Flow-through shares are a made-in-Canada innovation solution – by Richard Sutin (Globe and Mail – January 1, 2016)


Richard Sutin is a partner at Norton Rose Fulbright in Toronto.

Canadian policy-makers have long recognized the importance of capturing a share of the innovation economy – or even better, a leadership position. And much has been written and proposed to that end. With labour markets caught in the transition from an industrial to a knowledge economy and extreme global competition, the stakes keep getting higher.

But while successful innovation calls on several factors, the greatest challenge and most important ingredient is access to sufficient risk capital.

Flow-through shares for Canadian resource exploration and development were introduced into the Income Tax Act approximately 60 years ago. While originally introduced to keep these cyclical industries going in tough times, the program became a spectacular success, positioning Canada’s capital markets as a global leader in resource finance.

Leadership in accessing capital led to industry leadership and, as a result, Canada became home to more mining companies than any other country in the world. Canadian companies engaged in more global exploration and development than companies from any other country, and Canada developed and attracted top resource talent.

The Prospectors and Developers Association of Canada said it best: “Flow-through shares have helped make Canadian mining firms world leaders, with head offices, consultants, contractors, suppliers, legal and financial structure and other expertise – in Canada.”

For the rest of this column, click here: http://www.theglobeandmail.com/report-on-business/rob-commentary/flow-through-shares-are-a-made-in-canada-innovation-solution/article27975832/

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