Canada: Further Analysis On Limited Disclosure Relief For Certain Private Placements By Qualified Non-Canadian Issuers

As we initially discussed in an earlier post, on April 23 the Canadian Securities Administrators issued a decision providing a specified group of dealers limited exemptive relief (the Relief) from certain disclosure requirements under Canadian securities laws otherwise applicable where a foreign prospectus or offering memorandum (a Foreign Offering Document) is delivered by a dealer to a Canadian "permitted client" in connection with a private placement of foreign securities in Canada.

While any efforts to streamline the disclosure requirements applicable to private placements into Canada are certainly welcome, the Relief has limitations and imposes specific compliance obligations. Although the Relief may be helpful in resolving some of the timing concerns associated with extending certain qualified foreign offerings to Canadian "permitted clients", it also imposes a number of conditions and requirements that will require advance planning and monitoring to maintain eligibility and to ensure there are no time delays in the preparation and delivery of offering documents.

Among the significant conditions and requirements that may impede the usefulness of the Relief are the requirement to satisfy certain disclosure standards applicable to U.S. registered offerings, inter-syndicate restrictions applicable to dealers not qualified under the Relief, additional compliance obligations associated with the requisite client notice – return receipt requirement and the additional monthly reporting of transaction information to the Canadian securities regulators.

Dealers should consider whether relying on the existing market practices is preferable to meeting the conditions and requirements of the Relief. In some cases, it may be more cost effective and efficient to rely on the existing "Canadian wrapper" procedures.

Significantly, there is also a risk of fragmentation in market practice as dealers and syndicates decide whether and how to rely on the Relief. Issuers and dealers are not required to rely on the Relief and can conduct offerings in the same manner as they have done previously. Also, there are still a number of reasons why, for certain offerings, a form of Canadian "wrapper" or supplemental Canadian disclosure may be required or recommended, even under circumstances where the Relief is relied upon.

The Relief applies only to the dealers named therein. The Relief will come into effect sixty (60) days after April 23, 2013. This delay is designed to allow other dealers time to file and receive similar exemptive relief from the CSA. Dealers which do not file for similar relief will need to continue to be prepared to separately rely on the conventional Canadian wrapper form and process.

The Relief may work best in the context of a U.S. registered public offering. In certain other situations, reliance on the Relief may prove challenging as, for example, in the context of a private placement under U.S. securities laws or in connection with a non-U.S. offering, regardless of whether such offering is a public offering or private placement in the foreign jurisdiction.


The following are some of the key features, requirements and limitations of the Relief:

  • Only applies to "foreign issuers"
  • Does not apply to "investment funds"
  • Does not provide an exemption from applicable Canadian mining/mineral disclosure
  • Does not apply to "reporting issuers" in Canada (i.e., issuers that are either public companies or subject to continuous disclosure obligations in Canada)
  • The offering must be either a U.S. registered offering or comply with disclosure requirements applicable to a U.S. registered offering regarding underwriter conflicts of interest (a legal opinion may be required)
  • The offering must be made primarily outside of Canada
  • Each dealer must be named in the Relief or have obtained similar relief
  • Each Canadian purchaser must be a "permitted client"
  • Each dealer must have delivered a specified notice to each Canadian purchaser
  • Each Canadian purchaser must have signed and returned the notice to each dealer
  • Each dealer must have delivered the required monthly report summarizing the dealer's use of the Relief to its principal Canadian securities regulator

Scope of Relief

The Relief is not a blanket exemption applicable to all offerings by foreign issuers into Canada on a private placement basis and is only available to the specified dealers where all of the prescribed conditions are satisfied. It is very important to understand the limitations, conditions and requirements of the Relief.

Conditions to Reliance on the Relief

(i) Foreign Issuer / Non-Reporting Issuer Requirement

The Relief is limited to offerings by "foreign issuers" where the securities are being offered primarily outside of Canada. A "foreign issuer" is an issuer that:

  1. is incorporated, formed or created under the laws of a jurisdiction other than Canada or a province or territory of Canada,
  2. whose head office and principal place of business is located outside of Canada, and
  3. that is not a "reporting issuer" in Canada.

An offering by an issuer that maintains a listing on an exchange in Canada, or that is otherwise subject to "reporting issuer" requirements in Canada as a consequence of an acquisition or other transaction will not be entitled to rely on the Relief.

The Relief does not extend to offerings by "investment funds", including so called "mortgage REITs".

(ii) Offering Must Meet U.S. Prospectus Disclosure Rules Regarding Underwriter Conflicts

For a Foreign Offering Document to qualify under the Relief, whether or not the offering is a U.S. registered offering, it must comply with the conflicts of interest disclosure requirements applicable to a U.S. registered offering (the U.S. Disclosure Requirement). Specifically, reliance on the Relief is conditioned on the Foreign Offering Document containing the disclosure mandated pursuant to section 229.508 of Regulation S-K (Reg. S-K) under the United States Securities Act of 1933, as amended, and FINRA Rule 5121.

As the Relief requires that conflicts disclosure contained in the Foreign Offering Document comply with the U.S. Disclosure Requirement, we expect that a legal opinion or certification confirming compliance with the U.S. Disclosure Requirement, may be necessary to confirm that the Foreign Offering Document complies with the U.S. Disclosure Requirement.

(iii) Advance Client Notice and Return Receipt Requirement

Reliance on the Relief requires that each dealer deliver to each prospective Canadian purchaser, prior to each dealer's first reliance on the Relief, a notice in a form specified under the Relief and that such prospective purchaser execute and return a written acknowledgment and consent to reliance by each dealer on the Relief.

Furthermore, reliance on the Relief requires that all offers and sales into Canada made in reliance on a Foreign Offering Document be restricted to "permitted clients" only. As such, investment dealers, exempt market dealers and restricted dealers would not be permitted to offer or sell to "accredited investors" (who are not also "permitted clients") under their respective registrations pursuant to a Foreign Offering Document prepared in reliance on the Relief.

(iv) Monthly Reporting of Trade Information to Canadian Regulators

On a monthly basis, each dealer relying on the Relief is required to deliver to its principal Canadian securities regulator a list of all private placements in Canada made in reliance on the Relief (this is in addition to the filing of the usual post-trade report). The list is required to include for each such distribution:

(v) Post-Trade Reporting Requirements

Reliance on the Relief does not exempt dealers and issuers from the requirement to prepare and file a report of the exempt distribution, and to pay associated fees, in connection with the private placement of securities in Canada. Also, as a condition to relying on the Relief, all post-trade reports must be filed in electronic forms (no paper filings permitted in reliance on the Relief).

Scope of Relief – Not a Blanket Exemption from All Mandated Canadian Disclosure

The Relief is limited in scope and is not a blanket exemption from all applicable Canadian disclosure requirements. Issuers and dealers will need to continue to consider other disclosure requirements, such as disclosure applicable to mineral projects, resale restrictions, certain legending requirements, and, in Québec, the French language requirements.

In addition, dealers may want to preserve certain legal defenses by including in any Foreign Offering Documents distributed into Canada, Canada-specific supplemental disclosure containing applicable representations, warranties and other investor information specific to the Canadian marketplace.


Significantly, the Relief will apply to only certain qualifying offerings (assuming all conditions of the Relief are satisfied) and non -qualifying offerings will need to be done in accordance with existing market practice. Because the Relief imposes additional compliance and monitoring obligations, dealers should review the Relief and its potential impact on their participation in foreign offerings being extended into Canada. While the Relief will undoubtedly be useful to some dealers, issuers and investors for certain offerings, it is important that dealers which are actively offering foreign securities into Canada understand the conditions, requirements and limitations of the Relief, as well as existing market practices to determine the best way to ensure compliance with the Canadian offering rules.

We are working with various dealers to prepare the necessary documentation to file for similar relief and would be pleased to review and discuss the requirements, costs and timing.

Please also note, as we also discussed in our earlier post, that the Ontario Securities Commission recently published a Notice and Request for Comment dated April 25, 2013 that proposes amendments to OSC Rule 45-501 Ontario Prospectus and Registration Exemptions and National Instrument 45-106 Prospectus and Registration Exemptions that would change the rules relating to certain of the disclosure exemptions that are the subject of the Relief. The comment period is open for 90 days.

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

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

Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Davies Ward Phillips & Vineberg
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Davies Ward Phillips & Vineberg
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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 (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

To Use 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.


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.


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