Canada: Further Changes To British Columbia Disclosure Requirements For Private Placements Of Securities

New Exemptions Remove Onerous British Columbia Reporting Requirements for Most "Wrapper" Sales

On October 3, 2011, the British Columbia Securities Commission (BCSC) adopted new private placement trade reporting requirements, which applied only in the Province of British Columbia, through amendments to National Instrument 45-106 of the Canadian Securities Administrators. The BCSC also concurrently adopted some limited exemptions from those new requirements, which were set out in local BC Instrument 45-533.

The resulting changes to the B.C. trade reporting requirements were discussed in this Osler Update.

On December 9, 2011, the BCSC revoked and replaced original BC Instrument 45-533, creating a new series of exemptions from the B.C. trade reporting requirements. In some cases the exemptions allow the issuer or the underwriter filing a trade report to use the same trade report form in B.C. as is used in all other provinces of Canada (Form 45-106F1, or the "National Form"), with only minor modifications. In other cases, the exemptions still require the use of the specific form adopted in British Columbia (Form 45-106F6, or the "B.C. Form"), but provide relief from some of the more onerous information requirements of the B.C. Form.

The Wrapper Exemption

If the issuer of the securities is not a reporting issuer in British Columbia, and if sales of the securities in the Province of British Columbia are limited only to purchasers that are permitted clients (as defined under National Instrument 31-103), then the trade report may be filed in British Columbia using the National Form rather than the B.C. Form.

The only condition to this exemption is that when completing the National Form, in Item 2 of that form the filer must, in addition to providing the information usually required by that item, also add this statement: "The filer of this form is relying on the exemption in paragraph 6 of BCI 45-533."

We are referring to this as the wrapper exemption because we expect that typically sales into British Columbia by a non-Canadian issuer using a Canadian private placement supplement or wrapper will be eligible for this exemption. However, in cases where this exemption is not available, one of the other exemptions discussed below may be available instead.

The Investment Funds Exemption

If the issuer is an investment fund, then the National Form may be filed in British Columbia instead of the B.C. Form. This exemption was also available under the original BC Instrument 45-533, and is continued under the new instrument.

The Foreign Public Issuer Exemption

If the wrapper exemption is not available because sales in British Columbia are being made to a group of purchasers that includes persons other than permitted clients, this exemption may provide relief from the requirement to complete Item 4 of the B.C. Form, which is the section of the B.C. Form requiring the most onerous additional disclosure.

This exemption will be available if the issuer is a foreign public issuer or a subsidiary of a foreign public issuer. A foreign public issuer is an issuer that has a class of securities registered under section 12 of the U.S. Securities Exchange Act of 1934, as amended, or is required to file reports under section 15(d) of that Act. An issuer will also qualify as a foreign public issuer if is required to provide disclosure to the public, to securityholders or to a regulatory authority, and that disclosure is publicly available in a designated foreign jurisdiction.1

In order to rely on the foreign public issuer exemption, the trade report filer must:

  • file the B.C. Form (rather than the National Form), omitting only the disclosure called for by Item 4 of the B.C. Form;
  • state in Item 2(b) of the B.C. Form, in addition to the information usually required by that item, that: "The filer of this form is relying on the exemption in paragraph 7 of BCI 45-533"; and
  • if the issuer is a subsidiary of a foreign public issuer (and not itself a foreign public issuer), then the name of the parent foreign public issuer must also be stated in Item 2(b) of the B.C. Form.

It should be noted that if the issuer is a reporting issuer in British Columbia, it will automatically be exempt from the requirement to complete Item 4 of the B.C. Form under the instructions to the B.C. Form, and need not make any additional statement in Item 2(b).

Also note that because all of the other requirements of the B.C. Form still apply, it will still be necessary to disclose whether each purchaser of securities reported on the B.C. Form, and whether each recipient of compensation, is either an insider of the issuer or a registrant in Canada (that is, registered under Canadian securities laws as a dealer, adviser or otherwise).

The Subsidiary of a B.C. Reporting Issuer Exemption

Subsidiaries of a B.C. reporting issuer are now also exempt from Item 4 of the B.C. Form, even if the issuer itself is not a B.C. reporting issuer.

To utilize this exemption, all of the issuer's outstanding voting securities must be beneficially owned by a B.C. reporting issuer, except any securities required by law to be owned by directors of the subsidiary. The filer of the B.C. Form must state in Item 2(b) that it is relying on the exemption of paragraph 8 of BCI 45-533, and provide the name of the reporting issuer that owns the issuer's securities.

Again, the other requirements of the B.C. Form still apply, so it is still necessary to disclose whether each purchaser of securities reported on the B.C. Form, and whether each recipient of compensation, is either an insider of the issuer or a registrant in Canada.

The General Insider Information Exemption

Although the insider and promoter information requirements of Item 4 of the B.C. Form now only apply in a rather limited set of circumstances in light of the other exemptions discussed above, this new general insider information exemption somewhat reduces the scope of the information required to be provided by Item 4. However, the information required is still fairly onerous, including disclosure of the securities of the issuer held by each director, executive officer, control person and promoter of the issuer, and the purchase prices paid by them for those securities.

Footnotes

1. Australia, France, Germany, Hong Kong, Italy, Japan, Mexico, the Netherlands, New Zealand, Singapore, South Africa, Spain, Sweden, Switzerland or the United Kingdom of Great Britain and Northern Ireland.

Rob Lando is a cross-border corporate and securities lawyer with significant practice experience in the United States and Canada.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Miller Thomson LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Miller Thomson LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions