On November 29, 2013, the Canadian Securities Administrators
(the "CSA") published for comment proposed amendments to
National Instrument 33-105 Underwriting Conflicts
("NI 33-105") that provide limited relief from the
requirements to include connected and related issuer disclosure in
certain offering documents for private placements of foreign
securities to sophisticated investors in Canada.
Under NI 33-105, underwriters that are "connected
issuers" or "related issuers" that propose to sell
foreign securities in Canada under a private placement exemption
using a disclosure document must also include in the disclosure
document certain disclosure about the relationship the underwriter
has with the issuer. This disclosure often takes the form of a
"wrapper" to the foreign disclosure document.
Underwriters and other market participants have submitted to the
CSA that the "connected issuer" test, which is based on
the viewpoint of the "reasonable prospective purchaser",
is very broad and it is very difficult, costly and time consuming
to comply with the disclosure requirements in the context of a
foreign offering. As such, Canadians are often left out of a U.S.
or global offerings of foreign securities.
To address this issue, the CSA proposes to amend NI 33-105 to
provide that the connected and related issuer disclosure
requirement be eliminated in private placement offerings of
securities that qualify as "designated foreign
securities" that are sold to "permitted clients",
who are generally sophisticated, usually institutional investors,
and provided that the offering document complies with U.S.
disclosure requirements on conflicts of interest between issuers
and underwriters. The proposed exemptions do not apply to
prospectus offerings in Canada.
Designated foreign securities are defined as securities offered
primarily in a foreign jurisdiction that are issued or guaranteed
by a foreign government or securities of an issuer that:
is incorporated, formed or created under the laws of a foreign
is not a reporting issuer in Canada;
has its head office outside of Canada; and
has a majority of its executive officers and directors outside
Registrants involved in offerings of designated foreign
securities will need to provide permitted clients purchasing such
securities an alternative notice of any conflicts of interest that
would normally trigger the disclosure requirements under NI 33-105.
In particular, a registrant can provide a one-time notice that
explains that any offering document provided in connection with
future foreign private placements is made in reliance of the
provisions of the proposed amendments to NI 33-105.
The comment period is open until February 26, 2014.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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).