This Form 20-F is being filed as an annual report under the
U.S. Exchange Act and, as such, there is no requirement to provide any
information under this item.
The Company's outstanding common shares are listed on the TSX-V
and are also quoted in the United States on the OTC Pink.
Item 10. Additional Information
A. Share Capital
This Form 20-F is being filed as an annual report under the
U.S. Exchange Act and, as such, there is no requirement to provide any
information under this item.
B. Memorandum and Articles of Association
A copy of the memorandum and articles of association of the
Company is incorporated by reference into this Form 20-F as Exhibit 1.1.
The Company is a corporation governed by the
Companies Law
(2011 Revision)
of the Cayman Islands (the "
Companies Law
") and is
registered with the Registrar of Companies for the Cayman Islands under
registration number 266618. Under the Companies Law, the memorandum of
association of the Company may, by "special resolution" (see below for
definition), be amended with respect to any objects, powers or other matters
specified therein. Under the Companies Law, "special resolution" means a
resolution passed at a general meeting by a majority of not less than two-thirds
of the votes cast by the shareholders who are entitled to vote in respect of
that resolution or, if so authorized by the Company’s articles of association, a
resolution in writing signed by all the shareholders entitled to vote on that
resolution.
The Company’s memorandum of association provides that the
Company’s objects are unrestricted.
The Company's authorized share capital consists of US$50,000
divided into 62,500,000 common shares with a par value of US$0.0008 per share,
of which 21,906,742 common shares were issued and outstanding as of April
24, 2018. The following is a summary of the material provisions attaching to the
common shares:
The holders of the Company’s common shares are entitled to
receive notice of and to attend all meetings of the shareholders of the Company
and shall have one vote for each common share held at all meetings of the
shareholders of the Company, except for meetings at which only holders of
another specified class or series of shares are entitled to vote separately as a
class or series. Holders of the common shares are not entitled to preemptive
rights, and the common shares are not subject to conversion rights, redemption
provisions, or sinking fund provisions. Subject to the prior rights of any
shares ranking senior to the common shares (of which there are also presently
none), the holders of the common shares are entitled to (i) receive any
dividends as and when declared by the Board, out of the assets of the Company
properly applicable to the payment of dividends, in such amount and in such form
as the Board may from time to time determine, and (ii) receive the remaining
property of the Company in the event of any liquidation, dissolution or
winding-up of the Company.
Under the Company's articles of association, a director of the
Company may only be (a) a party to, or otherwise interested in, any transaction
or arrangement with the Company or in which the Company is or may otherwise be
interested, or (b) be interested in another corporation in which the Company is
interested, if the director discloses the nature and extent of his interest to
the other directors of the Company and such other directors resolve to approve
the director’s interest. Such a director may vote on any resolution concerning a
matter in which the director has an interest so long as the director disclosed
such interest in accordance with the Company's articles of association.
-26-
Also under the Company's articles of association, the Company's
directors may be paid such remuneration for their services as the Board may from
time to time determine. The directors are also be entitled to be reimbursed for
travelling and other expenses properly incurred by them in attending meetings of
the Board or any committee thereof.
With respect to borrowing powers, the Company's articles of
association
provide that the directors of the Company may by resolution
exercise all the powers of the Company to incur indebtedness, liabilities or
obligations and to secure indebtedness, liabilities or obligations whether of
the Company or of any third party.
A director of the Company need not be a shareholder of the
Company.
The annual meeting of shareholders of the Company is held at
such time in each year (but not later than 15 months after holding the last
preceding annual meeting of shareholders) and at such place as the Board may
from time to time determine. The Board has the power to call a special meeting
of shareholders of the Company at any time.
The only persons entitled to be present at a meeting of
shareholders are those entitled to vote thereat, the directors and, if the
Company’s financial statements are to be presented, the auditor of the Company
and others who, although not entitled to vote, are entitled or required under
any provision of the Companies Law or the articles of association of the Company
to be present at the meeting. Any other person may be admitted only on the
invitation of the chairperson of the meeting or with the consent of the meeting.
A quorum for the transaction of business at any meeting of
shareholders is two persons present in person or by proxy representing not less
than 5% of the votes of the shares entitled to vote on resolutions to be
considered at the meeting.
Disclosure of Share Ownership
In general, under applicable securities regulation in Canada, a
person or company who beneficially owns, directly or indirectly, voting
securities of an issuer or who exercises control or direction over voting
securities of an issuer or a combination of both, carrying more than 10% of the
voting rights attached to all the issuer's outstanding voting securities is an
insider and must, within 10 days of becoming an insider, file a report in the
required form effective the date on which the person became an insider. The
report must disclose any direct or indirect beneficial ownership of, or control
or direction over, securities of the reporting issuer. Additionally, securities
regulation in Canada provides for the filing of a report by an insider of a
reporting issuer whose holdings change, which report must be filed within five
days from the day on which the change takes place.
The rules in the U.S. governing the ownership threshold above
which shareholder ownership must be disclosed are more stringent than those
discussed above. Section 13 of the U.S. Exchange Act imposes reporting
requirements on persons who acquire beneficial ownership (as such term is
defined in Rule 13d-3 under the U.S. Exchange Act) of more than 5% of a class of
an equity security registered under Section 12 of the U.S. Exchange Act. In
general, such persons must file, within 10 days after such acquisition, a report
of beneficial ownership with the SEC containing the information prescribed by
the regulations under Section 13 of the U.S. Exchange Act. This information is
also required to be sent to the issuer of the securities and to each exchange
where the securities are traded.
-27-
C. Material Contracts
Except for contracts entered into in the ordinary course of
business and other than as may be referred to elsewhere in this Form 20-F, there
are no material contracts to which the Company is currently a party that were
entered into by the Company or any of its subsidiaries during the two years
immediately preceding the date of this Form 20-F.
D. Exchange Controls
There are no governmental laws, decrees, regulations or other
legislation, including foreign exchange controls, in Canada or the Cayman
Islands which may affect the export or import of capital or that may affect the
remittance of dividends, interest or other payments to non-resident holders of
the Company's securities.
E. Certain United States and Canadian Income Tax
Considerations
(1) Certain United States Federal Income Tax
Considerations
The following is a general summary of certain material U.S.
federal income tax considerations applicable to a shareholder arising from and
relating to the acquisition, ownership and disposition of common shares of the
Company ("
Common Shares
").
This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a shareholder arising from and
relating to the acquisition, ownership and disposition of Common Shares. In
addition, this summary does not take into account the individual facts and
circumstances of any particular shareholder that may affect the U.S. federal
income tax consequences to such shareholder, including specific tax consequences
to a shareholder under an applicable tax treaty. Accordingly, this summary is
not intended to be, and should not be construed as, legal or U.S. federal income
tax advice with respect to any shareholder. This summary does not address the
U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and
local, and foreign tax consequences to shareholders of the acquisition,
ownership and disposition of Common Shares. Except as specifically set forth
below, this summary does not discuss applicable tax reporting requirements. Each
prospective shareholder should consult its own tax advisor regarding the U.S.
federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S.
state and local, and foreign tax consequences relating to the acquisition,
ownership and disposition of Common Shares.
No legal opinion from U.S. legal counsel or ruling from the
Internal Revenue Service (the "
IRS
") has been requested, or will be
obtained, regarding the U.S. federal income tax consequences of the acquisition,
ownership and disposition of Common Shares. This summary is not binding on the
IRS, and the IRS is not precluded from taking a position that is different from,
and contrary to, the positions taken in this summary. In addition, because the
authorities on which this summary is based are subject to various
interpretations, the IRS and the U.S. courts could disagree with one or more of
the conclusions described in this summary.
Scope of This Disclosure
Authorities
This summary is based on the Internal Revenue Code of 1986 (the
"
Code
"), U.S. Treasury Regulations (whether final, temporary, or
proposed), published rulings of the IRS, published administrative positions of
the IRS, and U.S. court decisions that are applicable and, in each case, as in
effect and available, as of the date of this summary. Any of the authorities on
which this summary is based could be changed in a material and adverse manner at
any time, and any such change could be applied on a retroactive or prospective
basis which could affect the U.S. federal income tax considerations described in
this summary. This summary does not discuss the potential effects, whether
adverse or beneficial, of any proposed legislation that, if enacted, could be
applied on a retroactive or prospective basis.
-28-
U.S. Holders
For purposes of this summary, the term "
U.S. Holder
"
means a beneficial owner of Common Shares that is for U.S. federal income tax
purposes:
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(i)
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an individual who is a citizen or resident of the U.S.;
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(ii)
|
a corporation (or other entity taxable as a corporation
for U.S. federal income tax purposes) organized under the laws of the
U.S., any state thereof or the District of Columbia;
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(iii)
|
an estate whose income is subject to U.S. federal income
taxation regardless of its source; or
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(iv)
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a trust that (A) is subject to the primary supervision of
a court within the U.S. and the control of one or more U.S. persons for
all substantial decisions or (B) has a valid election in effect under
applicable U.S. Treasury Regulations to be treated as a U.S. person.
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Non-U.S. Holders
For purposes of this summary, a "
non-U.S. Holder
" is a
beneficial owner of common shares that is not a U.S. Holder and is not treated
as a partnership (or entity or arrangement classified as a partnership) for U.S.
federal income tax purposes.
U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed
This summary does not address the U.S. federal income tax
considerations to Company shareholders that are subject to special provisions
under the Code, including the following: (i) shareholders that are tax-exempt
organizations, qualified retirement plans, individual retirement accounts, or
other tax-deferred accounts; (ii) shareholders that are financial institutions,
underwriters, insurance companies, real estate investment trusts, or regulated
investment companies; (iii) shareholders that are broker-dealers, dealers, or
traders in securities or currencies that elect to apply a mark-to-market
accounting method; (iv) shareholders that have a "functional currency" other
than the U.S. dollar; (v) shareholders that own Common Shares as part of a
straddle, hedging transaction, conversion transaction, constructive sale, or
other arrangement involving more than one position; (vi) shareholders that
acquired Common Shares in connection with the exercise of employee stock options
or otherwise as compensation for services; (vii) shareholders that hold Common
Shares other than as a capital asset within the meaning of Section 1221 of the
Code (generally, property held for investment purposes); (viii) U.S. expatriates
or former long-term residents of the United States; (ix) controlled foreign
corporations and passive foreign investment companies; (x) shareholders required
to accelerate the recognition of any item of gross income with respect to Common
Shares as a result of such income being recognized on an applicable financial
statement; and (xi) shareholders that own or have owned, directly, indirectly,
or by attribution, 5% or more, by voting power or value, of the outstanding
Common Shares. Shareholders that are subject to special provisions under the
Code, including shareholders described immediately above, should consult their
own tax advisor regarding the U.S. federal, U.S. federal estate and gift, U.S.
state and local tax, and foreign tax consequences relating to the ownership and
disposition of Common Shares.
-29-
If an entity or arrangement that is classified as a partnership
(or a "pass-through" entity) for U.S. federal income tax purposes holds Common
Shares, the U.S. federal income tax consequences to such partnership and the
partners of such partnership of the ownership and disposition of Common Shares
generally will depend in part on the activities of the partnership and the
status of such partners. This summary does not address the tax consequences to
any such partner or partnership. Partners of entities or arrangements that are
classified as partnerships for U.S. federal income tax purposes should consult
their own tax advisors regarding the U.S. federal income tax consequences of the
ownership and disposition of Common Shares.
Treatment of the Company as a U.S. Corporation
The Company believes that it should be treated as a U.S.
domestic corporation for U.S. federal income tax purposes under Section 7874 of
the Code and be subject to U.S. tax on its worldwide income. The Company has not
sought or obtained an opinion of legal counsel or a ruling from the IRS
regarding the treatment of the Company as a U.S. domestic corporation.
Accordingly, there can be no assurance that the IRS will not challenge the
treatment of the Company as a U.S. domestic corporation or that the U.S. courts
will uphold the status of the Company as a U.S. domestic corporation in the
event of an IRS challenge. This summary assumes that the Company will be treated
as a U.S. domestic corporation for U.S. federal income tax purposes.
General U.S. Federal Income Tax Consequences Related
to the Ownership and Disposition of
Common
Shares by U.S. Holders
Distributions on Common Shares
The Company does not intend to pay any dividends on the Common
Shares in the foreseeable future. In the event that the Company pays dividends
on the Common Shares, a U.S. Holder that receives a distribution, including a
constructive distribution, with respect to a Common Share will be required to
include the amount of such distribution in gross income as a dividend to the
extent of the current or accumulated "earnings and profits" of the Company, as
computed for U.S. federal income tax purposes. To the extent that a distribution
exceeds the current and accumulated "earnings and profits" of the Company, such
distribution will be treated first as a tax-free return of capital to the extent
of a U.S. Holder’s tax basis in the Common Shares and thereafter as gain from
the sale or exchange of such shares taxable as described under "Sale or Other
Taxable Disposition of Common Shares" below. Subject to applicable limitations
and requirements, dividends received on the Common Shares generally should be
eligible for the “dividends received deduction” available to corporate
shareholders.
A dividend paid to a U.S. Holder who is an individual, estate
or trust by the Company generally will be taxed at the preferential tax rates
applicable to long-term capital gains if certain holding period and other
requirements are met. The dividend rules are complex and each U.S. Holder should
consult its own tax advisor regarding the application of such rules.
Sale or Other Taxable Disposition of Common Shares
Upon the sale or other taxable disposition of Common Shares, a
U.S. Holder generally will recognize a capital gain or loss in an amount equal
to the difference between (i) the amount of cash plus the fair market value of
any property received and (ii) such U.S. Holder’s tax basis in the shares sold
or otherwise disposed of. Gain or loss recognized on such sale or other
disposition generally will be long-term capital gain or loss if, at the time of
the sale or other disposition, the shares have been held for more than one year.
-30-
Preferential tax rates apply to long-term capital gains of a
U.S. Holder that is an individual, estate, or trust. There are currently no
preferential tax rates for long-term capital gains of a U.S. Holder that is a
corporation. Deductions for capital losses are subject to significant
limitations under the Code.
Receipt of Foreign Currency
Amounts paid to a U.S. Holder in foreign currency generally
will be equal to the U.S. dollar value of such distribution based on the
exchange rate applicable on the date of receipt. A U.S. Holder that does not
convert foreign currency received into U.S. dollars on the date of receipt
generally will have a tax basis in such foreign currency equal to the U.S.
dollar value of such foreign currency on the date of receipt. Such U.S. Holder
generally will recognize ordinary income or loss on the subsequent sale or other
taxable disposition of such foreign currency (including an exchange for U.S.
dollars), which generally would be treated as U.S. source ordinary income for
foreign tax credit purposes. Different rules apply to U.S. Holders who use the
accrual method of tax accounting.
Additional Tax on Passive Income
Individuals, estates and certain trusts whose income exceeds
certain thresholds will be required to pay a 3.8% Medicare surtax on "net
investment income" including, among other things, dividends and net gain from
disposition of property (other than property held in certain trades or
businesses). U.S. Holders should consult with their own tax advisors regarding
the effect, if any, of this tax on their ownership and disposition of Common
Shares.
Backup Withholding and Information Reporting
Information reporting requirements generally will apply to
payments of dividends on Common Shares and to the proceeds of a sale of Common
Shares paid to a U.S. Holder unless the U.S. Holder is an exempt recipient (such
as a corporation). Payments made within the U.S. or by a U.S. payor or U.S.
middleman, of dividends on, and proceeds arising from the sale or other taxable
disposition of, Common Shares will generally be subject to information reporting
and backup withholding tax, at the rate of 24%, if a U.S. Holder (i) fails to
furnish such U.S. Holder’s correct U.S. taxpayer identification number
(generally on Form W-9), (ii) furnishes an incorrect U.S. taxpayer
identification number, (iii) is notified by the IRS that such U.S. Holder has
previously failed to properly report items subject to backup withholding tax, or
(iv) fails to certify, under penalty of perjury, that such U.S. Holder has
furnished its correct U.S. taxpayer identification number and that the IRS has
not notified such U.S. Holder that it is subject to backup withholding tax.
However, certain exempt persons generally are excluded from these information
reporting and backup withholding rules. Backup withholding is not an additional
tax. Any amounts withheld under the U.S. backup withholding tax rules will be
allowed as a credit against a U.S. Holder’s U.S. federal income tax liability,
if any, or will be refunded, if such U.S. Holder furnishes required information
to the IRS in a timely manner. U.S. Holders should consult with their own tax
advisors regarding the information reporting and backup withholding rules.
-31-
General U.S. Tax Consequences Related to the Ownership
and Disposition of Common Shares by Non-U.S. Holders
Distributions on Common Shares
The Company does not intend to pay any dividends on the Common
Shares in the foreseeable future. In the event that the Company pays dividends
on the Common Shares, a non-U.S. Holder that receives a distribution, including
a constructive distribution, with respect to a Common Share will be required to
treat such distribution as a dividend to the extent of the current or
accumulated "earnings and profits" of the Company, as computed for U.S. federal
income tax purposes. To the extent that a distribution exceeds the current and
accumulated "earnings and profits" of the Company, such distribution will be
treated (i) as a tax-free return of capital to the extent of a non-U.S. Holder’s
tax basis in the Common Shares and (ii) thereafter as gain from the sale or
exchange of such shares.
Any amount treated as a dividend generally will be subject to
withholding tax at a 30% gross rate, subject to any exemption or lower rate
under an applicable treaty if the non-U.S. Holder provides the Company with a
properly executed IRS Form W-8BEN or W-8BEN-E, unless the non-U.S. Holder
instead supplies a properly executed IRS Form W-8ECI (or other applicable form)
relating to income effectively connected with the conduct of a trade or business
within the U.S. To the extent a distribution from the Company is treated as a
dividend effectively connected with the conduct of a trade or business within
the U.S. and includible in the non-U.S. Holder’s gross income, it will not be
subject to the withholding tax (assuming proper certification and disclosure),
but instead will be subject to U.S. federal income tax on a net income basis at
applicable graduated individual or corporate rates. Any such effectively
connected income received by a non-U.S. corporation may, under certain
circumstances, be subject to an additional branch profits tax at a 30% rate,
subject to any exemption or lower rate as may be specified by an applicable
income tax treaty.
A non-U.S. Holder who wishes to claim the benefit of an
applicable treaty rate or exemption is required to satisfy certain certification
and other requirements. If a non-U.S. Holder is eligible for an exemption from
or a reduced rate of U.S. withholding tax pursuant to an income tax treaty, it
may obtain a refund of any excess amounts withheld by timely filing an
appropriate claim for refund with the IRS. Amounts taxable to a non-U.S. Holder
as gain from the sale or exchange of Common Shares will be taxable as described
under "Sale or Other Taxable Disposition of Common Shares" below.
Sale or Other Taxable Disposition of Common Shares
In general, a non-U.S. Holder of Common Shares will not be
subject to U.S. federal income tax on gain recognized from a sale, exchange, or
other taxable disposition of such shares, unless one of the circumstances
described below exist.
If the gain is effectively connected with a U.S. trade or
business carried on by the non-U.S. Holder (and, where an income tax treaty
applies, is attributable to U.S. permanent establishment of the non-U.S.
Holder), such holder will be subject to tax on the net gain derived from the
sale or other taxable disposition of Common Shares under regular graduated U.S.
federal income tax rates. If a non-U.S. Holder is a non-U.S. corporation, it
will be subject to tax on its net gain from such a sale or other taxable
disposition generally in the same manner as if it were a U.S. person as defined
under the Code and, in addition, it may be subject to the branch profits tax at
a gross rate equal to 30% of its effectively connected earnings and profits for
that taxable year, subject to any exemption or lower rate as may be specified by
an applicable income tax treaty.
-32-
If a non-U.S. Holder is an individual who is present in the
U.S. for 183 days or more in the taxable year of disposition and certain other
conditions are met, such holder will be subject to tax at a rate of 30% (or
subject to any exemption or lower rate as may be specified by an applicable
income tax treaty) on the gain derived from the sale or other taxable
disposition of Common Shares even though such holder is not considered a
resident of the U.S. The amount of such gain may be offset by the non-U.S.
Holder’s U.S. source capital losses.
If the Common Shares qualify as a "United States real property
interest" ("
USRPI
"), gain from the sale or disposition of a non-U.S.
Holder’s shares will be subject to special U.S. federal income tax rules
applicable to dispositions of U.S. real estate by foreign persons. If at any
time during the shorter of the non-U.S. Holder’s holding period or the 5-year
period ending on the date of disposition of the Common Shares, the Company (or a
predecessor entity) qualifies as a "United States Real Property Holding
Corporation" ("
USRPHC
"), a non-U.S. Holder will be treated as having
disposed of a USRPI and, thus, will be subject to U.S. federal net income tax on
gain from a sale of Common Shares at graduated rates as if the gain or loss were
effectively connected with the conduct of a U.S. trade or business unless an
exception applies for shares of a USRPHC which are "regularly traded on an
established securities market" within the meaning of Section 897 of the Code
(the "
Regularly Traded Exception
"). A "
USRPHC
" is a U.S. domestic
corporation whose trade or business and real property assets consist primarily
of USRPIs. For purposes of these rules, a "
USRPI
" includes land,
buildings and other improvements, growing crops and timber, and mines, wells and
other natural deposits (including, oil and gas properties and mineral deposits)
located in the United States as well as equity interests in a USRPHC.
Under the Regularly Traded Exception, a disposition of stock of
a USRPHC that is regularly traded on an established securities market will only
be subject to U.S. federal income taxation in the case of a person who, directly
or constructively, at any time during the five year period ending on the date of
the disposition of stock, held more than 5% of that class of stock. There can be
no assurance that the Common Shares will satisfy the Regularly Traded Exception
at any particular point in the future.
The Company does not believe that it is currently a USRPHC for
U.S. federal income tax purposes, though it could become a USRPHC in the future.
Non-U.S. Holders are urged to consult with their own tax advisors regarding the
consequences if the Company is, has been or will be a USRPHC.
Information Reporting and Withholding
Generally, the Company must report annually to the IRS and to
non-U.S. Holders the amount of dividends paid to non-U.S. Holders and the amount
of tax, if any, withheld with respect to those payments. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which a non-U.S. Holder
resides under the provisions of an applicable income tax treaty.
In general, a non-U.S. Holder will not be subject to backup
withholding with respect to payments of dividends paid, provided the Company
receives a statement meeting certain requirements to the effect that the non-U.S.
Holder is not a U.S. person and that the Company does not have actual knowledge
or reason to know that the holder is a U.S. person, as defined under the Code,
that is not an exempt recipient. The requirements for the statement will be met
if (i) the non-U.S. Holder provides its name and address and certifies, under
penalty of perjury, that it is not a U.S. person (which certification may be
made on IRS Form W-8BEN or W-8BEN-E) or (ii) a financial institution holding the
instrument on behalf of the non-U.S. Holder certifies, under penalty of perjury,
that such statement has been received by it and furnishes the Company or its
paying agent with a copy of the statement. In addition, a non-U.S. Holder will
be subject to information reporting and, depending on the circumstances, backup
withholding with respect to payments of the proceeds of a sale of Common Shares
within the U.S. or conducted through certain U.S.-related financial
intermediaries, unless the statement described above has been received, and the
Company does not have actual knowledge or reason to know that a holder is a U.S.
person, as defined under the Code, or that it is not an exempt recipient, or the
non-U.S. Holder otherwise establishes an exemption. Any amounts withheld under
the backup withholding rules will be allowed as a refund or a credit against a
non-U.S. Holder’s U.S. federal income tax liability provided the required
information is furnished timely to the IRS.
-33-
Sections 1471 through 1474 of the Code (commonly referred to as
“FATCA”) impose a reporting regime and potentially a 30% withholding tax on
certain payments made to or through (i) a “foreign financial institution” (as
specifically defined in the Code) that does not enter into an agreement with the
IRS to provide the IRS with certain information in respect of its account
holders and investors or (ii) a “non-financial foreign entity” (as specifically
defined in the Code) that does not provide sufficient information with respect
to its substantial U.S. owners (if any). The United States has entered into, and
continues to negotiate, intergovernmental agreements (each, an "IGA") with a
number of other jurisdictions to facilitate the implementation of FATCA. An IGA
may significantly alter the application of FATCA and its information reporting
and withholding requirements with respect to any particular investor.
FATCA withholding may apply to payments of dividends in respect
of the Common Shares and, in the case of a sale or other disposition of Common
Shares occurring after December 31, 2018, the gross proceeds of such sale or
other disposition if the payee does not provide documentation (typically IRS
Form W-9 or the relevant IRS Form W-8) providing the required information or
establishing compliance with, or an exemption from, FATCA. FATCA is particularly
complex and its application remains uncertain. Non-U.S. Holders should consult
their own tax advisors regarding how these rules may apply in their particular
circumstances.
(2) Certain Canadian Federal Income Tax Considerations
The following is a general summary, as of the date hereof, of
the principal Canadian federal income tax considerations under the
Income Tax
Act
(Canada) and the regulations thereunder, as amended (collectively, the "
Tax
Act
"), generally applicable to a holder who, for the purposes of the Tax Act
and at all relevant times, holds common shares in the capital of the Company
(the "
Common Shares
") as capital property and deals at arm’s length with,
and is not affiliated with, the Company (a "
Holder
"). Common Shares will
generally be considered to be capital property to a Holder unless the Holder
holds such Common Shares in the course of carrying on a business of buying and
selling securities or has acquired them in one or more transactions considered
to be an adventure or concern in the nature of trade.
This summary is not applicable to a Holder: (i) with respect to
whom the Company is or will be a "foreign affiliate" within the meaning of the
Tax Act, (ii) that is a "financial institution" for the purposes of the
mark-to-market rules under the Tax Act, (iii) an interest in which is a "tax
shelter" or a "tax shelter investment" as defined in the Tax Act, (iv) that is a
"specified financial institution" as defined in the Tax Act, (v) who has made a
"functional currency" election under section 261 of the Tax Act, or (vi) that
has entered into or will enter into, with respect to the Common Shares, a
“derivative forward agreement” as defined in the Tax Act. Any such Holder should
consult its own tax advisor.
This summary is based on the current provisions of the Tax Act
and an understanding of the current published administrative policies and
assessing practices of the Canada Revenue Agency (the "
CRA
") released
prior to the date hereof. This summary takes into account all proposed
amendments to the Tax Act that have been publicly announced by or on behalf of
the Minister of Finance (Canada) ("
Finance
") prior to the date hereof
(the "
Proposed Amendments
") and assumes that such Proposed Amendments
will be enacted in the form proposed, although no assurance can be given that
the Proposed Amendments will be enacted in their current form or at all. Except
for the Proposed Amendments, this summary does not take into account or
anticipate any other changes in law or any changes in the CRA’s administrative
policies and assessing practices, whether by judicial, governmental or
legislative action or decision, nor does it take into account other federal or
any provincial, territorial or foreign tax legislation or considerations, which
may differ from the Canadian federal income tax considerations described herein.
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This summary is of a general nature only and is not intended
to be, nor should it be construed to be, legal or tax advice to any particular
Holder, and no representations are made with respect to the income tax
considerations applicable to any particular Holder. Accordingly, Holders are
urged to consult their own tax advisors about the specific tax consequences to
them of acquiring, holding and disposing of Common Shares.
Currency Conversion
For purposes of the Tax Act, all amounts relating to the
acquisition, holding or disposition of securities (including dividends, adjusted
cost base and proceeds of disposition) must generally be expressed in Canadian
dollars. Amounts denominated in foreign currencies must be converted into
Canadian dollars generally based on the exchange rate quoted by the Bank of
Canada on the date such amounts arise or such other rate of exchange as is
acceptable to the Minister of National Revenue (Canada).
Residents of Canada
The following discussion applies to a Holder who, for the
purposes of the Tax Act and any applicable income tax treaty or convention, and
at all relevant times, is resident in Canada (a "
Resident Holder
").
Dividends on Common Shares
A Resident Holder will be required to include in computing such
Holder’s income for a taxation year the amount of dividends, if any, received on
Common Shares. Gentor is not a "taxable Canadian corporation". Therefore,
dividends received on Common Shares by a Resident Holder who is an individual
will not be subject to the gross-up and dividend tax credit rules in the Tax Act
normally applicable to taxable dividends received from taxable Canadian
corporations. A Resident Holder that is a corporation will not be entitled to
deduct the amount of dividends received on Common Shares in computing its
taxable income.
Disposition of Common Shares
A disposition or deemed disposition of Common Shares by a
Resident Holder will generally result in a capital gain (or capital loss) to the
extent that the proceeds of disposition, net of any reasonable costs of the
disposition, exceed (or are less than) the adjusted cost base to the Resident
Holder of the Common Shares immediately before the disposition. See "
Taxation
of Capital Gains and Capital Losses
" below.
Taxation of Capital Gains and Capital Losses
Generally, one-half of any capital gain (a "
taxable capital
gain
") realized by a Resident Holder will be included in the Resident
Holder’s income for the year of disposition. One-half of any capital loss (an "
allowable
capital loss
") realized by a Resident Holder in a taxation year is generally
required to be deducted by the Holder against taxable capital gains in that year
(subject to, and in accordance with, the provisions of the Tax Act). Any excess
of allowable capital losses over taxable capital gains of a Resident Holder
realized in a taxation year may be carried back up to three taxation years or
forward indefinitely and deducted against net taxable capital gains realized in
such years, to the extent and under the circumstances provided in the Tax Act.
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Capital gains realized by an individual or trust, other than
certain specified trusts, may give rise to a liability for alternative minimum
tax under the Tax Act.
Offshore Investment Fund Property Rules
The Tax Act contains provisions (the "
OIF Rules
") which,
in certain circumstances, may require a Resident Holder to include an amount in
income in each taxation year in respect of the acquisition and holding of Common
Shares if (1) the value of such Common Shares may reasonably be considered to be
derived, directly or indirectly, primarily from portfolio investments in: (i)
shares of the capital stock of one or more corporations, (ii) indebtedness or
annuities, (iii) interests in one or more corporations, trusts, partnerships,
organizations, funds or entities, (iv) commodities, (v) real estate, (vi)
Canadian or foreign resource properties, (vii) currency of a country other than
Canada, (viii) rights or options to acquire or dispose of any of the foregoing,
or (ix) any combination of the foregoing (collectively, "
Investment Assets
");
and (2) it may reasonably be concluded that one of the main reasons for the
Resident Holder acquiring, holding or having the Common Shares was to derive a
benefit from portfolio investments in Investment Assets in such a manner that
the taxes, if any, on the income, profits and gains from such Investment Assets
for any particular year are significantly less than the tax that would have been
applicable under Part I of the Tax Act if the income, profits and gains had been
earned directly by the Resident Holder.
In making this determination, the OIF Rules provide that regard
must be had to all of the circumstances, including (i) the nature, organization
and operation of any non-resident entity, including the Company, and the form
of, and the terms and conditions governing, the Resident Holder’s interest in,
or connection with, any such non-resident entity, (ii) the extent to which any
income, profit and gains that may reasonably be considered to be earned or
accrued, whether directly or indirectly, for the benefit of any such
non-resident entity, including the Company, are subject to an income or profits
tax that is significantly less than the income tax that would be applicable to
such income, profits and gains if they were earned directly by the Resident
Holder, and (iii) the extent to which any income, profits and gains of any such
non-resident entity, including the Company, for any fiscal period are
distributed in that or the immediately following fiscal period.
The CRA has taken the position that the term “portfolio
investments” should be given a broad interpretation. Nevertheless the Company
does not believe that the value of its Common Shares should be regarded as being
derived, directly or indirectly, from portfolio investments. Nevertheless it is
possible that the CRA or a Court could take a different view, in which case the
applicability of the provision may depend on the determination referred to in
the immediately preceding paragraph regarding the reasons for the acquisition
and holding of the Common Shares.
If applicable, the OIF Rules can result in a Resident Holder
being required to include in its income for each taxation year in which such
Resident Holder owns the Common Shares the amount, if any, by which (i) an
imputed return based on the Resident Holder’s “designated cost” (as defined in
the Tax Act) of the Common Shares exceeds (ii) any dividends or other amounts
included in computing such Holder’s income for the year (other than a capital
gain) in respect of the Common Shares determined without reference to the OIF
Rules. Any amount required to be included in computing a Resident Holder’s
income under these provisions will be added to the adjusted cost base of the
Common Shares.
The OIF Rules are complex and their application will
potentially depend, in part, on the reasons for a Resident Holder acquiring or
holding Common Shares. Resident Holders should consult their own tax advisors
regarding the application and consequences of the OIF Rules in their own
particular circumstances.
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Additional Refundable Tax
A Resident Holder that is, throughout its taxation year, a
"Canadian-controlled private corporation" (as defined in the Tax Act) may be
liable to pay a refundable tax in respect of its “aggregate investment income”
(as defined in the Tax Act), including taxable capital gains and certain
dividends.
Foreign Property Information Reporting
A Resident Holder that is a "specified Canadian entity" for a
taxation year or a fiscal period and whose total "cost amount" of "specified
foreign property" (as such terms are defined in the Tax Act), including Common
Shares, at any time in the year or fiscal period exceeds Cdn$100,000 will be
required to file an information return with the CRA for the year or period
disclosing prescribed information in respect of such property. The Common Shares
will be “specified foreign property” for this purpose. Substantial penalties may
apply where a Resident Holder fails to file the required information return in
respect of its specified foreign property on a timely basis in accordance with
the Tax Act.
The foreign information reporting rules in the Tax Act are
complex and this summary does not purport to address all circumstances in which
reporting may be required by a Resident Holder. Resident Holders should consult
their tax advisors regarding these rules.
Shareholders Not Resident in Canada
The following discussion applies to a Holder who at all
relevant times: (i) has not been, is not, and will not be resident or deemed to
be resident in Canada for purposes of the Tax Act or any applicable tax treaty;
and (ii) does not and will not use or hold, and is not and will not be deemed to
use or hold, Common Shares in connection with, or in the course of, carrying on
a business in Canada (a "
NonResident Holder
"). Special rules, which are
not discussed in this summary, may apply to a Non-Resident Holder that is an
insurer carrying on business in Canada and elsewhere. Such a non-resident
insurer should consult its own tax advisors.
Dividends on Common Shares
Dividends paid in respect of Common Shares to a Non-Resident
Holder will not be subject to Canadian withholding tax or other income tax under
the Tax Act.
Disposition of Common Shares
A Non-Resident Holder who disposes or is deemed to dispose of
Common Shares will not be subject to Canadian income tax in respect of any
capital gain realized on the disposition unless such Common Shares constitute
"taxable Canadian property" for the purposes of the Tax Act and no exemption is
available under an applicable income tax convention between Canada and the
jurisdiction in which the Non-Resident Holder is resident.
Generally, Common Shares will not be taxable Canadian property
at a particular time to a Non-Resident Holder provided that the Common Shares
are listed on a designated stock exchange (which includes the TSX-V)
at
that time, unless at any time during the sixty month period immediately
preceding the disposition of the Common Shares by such Non-Resident Holder both
(a) (i) the Non-Resident Holder, (ii) persons not dealing at arm’s length with
such Non-Resident Holder, (iii) partnerships in which the Non-Resident Holder or
a person mentioned in (a) (ii) holds a membership interest directly or
indirectly through one or more partnerships, or (iv) any combination of (a) (i)
to (iii), owned 25% or more of the issued shares of any class or series of the
capital stock of the Company; and (b) at that time more than 50% of the value of
such shares was attributable to resource properties or real properties situated
in Canada. The Company has advised that, based on the historical and
contemplated assets of the Company, the Common Shares should not be taxable
Canadian property to a Non-Resident Holder.
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F. Dividends and Paying Agents
This Form 20-F is being filed as an annual report under the
U.S. Exchange Act and, as such, there is no requirement to provide any
information under this item.
G. Statement By Experts
This Form 20-F is being filed as an annual report under the
U.S. Exchange Act and, as such, there is no requirement to provide any
information under this item.
H. Documents on Display
The documents referred to and/or incorporated by reference in
this Form 20-F can be viewed at the office of the Company at 1 First Canadian
Place, 100 King Street West, Suite 7070, Toronto, Ontario, M5X 1E3, Canada. The
Company is required to file financial statements and other information with the
securities regulatory authorities in each of the Canadian provinces of Ontario,
British Columbia and Alberta, electronically through the Canadian System for
Electronic Document Analysis and Retrieval (SEDAR), which can be viewed at
www.sedar.com
. The Company is subject to the informational requirements
of the U.S. Exchange Act and files reports and other information with the SEC.
You may read and copy any of the Company’s reports and other information at, and
obtain copies upon payment of prescribed fees from, the Public Reference Room
maintained by the SEC at 100 F Street, N.E., Washington, D.C., U.S., 20549. In
addition, the SEC maintains a website that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC at http://www.sec.gov. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
I. Subsidiary Information
Not applicable.
See accompanying notes to consolidated financial statements. A
reconciliation for the restated comparative year is provided in Note 6.
See accompanying notes to the consolidated financial
statements. A reconciliation for the restated comparative years is provided in
Note 6.
See accompanying notes to the consolidated financial
statements. A reconciliation for the restated comparative years is provided in
Note 6.
See accompanying notes to the consolidated financial
statements. A reconciliation for the restated comparative years is provided in
Note 6.
