The Ontario Securities Commission (OSC) has announced proposed rule amendments designed to remove certain Canadian-specific disclosure requirements for offerings of foreign securities in Ontario to sophisticated investors on a private placement basis.
The intended purpose of the proposed amendments is to eliminate the requirement for a "wrapper" that is normally included with the offering document when foreign securities are offered to sophisticated Ontario investors under a prospectus exemption. Essentially, when a foreign offering document is used to distribute securities in Ontario, it falls under the definition of an "offering memorandum" under the Securities Act (Ontario). Accordingly, certain Ontario-specific disclosure must be added to the offering document before it can be provided to prospective purchasers in Ontario. The offering document may either be amended to include the necessary Ontario-specific language, or more commonly, a supplemental document known as a "wrapper" is attached to the face of the document, and the two combine to form an Ontario offering memorandum for the purposes of offering securities in Ontario.
Many institutional investors and other market participants have expressed concern that the current requirements restrict investor access to foreign investment opportunities, due to, among other reasons, the time and expense associated with retaining counsel and preparing a "wrapper" to meet Ontario disclosure requirements. Market participants have also expressed that such cost and delay may discourage some issuers/dealers from extending foreign offerings into Ontario.
The OSC anticipates that the proposed amendments will facilitate participation by sophisticated Ontario investors in foreign securities offerings and provide them with a wider range of investment opportunities.
The OSC's announcement was made in conjunction with the publication of a decision on an application made in Ontario (and certain other jurisdictions) by a group of dealers for exemptive relief to address these issues. In order to ensure that dealers outside of the applicant group are not disadvantaged, the OSC decision will have a 60-day period of delayed effectiveness to allow other parties sufficient time to apply for similar relief.
The proposed rule amendments are subject to a 90-day comment period. The document is available on the OSC's website: www.osc.gov.on.ca.
About Dentons
Dentons is a global firm driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace. We were formed by the March 2013 combination of international law firm Salans LLP, Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law firm SNR Denton.
Dentons is built on the solid foundations of three highly regarded law firms. Each built its outstanding reputation and valued clientele by responding to the local, regional and national needs of a broad spectrum of clients of all sizes – individuals; entrepreneurs; small businesses and start-ups; local, regional and national governments and government agencies; and mid-sized and larger private and public corporations, including international and global entities.
Now clients benefit from more than 2,500 lawyers and professionals in 79 locations in 52 countries across Africa, Asia Pacific, Canada, Central Asia, Europe, the Middle East, Russia and the CIS, the UK and the US who are committed to challenging the status quo to offer creative, actionable business and legal solutions.
Learn more at www.dentons.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.
