On March 25, the Canadian Securities Administrators (the CSA) published for comment
the proposed National Instrument 41-103 – Supplementary
Prospectus Disclosure Requirements for Securitized Products and
National Instrument 51-106 – Continuous Disclosure
Requirements for Securitized Products (together, the Proposed
Rules), along with proposed amendments to National Instrument
52-109 – Certification of Disclosure in Issuers Annual
and Interim Filings, National Instrument 45-106
–Prospectus and Registration Exemptions (NI 45-106) and
National Instrument 45-102 – Resale of Securities
(collectively, the Proposed Amendments, and together with the
Proposed Rules, the Proposal).
According to the CSA, the Proposal contains four main
Enhanced prospectus disclosure requirements for securitized
products issued by reporting issuers;
New prospectus exemption rules for securitized products that
require, in most cases, the delivery of an "information
memorandum" to investors and narrow the class of investors who
can buy securitized products on a prospectus exempt basis.
Specifically, the Proposal would make a number of prospectus
exemptions currently in NI 45-106 unavailable for distributions of
securitized products, including: section 2.3 (the accredited
investor exemption), section 2.4 (the private issuer exemption),
section 2.9 (the offering memorandum exemption) and section 2.10
(the minimum amount investment exemption). These exemptions would
be replaced by a new prospectus exemption for investors who are fit
into the narrower proposed definition of "eligible securitized
Prospectus level liability for issuers, sponsors and
underwriters, including CEO certification of "information
Continuous disclosure and prescribed monthly reporting
obligations for both reporting issuers and issuers in the exempt
The Proposal contains significant, and in many cases, onerous
requirements which will have a material impact on a Canadian
industry with a very positive track record of performance.
The CSA is accepting comments on the Proposed Rule until June
We will be posting detailed future commentary on these proposed
rules with a view to creating the broadest possible discussion
among market participants. We encourage you to let us know your
views. Stay tuned.
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.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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