The Alberta Securities Commission (ASC) and the British Columbia
Securities Commission (BCSC) have each issued a local exemption
order (ASC Blanket Order 51-513 and BCI 51-511) expanding the list
of stock exchanges on which an issuer may have its securities
listed or quoted in order to be exempt from Multilateral Instrument
51-105 Issuers Quoted in the U.S. Over-the-Counter Markets (MI
51-105). ASC Blanket Order 51-513 and BCI 51-511 became effective
July 31, 2012, to coincide with the effective date of MI 51-105 in
each province and territory of Canada (with the exception of
Ontario which did not adopt MI 51-105).
We expect that similar blanket exemption orders have been or
will be issued soon by all other securities commissions in the
provinces and territories that adopted MI 51-105.
Under MI 51-105, an issuer is not considered an "OTC
reporting issuer" and therefore not subject to Canadian public
company reporting and other obligations if it has any class of
securities listed or quoted on the TSX, TSX Venture Exchange,
Canadian National Stock Exchange, Alpha Exchange, NYSE, NYSE Amex,
ASC Blanket Order 51-513 and BCI 51-511 extend this
list of stock exchanges to include the NASDAQ OMX; Borsa
Italiana, MTA Tier; London Stock Exchange, except AIM; Hong Kong
Stock Exchange; Deutsche Börse, except the First Quotation
Board and the Entry Standard tier; Xetra, Prime Standard and
General Standard tiers; SIX Swiss Exchange; Bourse de Luxembourg,
except Euro MTF; Tokyo Stock Exchange, 1st Section and 2nd Section;
Shanghai Stock Exchange; The Stock Exchange of Thailand, except The
Market for Alternative Investment (mai); National Stock Exchange of
India; Bombay Stock Exchange; Osaka Stock Exchange; Korea Stock
Exchange; and Singapore Exchange. If an issuer has its primary
listing on any of these exchanges, each time it carries on any
promotional activities in or from Alberta or British Columbia, or
distributes a security to a person resident in Alberta or British
Columbia, it will be exempt from MI 51-105 in those
The list of designated exchanges in the orders is not as
extensive as we had hoped it would be. Notable exceptions are: NYSE
Euronext, Australia Securities Exchange, Johannesburg Stock
Exchange, Bolsa de Madrid, Bolsa Mexicana and the Irish Stock
Exchange. The definition of designated exchange does not include
any South American exchanges.
The orders exempt issuers of non-convertible debt securities
from MI 51-105 entirely, provided that "the issuer does not
have any class of securities other than non-convertible debt listed
on an exchange or quoted on a quotation and trading reporting
system". An unlisted issuer offering debt securities into
Canada will not be subject to MI 51-105, but if an
Australian company wants to offer Maple bonds into Canada, for
example, it would not be able to rely on the blanket order
exemption if it has common shares listed on the ASX, which also
trade in the OTC markets in the United States. Since the ASX is not
a "designated exchange", it cannot rely on Section 5(a)
of the order.
Although the blanket orders solve a number of issues raised by
MI 51-105, a number of other issues continue to exist, so we
recommend foreign issuers and under-writers acting on their behalf
in connection with proposed private placements into Canada continue
to analyze the impact MI 51-105 may have prior to undertaking any
marketing activities in Canada other than Ontario.
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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