patentable subject matter. The 2026 Practice Notice supersedes the 2020 Practice Notice (PN2020-04) and was issued in response to the Federal Court’s decision in Dusome. The 2026 Practice Notice reaffirms that: purposive construction precedes any determination of validity, including patentable subject matter; the subject matter defined by a claim is determined on the basis of a purposive construction conducted in accordance with the principles set out by the Supreme Court of Canada; in carrying out purposive construction, all elements set out in a claim should be considered essential, unless the inventor establishes otherwise or if essentiality is contrary to the language used in the claim. The 2026 Practice Notice provides considerations for determining the nature of the invention, including whether elements are described as well-known or presented with little detail, suggesting they belong to common general knowledge, and asking what the inventor has actually invented or claims to have invented. Further, once a claim has been construed, the subject matter must comply with the definition of "invention" in section 2 of the Patent Act (i.e., an art, process, machine, manufacture, or composition of matter), must not be a mere scientific principle or abstract theorem under subsection 27(8), and must not fall into a judicially excluded category such as a method of medical treatment. Claimed subject matter that includes a disembodied idea, scientific principle, or abstract theorem is patentable if the idea is part of a practical application that has physical existence or manifests a discernible effect or change — the "physicality requirement" implicit in the definition of "invention." Where a claim recites a computer, the computer is generally an essential element, but the mere fact that a computer is essential does not necessarily mean the physicality requirement is met. In computer-implemented inventions where there are additional physical essential elements, such as a measurement step, sensor, or output means like a robotic actuator, there generally is physicality. Where the invention does not extend beyond the computer, the analysis turns on whether the invention can be distinguished from a mathematical calculation merely programmed into a computer. If a computer merely processes an abstract algorithm in a well-known manner and the processing does not improve the functioning of the computer, then the computer is not part of “what has been discovered”, and the invention is not patentable subject matter. On the other hand, if processing the algorithm improves the functioning of the computer, the improved computer and its improved functionality impart physicality to the invention, and the subject matter is patentable. In summary, it appears that much of the analytical framework from the 2020 Practice Notice is preserved, but with some minor tweaks that attempt to incorporate the Federal Court’s analysis from the Dusome decision. The most significant change is that the 2026 Practice Notice does away with the concept of identifying the "actual invention" as a distinct analytical step after claim construction. In particular, there is no longer a requirement to draw a distinction between essential elements identified during purposive construction and elements that were "part of the actual invention," noting that an element could be essential for claim construction purposes but not necessarily part of the actual invention. In Dusome, the Federal Court criticized this two-step approach, and CIPO has responded by folding the inquiry into what the inventor "actually invented" into the purposive construction stage itself. Furthermore, the 2026 Practice Notice has removed the games prohibition since there is no per se prohibition on the patenting of games. The 2026 Practice Notice also elevates the physicality requirement to a more prominent position in the analysis. Where there is no physicality outside of the computer system, the question is now explicitly framed as the key inquiry: does the invention simply process an abstract algorithm in a well-known manner or does it improve the computer's own functioning? The guidance on what constitutes physicality looks into “Discernible" is interpreted as referring to physical effects or changes and attempts to clarify what counts as additional physical elements (e.g., measurement sensors that generate data, robotic actuators) versus conventional computer elements that do not supply additional physicality (e.g., keyboard, display, printer). The 2026 Practice Notice includes new worked examples, including the first machine-learning example addressing a neural network trained on historical weather, irrigation, and crop yield data. In that example, CIPO found that model sophistication does not matter: a detailed layered neural network is treated the same as a simple formula if neither addresses a computing problem. Domain-level improvements, such as better crop yields, are not sufficient unless acted upon by physical means. On redetermination, the Patent Appeal Board applied the revised framework and reached the same conclusion as it did initially: the ‘028 Application’s claims are preliminarily directed to non-patentable subject matter. The Board identified the person skilled in the art as a team comprising a poker game designer, a computer technician, and a software developer. The Board found that all claimed elements are essential. For claims 1–21 (physical cards), the Board concluded that the skilled person would understand the discovery to lie in the set of rules governing the poker game, because the physical cards are standard and their use to play poker games is part of the common general knowledge. The Board found that the physical cards are nothing more than a well-known tool used to implement the game, and their use does not add to human knowledge on the subject of poker games. The Board then concluded that claims 1–21 do not provide the "something more" required to satisfy the physicality requirement. For claims 22–24 (computer implementation), the Board similarly concluded that the discovery lies in the algorithm or set of programmable instructions coded on the computer readable medium, as there is no suggestion in the specification that the computer device or its components represent anything other than well-known computer components operating in a well-known manner, and there is no indication that the functioning of the computer is improved. The Board concluded that the computer merely acts in a well-known manner and that the only new knowledge lies in the algorithm for implementing the poker game. The Board rejected the Applicant's arguments that the computer was a "unique specifically programmed computer/server" that was "physically altered with permanently installed memory storage," finding instead that the computer device is merely a general-purpose, well-known computer specifically programmed to implement the game. The Board also rejected the Applicant's argument that the computer's functioning was "inherently improved" because the system could run two games at once or provide a better experience for participants, noting that improvements to the functioning of the computer could include improvements in memory usage or processing speed, neither of which was disclosed. The Board also considered the jurisprudence and found the conclusions were consistent: the claimed modifications to the rules of play do not constitute a new and innovative method of applying skill or knowledge, nor a contribution to the cumulative wisdom on the subject of poker games. The Board further found that the proposed amended claims would not alter the patentable subject-matter assessment, as the proposed amendments were not substantive in nature and did not add any limitations that would provide the "something more" required to meet the physicality requirement. Has anything really changed? On its face, the 2026 Practice Notice represents a meaningful doctrinal shift. The abandonment of the "actual invention" as a standalone analytical construct, the removal of the per se prohibition on games, and the elevation of the physicality question all reflect CIPO's responsiveness to the Federal Court's criticisms in Dusome and the broader line of jurisprudence on patentable subject matter. However, a review of the Board's redetermination in Dusome itself suggests that, in practice, the revised framework may produce substantially similar outcomes for applicants whose inventions can be characterized as abstract methods implemented on well-known tools. The Board reached the same preliminary conclusion as it had before that the claims are directed to non-patentable subject matter, applying the new framework as it did under the old one. The inquiry into "what has been discovered" has been relocated from a post-construction "actual invention" analysis into the purposive construction stage, but the substantive question remains functionally the same: where the only new knowledge lies in an abstract set of rules or algorithm, and the physical implementation involves only well-known instruments used in well-known ways, the physicality requirement will not be met without "something more". For inventors in the gaming, software, and AI spaces, the path to patentability in Canada continues to require demonstrating that the invention does more than implement an abstract idea on a generic platform: it must either involve additional physical elements or demonstrably improve the functioning of the computer itself. The Board’s redetermination of the ‘028 Application is a useful illustration that a doctrinal refinement does not always translate into a different result.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has published guidance on the implementation of a new administrative monetary penalties (AMP) framework under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). While FINTRAC has held the authority to impose AMPs on reporting entities (REs) since December 30, 2008, the new AMP framework significantly enhances FINTRAC’s enforcement toolkit. This framework was enacted by the Strengthening Canada's Immigration System and Borders Act (Bill C-12) and took effect on March 26, 2026. It was introduced alongside other notable amendments to the PCMLTFA and associated Regulations, discussed in our earlier finance alert: Canada implements amendments to the PCMLTFA anti-money laundering and anti-terrorist financing regime. The discussion below provides a more detailed breakdown of the new AMP framework and its practical implications for REs. Transition and implementation At the outset, it is important to emphasize that FINTRAC will continue to assess compliance with the PCMLTFA and associated Regulations using the AMP policy applicable to the period under review. This policy is contingent on whether the period under review falls entirely before or after March 26, 2026. Specifically, where a review period falls entirely before March 26, 2026, FINTRAC will apply the pre-existing AMP policy, including the previous penalty amounts and enforcement processes. Conversely, violations occurring on or after March 26, 2026, are subject to the new AMP framework. To promote regulatory clarity and consistency, FINTRAC has confirmed that each examination will be assessed using a single set of compliance expectations for the entire review period. Key changes to the AMP framework Under the new AMP framework, FINTRAC will have the authority to: define prescribed violations and compliance order violations subject to penalties; apply increased maximum penalty amounts of up to 40 times the current limits; consider the ability to pay as part of the criteria for determining a penalty amount; require mandatory compliance agreements for prescribed violations; and introduce compliance orders as an additional enforcement tool. Increased maximum penalty amounts Under the pre-existing AMP framework, minor violations incur penalties of $1 to $1,000 per violation; serious violations range from $1 to $100,000 per violation; and very serious violations range from $1 to $100,000 per violation for individuals and $1 to $500,000 for entities. The limits apply to each violation individually, and multiple violations may result in a total amount that exceeds these limits. The new AMP framework proposes significantly increased penalties, potentially increasing them up to 40 times the existing limits. Specifically, for prescribed violations, the maximum AMP would increase to $4,000,000 for individuals (up from $100,000) and $20,000,000 for entities (up from $500,000). This framework also introduces penalties for contravention of compliance orders, discussed further below. These penalties can be substantial: for individuals, up to the greater of $5,000,000 or 3% of the individual’s income from domestic and foreign sources, and for entities, up to the greater of $30,000,000 or 3% of the entity’s gross revenue from domestic and foreign sources. Ability to pay as a criterion in determining penalty amounts Notably, the inclusion of “ability to pay” as an explicit criterion in determining penalty amounts marks a shift from the three pre-existing penalty criteria, which focused on: the purpose of the AMPs, which is to encourage compliance, not to punish; the harm done by the violation; and the REs’ history of compliance. Compliance agreements and compliance orders The new AMP framework introduces two key enforcement mechanisms. First, mandatory compliance agreements will be required in all cases where an AMP is imposed for a prescribed violation. REs that commit prescribed violations after March 26, 2026, will be required to enter into these mandatory compliance agreements. Second, compliance orders are introduced as a new enforcement tool, and contravention of a compliance order is designated as a distinct violation under the PCMLTFA. REs may also be subject to compliance orders in addition to any AMP imposed. Existing AMP procedures continue to apply While the new AMP framework enhances FINTRAC's enforcement tools, the core procedural elements of the AMP policy remain broadly intact. An RE subject to an AMP will receive a notice of violation detailing the penalty amount, payment instructions, and information on the right to make written representations to FINTRAC's Director and CEO within 30 days of receipt. If the penalty is paid, the RE is deemed to have committed the specified violations, concluding the process, and FINTRAC will publish the AMP details. Alternatively, REs may request a review by making written representations to the Director and CEO within 30 days of receipt, who will decide on a balance of probabilities whether the violation was committed and may impose the proposed penalty or a lesser amount. REs receiving a decision notice then have 30 days to appeal to the Federal Court of Canada, which holds the authority to confirm, set aside, or change a notice of decision. Conclusion REs must continue to meet all obligations under the PCMLTFA and associated Regulations. With the substantially increased penalty maximums, the introduction of compliance orders, and the mandatory compliance agreement requirement, the consequences of non-compliance have materially increased. FINTRAC is updating its administrative monetary penalties policy to reflect the key changes discussed above, which REs should continue to monitor. The updated policy will include: guidance on compliance agreements and compliance orders; and an updated approach to calculating penalties. If you are concerned that your business may be impacted, contact a member of our Financial Services or Compliance team for assistance.