The wires have hit. You’ve just closed a multijurisdictional offering and delivered a great result for your client. As visions of a raucous post-closing party with your client enter your mind (or perhaps just visions of a good night’s sleep!), U.S. counsel interrupts your reverie with a reminder that your client’s Form D and associated blue sky filings are due within 15 days. Say what? Do you really have to make these filings, and what in the world are “blue sky laws” anyway? Although not quite as colorful and catchy as a Jimi Hendrix song, blue sky laws can leave you in a purple haze if not carefully considered. Let’s explore this often-overlooked topic in further detail.
Canadian lenders engaged in cross-border financing frequently require their borrowers’ US affiliates to grant security interests in their assets. The standard practice involves using U.S.-law-governed security agreements for these US entities. However, sometimes Canadian lenders or their Canadian counsel will request that a Canadian General Security Agreement (GSA) be “converted” to a US security agreement. While the desire for contractual uniformity across all cross-border obligors is understandable, relying on a poorly converted GSA can lead to serious negative outcomes and often overlooked legal risks.
Canadian businesses regularly performing work or sending products into the United States have increased growth opportunities as a result. But doing business in the U.S. also comes with litigation risks, as the bar to commencing litigation in America is less costly than in Canada.