Canada: BCSC Proposes Amendments to NI 45-106 to Require Additional Disclosure From Issuers Raising Capital Under Prospectus Exemptions

The British Columbia Securities Commission (BCSC) published for comments amendments to National Instrument 45-106 – Prospectus and Registration Exemptions that would introduce a new Form 45-106F6 British Columbia Report of Exempt Distribution to replace the current Form 45-106F1 Report of Exempt Distribution. The new form would require enhanced disclosure from issuers that complete a distribution exempted from the prospectus requirements under applicable securities legislation, often referred to as private placement.

The proposed modifications would require issuers to file a separate form with the BCSC, in addition to the current form to be filed in other Canadian jurisdictions, upon completion of a private placement to purchasers resident in British Columbia or of a private placement made by an issuer in or with a significant connection to British Columbia to purchasers resident in other jurisdictions. Under the new form, non-reporting issuers would need to provide the name, municipality and country of residence of their insiders and promoters, the number and type of securities controlled or owned by their insiders and promoters, and the total price paid for the securities owned or controlled by their insiders and promoters. In addition, issuers would also have to indicate whether the purchasers of their securities under the private placement are registrants or insiders of the issuer. Finally, it should be noted that the new forms filed by issuers upon completion of a private placement, including all the information contained therein, would be made public by the BSBC.

The BCSC has indicated that the changes it proposes, if adopted, are aimed at improving the protection of investors against risks associated with private placements as well as supporting the financing activities of legitimate venture capital issuers. British Columbia is the only jurisdiction, for the time being, to propose enhanced disclosure from issuers completing private placements.

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