Canada’s finance minister unveiled a series of legislative proposals on August 4, 2023 aimed at making significant changes to the flow-through share regime, particularly as regards lithium exploration. Although a number of these changes had already been announced in the 2023 federal budget, e.g. the inclusion of lithium brine in the “mineral resources” definition, they had not really affected junior exploration companies in Quebec since this type of lithium is virtually non-existent in the province. More targeted change However, the recent proposals include a more targeted change for mining companies exploring for traditional “hard rock” lithium, which is much more common in Quebec. These proposals include amending the definition of “mineral resources” to systematically includetraditional hard-rock lithium in the list set out in section 248 of the Income Tax Act (the “Act”). The consequences As a consequence of this change, the requirement for mining companies to obtain a certificate issued by Natural Resources Canada will be eliminated. The application process for this certificate represented a heavy administrative burden for exploration companies. Moreover, lengthy processing times often delayed the conclusion of flow-through share subscription agreements. This change is a timely one: growing numbers of companies are refocusing on exploring for lithium rather than for more traditional metals such as gold. This reflects not only the market’s infatuation with lithium, but also the recent 30% tax credit potentially available to investors incurring mining exploration expenses involving critical metals. Proceed with caution For the time being, however, these legislative proposals only apply to lithium; they do not cover all critical minerals. Mining exploration companies should proceed with caution if they plan to explore for other types of critical minerals such as graphite and rare earth elements, for example. This is because a mineral resources certificate issued by Natural Resources Canada may still required in those cases. 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.
René Branchaud Partner, Lawyer
- Québec, 1983
René Branchaud, partner, practises in the fields of securities, mergers and acquisitions, as well as corporate law. With more than thirty years’ experience, he advises companies on matters such as incorporation and organization, the drafting of shareholder agreements, private placements, public issues, going public, dispositions, and takeovers.
His services are in demand with European entrepreneurs and investors, primarily in France, wishing to set up companies in Canada. René has acquired extensive experience in this area and the specific challenges facing companies moving to Québec. He advises businesses in all sectors of economic activity on the legal and regulatory aspects of doing business in Québec and Canada, identifying the business services they will need and assembling multidisciplinary teams to facilitate their efforts. Over the years, he has built a strong business network (bankers, financial advisers, tax experts, and accountants) that he calls upon when carrying out the mandates entrusted to him.
René acts as secretary of several publicly traded companies; he also serves on corporate governance committees and special committees established to address specific issues (mergers, takeovers).
- Advise issuers preparing public offering and private placement documents
- Advise senior management during mergers and acquisitions
- Coordinate due diligence reviews in connection with financings and mergers
- Advise securities dealers in connection with financings, mergers, and stock exchange listings
- Chambers Canada in the field of Energy and Natural Resources: Mining, since 2019
- The Best Lawyers in Canada in the fields of Mining, Natural Resources and Securities Law, since 2011
- The Best Lawyers, Lawyer of the Year, Mining Law, 2018
- The Legal 500 Canada as « Recommended Lawyer » in the area of mergers and acquisitions, 2017
- Lexpert Special Edition – Canada’s Leading Energy Lawyers in energy law, 2017
- Lexpert/Report on Business Special Edition – Corporate in corporate law in Canada, 2017
- Lexpert Guide to the Leading US/Canada Cross-Border Corporate Lawyers in the field of Natural Resources Law, 2017
- The Canadian Legal LEXPERT® Directory in the field of Corporate Finance Securities, since 2016
- The Canadian Legal LEXPERT® Directory in the field of Mining Law, since 2010
- « Lawyer of the Year in Montreal» par Best Lawyers in the field of Natural Resources Law, 2014
- LL.B., Université Laval, 1982
Boards and Professional Affiliations
- Genius Metals Inc.
- Hydroma Inc.
- Midland Exploration Inc.
- Mines Abcourt inc.
- Chairman of the Board of Director for the Opéra de Montréal
On March 21, 2023, Quebec’s Minister of Finance tabled his budget for the 2023-2024 fiscal year. One of the budget’s key measures is the introduction of a new tax holiday in connection with major investment projects. At first glance, the new measure does not appear to be specifically aimed at the mining industry, but some mining companies involved in the extraction of critical and strategic minerals and planning substantial investments in the near future could greatly benefit from it. Under the new tax exemption, a corporation or partnership that carries out an investment project of more than $100 million in Quebec will be eligible, under certain conditions, for an income tax holiday and a holiday from the employer contribution to the Health Services Fund. As far as income tax is concerned, this new 10-year tax holiday consists of a deduction in the calculation of the company’s taxable income. The deduction is calculated by applying a rate of 15%, 20% or 25% to the cumulative total of eligible project expenditures. Since this tax measure is intended to promote investment outside major urban centres, the rate will vary according to the project’s location, ranging from 15% for projects in areas with high economic vitality, to 20% for projects in areas with intermediate economic vitality and up to 25% for those in areas with low economic vitality. The higher rates of 20% and 25% are more likely to apply to mining projects, which are generally located in remote areas with lower economic vitality. The critical and strategic minerals identified in the context of this measure are the following: antimony, bismuth, cadmium, caesium, copper, tin, gallium, indium, tellurium, zinc, cobalt, rare-earth elements, platinum-group elements, graphite (natural), lithium, magnesium, nickel, niobium, scandium, tantalum, titanium and vanadium. Let’s briefly consider the example of a mining company carrying out a major investment project for lithium mining in the Nord-du-Québec administrative region, designated by the Quebec government as a territory with intermediate economic vitality. During the investment phase, while the mine is being developed and built, the company incurs $200 million worth of eligible expenditures, which are capital expenditures for new mining equipment and heavy machinery for lithium extraction and processing. Evidently, the company will probably sustain a loss during the investment phase, and, because it has no taxable income, it will not be able to immediately benefit from the tax holiday. However, should the company have taxable income of $50 million in year 5, after four years of investment and mine development, it will be able to deduct $40 million of this taxable income under the new tax holiday, reducing its taxable income to $10 million for that year. This $40 million deduction is based on the application of the 20% rate for territories with intermediate economic vitality to the $200 million of eligible expenditures for the mining project. Another point relevant to the mining industry is that the income tax holiday will apply only to tax payable under the provisions of the Taxation Act. In other words, this tax holiday will not reduce the amounts payable under the Mining Tax Act. With respect to the Health Services Fund, companies will generally be eligible for an employer contribution holiday on wages paid to employees for pay periods falling within the exemption period for major investment projects. In order to benefit from this new tax holiday, companies will have to obtain an initial certificate, as well as annual attestations issued by the Quebec Minister of Finance. Our team of professionals specializing in mining and tax law is available to answer all your questions regarding this new measure and to assist you in your mining investment projects in Quebec.
In 2020, the pandemic disrupted the Quebec economy and the trend continued in 2021. After a difficult year for local businesses, there is an opportunity for business owners to rethink their business model as they develop their recovery plan. In this context, an initial public offering and equity financing might be a good idea. While the process is relatively costly and time-consuming for senior management, not to mention that it results in a series of obligations for the company and its executives and major shareholders, the benefits far outweigh the disadvantages. Here are five good reasons to take your company public and use equity financing to ensure a successful future. 1. Equity financing: financing your company’s growth differently The moment your company goes public, you significantly expand and diversify your equity financing sources. You are no longer dependent on traditional bank loans. Your company can now raise capital much more easily and at a much lower cost, for example through the issuance of convertible securities, share capital, rights or warrants. In addition, your pool of funders expands considerably, going far beyond founding shareholders, your banker and your very close friends and relatives. All these equity financing tools make it possible to more aggressively manage the growth of your business and take advantage of new business opportunities. 2. Equity financing: facilitating mergers and acquisitions Having a company listed on the stock exchange means having a key advantage when it comes to your expansion plan. Once listed, you can acquire another business using your company’s shares as leverage. This added flexibility increases your chances of success in negotiations. You can thus be more bold in your growth management, as you will no longer be limited to conventional financing methods. 3. Equity financing: gaining notoriety By making the decision to take your business public and opting for equity ?nancing, you will give your business greater visibility. First, the initial public offering will be an opportunity to make your company known to investors through promotional events organized by the brokers participating in the issuance, among others. Second, public companies are often followed by ?nancial analysts, and such attention can be an asset when it comes to marketing products and services. In short, by having your company in the spotlight, it will inevitably gain notoriety, both with investors and economic partners. Finally, for many customers and suppliers, doing business with a publicly traded company is reassuring. They see it as a sign of a well-established business, and this perception can facilitate the conclusion of a sale or supply contract. 4. Equity financing: increasing the market value of your business Better ?nancing costs, greater liquidity for your company’s shares, improved growth potential and increased visibility will all make the market value of your company signi?cantly higher than it was before going public. Once listed, book value will no longer be the main indicator used to determine your company’s worth. It will be worth what investors recognize its value to be, based on its potential for growth and pro?tability and its performance relative to competitors. 5. Company succession made easier When the time comes, it will be much easier for you to retire from your business and bene?t from the fruits of your years-long effort. You will have a number of options, including disposing of your shares through a secondary offering. It will also be easier to attract talented people to take over your business because of the multiple bene?ts that come with the status of public company. The advantages of listing your company on the stock exchange and opting for equity ?nancing are many. In addition to the ?ve points presented here, we could add increased credibility with clients and suppliers, better compensation for key employees, less dilution during fundraising, and others. More companies entering the stock market will rebuild our economy. If you are thinking of transforming your company into a public one, opting for equity ?nancing and taking the plunge into the stock market, do not hesitate to call on one of our lawyers practicing in business law to guide and advise you in the process.
Quebec mining, oil and gas companies are henceforth subject to the imposing disclosure regime under the Act respecting transparency measures in the mining, oil and gas industries (the “Act”), which came into force last October 21. This statute echoes the Extractive Sector Transparency Measures Act (Canada),1 which took effect on June 1, 2015, and follows a global trend to increase the transparency of mining, oil and gas exploration and development. The measures provided for in the Act are aimed at discouraging and detecting corruption, as well as fostering the social acceptability of these activities. Under the Act, the companies subject to the Act are required to declare in a statement, as of the next fiscal year following their current fiscal year on October 21, 2015, the payments covered by the Act made to payees for each project and country in which they have operations. Furthermore, this obligation extends to the subsidiaries controlled by a company subject to the Act. The statements will be made public for five years. Companies subject to the Act Is subject to the Act any company which engages in exploration for or development of mineral substances or hydrocarbons and which meets any of the following requirements: its securities are listed on a stock exchange in Canada and its head office is in Quebec; or it has an establishment in Quebec, exercises activities or has assets in Quebec and, based on its consolidated financial statements, meets at least two of the following three conditions for at least one of its two most recent fiscal years: $20 million or more in assets, $40 million or more in revenue, an average of 250 employees or more. Payments covered The payments covered are monetary payments or payments in kind made to the same payee during a fiscal year, where the total value of those payments is equal to or greater than $100,000. The following payments are subject to disclosure: taxes and income tax, other than consumption taxes and personal income taxes royalties fees, including rental fees, entry fees, regulatory charges and any other consideration for licences, permits or concessions production entitlements dividends other than those paid as an ordinary shareholder of a person subject to the Act bonuses, including signature, discovery and production bonuses contributions for infrastructure construction or improvement Payees The Act defines a payee as a government, a body established by two or more governments, a municipality or an aboriginal community,2 as well as an agent exercising powers or duties for such payees. Application and administration of the Act The administration of the Act is assigned to the Autorité des marchés financiers ("AMF"). To avoid duplication, the Act provides that a statement filed in accordance with the requirements of another state may be substituted for the statement required under Quebec law if the government has determined by regulation that the requirements of that state are an acceptable substitute. The statement must be accompanied by a certificate made by an officer or director of the company subject to the Act, or by an independent auditor, attesting that the information contained in the statement is true, accurate and complete. In addition to the investigative powers generally available to the AMF under the Act respecting the Autorité des marchés financiers (chapter A-33.2), the Act gives it the power to require the communication of any document or information considered useful for purposes of the Act. This includes a list of the mining, oil or gas exploration or development projects in which the company subject to the Act has an interest, an explanation of how the disclosed payments were calculated, and a statement of any policies implemented for purposes of meeting the obligations under the Act. The AMF may also require an audit by an outside independent auditor of the statement or the documents pertaining to the disclosed payments. Penalties Lastly, significant penalties are provided for a failure to comply by a company subject to the Act. In particular, the Act provides for administrative monetary penalties for which the directors and officers are jointly and severally liable, unless they demonstrate that they exercised due care and diligence to prevent the failure which led to the penalty. In addition, the penal provisions provide for a fine of up to $250,000 for a failure to comply with certain significant provisions of the Act. Quebec mining, oil and gas companies will be well-advised to stay informed of the regulations that will be passed by the provincial government and which could provide for exceptions or extensions to the requirements of the Act regarding the companies subject to the Act, the payments covered and the payees concerned. 1 Need to Know newsletter, june 2015. 2 A transitional period is provided for regarding payments made to aboriginal communities. The Act will apply to these communities beginning on June 1, 2017.
On October 23, 2023, Lexpert recognized the expertise of three of our partners in its 2023 Lexpert Special Edition: Mining. Josianne Beaudry, René Branchaud and Sébastien Vézina now rank among Canada’s leaders in the area of Mining. Josianne Beaudry is a partner and leader of the Business law group at Lavery. Her practice is primarily focused on securities law, investment funds and mining law. She advises financial sector participants on the application of regulations relating to securities and corporate governance. René Branchaud is a partner in the firm’s Business Law group. He practises in the fields of securities, mergers and acquisitions, as well as corporate law. With more than thirty years’ experience, he advises companies on matters such as incorporation and organization, the drafting of shareholder agreements, private placements, public issues, going public, dispositions, and takeovers. Sébastien Vézina is a partner in the firm’s Business Law group. Over the years, he has refined his practice and developed a particular interest in negotiating commercial agreements with companies in the mining and renewable energy sources, financial services and sports and entertainment industries. Generally, Sébastien's practice in these different industries includes public and private mergers and acquisitions, public and private financing, private sector investments and company buyouts, in particular cross-border transactions between Canada and the United States and international transactions, and the negotiation of various commercial agreements. About Lavery Lavery is the leading independent law firm in Quebec. Its more than 200 professionals, based in Montréal, Quebec, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Quebec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm’s expertise is frequently sought after by numerous national and international partners to provide support in cases under Quebec jurisdiction.
We are pleased to announce that Lavery has once again been recognized in the 2024 edition of Chambers Canada in the following sectors: Corporate/Commercial (Québec, Band 1, Highly Regarded) Employment and Labour (Québec, Band 2) Energy and Natural Resources: Mining (Nationwide, Band 3) Intellectual Property (Nationwide, Band 4) These recognitions are further demonstration of the expertise and quality of legal services that characterize Lavery’s professionals. Five lawyers have been recognized as leaders in their respective areas of practice in the 2023 edition of the Chambers Canada guide. Areas of expertise in which they are recognized: René Branchaud : Energy and Natural Resources: Mining (Nationwide, Band 5) Nicolas Gagnon : Construction (Nationwide, Band 3) Marie-Hélène Jolicoeur : Employment and Labour (Québec, Up and Coming) Guy Lavoie : Employment and Labour (Québec, Band 2) Sébastien Vézina : Energy and Natural Resources: Mining (Nationwide, Band 5) Since 1990, Chambers and Partners' ranks the best law firms and lawyers across 200 jurisdictions throughout the world. The lawyers and law firms profiled in Chambers Canada are selected following through a rigorous process of research and interviews with a broad spectrum of lawyers and their clients. The final selection is based on clearly defined criteria such as the quality of client service, legal expertise, and commercial astuteness. About Lavery Lavery is the leading independent law firm in Quebec. Its more than 200 professionals, based in Montréal, Quebec, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Quebec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm’s expertise is frequently sought after by numerous national and international partners to provide support in cases under Quebec jurisdiction.
On September 25, 2023, Lexpert recognized the expertise of two of our partners in its 2023 Lexpert Special Edition: Energy. René Branchaud and Edith Jacques now rank among Canada’s leaders in the area of energy. René Branchaud practises in the fields of securities, mergers and acquisitions, as well as corporate law. With more than thirty years’ experience, he advises companies on matters such as incorporation and organization, the drafting of shareholder agreements, private placements, public issues, going public, dispositions, and takeovers. Edith Jacques is a partner in Montréal's Business law group. She specializes in mergers and acquisitions, commercial law, as well as international law and acts as business and strategic consultant to mid- and large-size companies. She plays an active role in companies in the manufacturing and energy sectors. These recognitions are further demonstration of the expertise and quality of legal services René and Edith. About Lavery Lavery is the leading independent law firm in Quebec. Its more than 200 professionals, based in Montréal, Quebec, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Quebec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm’s expertise is frequently sought after by numerous national and international partners to provide support in cases under Quebec jurisdiction.
Lavery is pleased to announce that 68 of its lawyers have been recognized as leaders in their respective fields of expertise by The Best Lawyers in Canada 2024. The following lawyers also received the Lawyer of the Year award in the 2024 edition of The Best Lawyers in Canada: Josianne Beaudry : Mining Law Jules Brière : Administrative and Public Law Bernard Larocque : Professional Malpractice Law Carl Lessard : Workers' Compensation Law Consult the complete list of Lavery's lawyers and their fields of expertise: Josianne Beaudry : Mergers and Acquisitions Law / Mining Law Laurence Bich-Carrière : Class Action Litigation / Contruction Law / Corporate and Commercial Litigation / Product Liability Law Dominic Boivert : Insurance Law Luc R. Borduas : Corporate Law / Mergers and Acquisitions Law Daniel Bouchard : Environmental Law Elizabeth Bourgeois : Labour and Employment Law (Ones To Watch) René Branchaud : Mining Law / Natural Resources Law / Securities Law Étienne Brassard : Equipment Finance Law / Mergers and Acquisitions Law / Real Estate Law Jules Brière : Aboriginal Law / Indigenous Practice / Administrative and Public Law / Health Care Law Myriam Brixi : Class Action Litigation Benoit Brouillette : Labour and Employment Law Richard Burgos : Mergers and Acquisitions Law / Corporate Law / Commercial Leasing Law / Real Estate Law Marie-Claude Cantin : Insurance Law / Construction Law Brittany Carson : Labour and Employment Law Karl Chabot : Construction Law (Ones To Watch) Chantal Desjardins : Intellectual Property Law Jean-Sébastien Desroches : Corporate Law / Mergers and Acquisitions Law Raymond Doray : Privacy and Data Security Law / Administrative and Public Law / Defamation and Media Law Christian Dumoulin : Mergers and Acquisitions Law Alain Y. Dussault : Intellectual Property Law Isabelle Duval : Family Law Philippe Frère : Administrative and Public Law Simon Gagné : Labour and Employment Law Nicolas Gagnon : Construction Law Richard Gaudreault : Labour and Employment Law Julie Gauvreau : Intellectual Property Law / Biotechnology and Life Sciences Practice Audrey Gibeault : Trusts and Estates Caroline Harnois : Family Law / Family Law Mediation / Trusts and Estates Marie-Josée Hétu : Labour and Employment Law Édith Jacques : Energy Law / Corporate Law / Natural Resources Law Marie-Hélène Jolicoeur : Labour and Employment Law Isabelle Jomphe : Advertising and Marketing Law / Intellectual Property Law Guillaume Laberge : Administrative and Public Law Jonathan Lacoste-Jobin : Insurance Law Awatif Lakhdar : Family Law Bernard Larocque : Professional Malpractice Law / Class Action Litigation / Insurance Law / Legal Malpractice Law Éric Lavallée : Technology Law Myriam Lavallée : Labour and Employment Law Guy Lavoie : Labour and Employment Law / Workers' Compensation Law Jean Legault : Banking and Finance Law / Insolvency and Financial Restructuring Law Carl Lessard : Workers' Compensation Law / Labour and Employment Law Josiane L'Heureux : Labour and Employment Law Despina Mandilaras : Construction Law / Corporate and Commercial Litigation (Ones To Watch) Hugh Mansfield : Intellectual Property Law Zeïneb Mellouli : Labour and Employment Law / Workers' Compensation Law Isabelle P. Mercure : Trusts and Estates Patrick A. Molinari : Health Care Law Jessica Parent : Labour and Employment Law (Ones To Watch) Luc Pariseau : Tax Law / Trusts and Estates Ariane Pasquier : Labour and Employment Law Jacques Paul-Hus : Mergers and Acquisitions Law Audrey Pelletier : Tax Law (Ones To Watch) Hubert Pepin : Labour and Employment Law Martin Pichette : Insurance Law / Professional Malpractice Law / Corporate and Commercial Litigation Élisabeth Pinard : Family Law François Renaud : Banking and Finance Law / Structured Finance Law Judith Rochette : Insurance Law / Professional Malpractice Law Ian Rose FCIArb : Director and Officer Liability Practice / Insurance Law / Class Action Litigation Sophie Roy : Insurance Law (Ones To Watch) Chantal Saint-Onge : Corporate and Commercial Litigation (Ones To Watch) Ouassim Tadlaoui : Construction Law / Insolvency and Financial Restructuring Law Bernard Trang : Banking and Finance Law / Project Finance Law (Ones To Watch) Mylène Vallières : Mergers and Acquisitions Law / Securities Law (Ones To Watch) André Vautour : Corporate Governance Practice / Corporate Law / Information Technology Law / Intellectual Property Law / Technology Law / Energy Law Bruno Verdon : Corporate and Commercial Litigation Sébastien Vézina : Mergers and Acquisitions Law / Mining Law Yanick Vlasak : Corporate and Commercial Litigation / Insolvency and Financial Restructuring Law Jonathan Warin : Insolvency and Financial Restructuring Law These recognitions are further demonstration of the expertise and quality of legal services that characterize Lavery’s professionals. About Lavery Lavery is the leading independent law firm in Quebec. Its more than 200 professionals, based in Montréal, Quebec, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Quebec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm’s expertise is frequently sought after by numerous national and international partners to provide support in cases under Quebec jurisdiction.