Aligning our Interests with our Clients
Ber Tov’s business model directly aligns its interests with those of its clients. One hundred percent of our operating revenue is derived from fees paid by our clients. Neither Ber Tov nor any person or company affiliated with Ber Tov receives any compensation from the issuer of the flow-through shares or the underwriter of the transaction.
We work with all the major investment dealers to find quality transactions for our clients. Our sole service objective is to advise our clients, and there is no competing interest to steer clients to a particular issuer, dealer or transaction.
In compliance with securities laws, Ber Tov is registered as an Exempt Market Dealer in each province in which it does business.
How We Are Different
Ber Tov’s Initiative transactions provide the tax benefits of flow-through shares without the long-term holding period, share price volatility and material risk of loss associated with the purchase of flow-through LP units or direct investments in flow-through shares.
Comparing Ber Tov’s Structured Strategies to Alternative FT Options
|Tax Benefits||Holding Period||Volatility||Risk of After-tax Loss||Individually-tailored Transactions|
|BT Initiative||Yes||None – Immediate Liquidity||None||No risk of share-price decline||Yes|
|Flow-Through LP||Yes||18-24 months||High||Losses in 2 of the past 5 years||No|
|Individual Direct FT Investment||Yes||120 days||High||Material risk of loss||Yes, but difficult for individual investor to access|
Before we advise a client regarding a transaction with a specific issuer of flow-through shares, we examine (i) the issuer’s financial position to assess its fiscal soundness and (ii) the transaction documents to ensure that the issuer’s legal obligations and our clients’ legal rights are accurately specified.
Our structured flow-through and charity flow-through transactions remove market risk (i.e., the risk that the client will be harmed by a falling share price). The major remaining risk is that the issuer fails to spend the funds raised in the offering on expenditures that are eligible for the flow-through tax benefits within the mandated time period. (Funds generally must be spent on eligible expenditures by December 31st of the calendar year following the year of the offering). In the event that the issuer fails to comply with its commitment to properly spend the funds, the related income tax benefits will be disallowed in whole or in part.
Accordingly, our due diligence focuses on the issuer’s financial soundness to ensure the issuer can successfully complete its committed exploration program without hardship. We also ensure that the transaction documents include an indemnity agreement whereby the issuer agrees to indemnify subscribers of the flow-through shares where the issuer’s actions result in a full or partial disallowance of the anticipated income tax benefits.
Should you have any questions about the issuer’s spending requirement or the steps we take in our due diligence review, please contact Howard Berglas, Avi Wachsman, or Steven Balsam.