Canada: International Dealers And Issuers Offering Securities To Canadian Investors – New Developments In "Canadian Wrapper Exemptions": Navigate With Care

Last Updated: April 29 2015
Article by Elana M. Hahn and Kris Miks

On March 23, 2015, the British Columbia Securities Commission (BCSC) adopted BC Instrument 51-512 – Certain Private Placements (BCI 51-512), which provides certain disclosure exemptions in the case of securities offered to sophisticated Canadian investors on a private placement basis. This development is the latest in a series of actions taken by Canadian provincial securities regulators since 2012 to reduce hurdles for international dealers and issuers engaging in cross-border offerings to sophisticated Canadian investors. Through this series of actions, Canada's provincial securities regulators have, where the exemptions are available, eliminated the time and expense associated with preparing a document to supplement the foreign offering document to satisfy technical Canadian securities law requirements (a Canadian Wrapper). The aim of these exemptions is to broaden the range of investment opportunities available to Canadian investors, without compromising investor protection. These actions have been focused in the following four areas:

  1. exemptions from the requirement to include "connected and related" issuer relationship disclosure in accordance with Canadian securities laws;
  2. exemptions from the requirements to include prescribed statutory rights of action disclosure under the securities laws of certain provinces or territories;
  3. exemptions from the prohibition on making representations in an offering memorandum about applications and intended applications to list securities on stock exchanges; and
  4. exemptions from the imposition of certain Canadian continuous disclosure obligations.

From the perspective of international dealers and issuers, and Canadian institutional investors, these changes are welcome. However, accommodations have been made by only some but not all of the Canadian securities regulators, while some exemptions only apply to certain specified dealers. Some of the orders and instruments address some but not all of the above areas, and each order and instrument specifies different sets of prerequisite conditions. Furthermore, the majority of the orders are time-limited (with different expiry dates) with the expectation that legislative action will eventually be taken to codify the exemptions. The market is hopeful that such legislation will come soon and will further streamline technical requirements, provide a clearer way forward, and eliminate gaps and conflicts across the existing patchwork of orders and law across Canada. In the meantime, international dealers and issuers must take care in navigating the rules for cross-border offerings to Canadian investors.

BC Instrument 51-512: offering disclosure exemptions

BCI 51-512 replaces BC Instrument 51-511 - Exemptions from Multilateral Instrument 51-105 Issuers Quoted in the US Over-the-Counter Markets, and exempts certain issuers from becoming over-the-counter reporting issuers under Multilateral Instrument 51-105 – Issuers Quoted in the US Over-the-Counter Markets (MI 51-105), as long as selling efforts and actual sales are only made to "permitted clients" on a private placement basis. BCI 51-512 further provides that where the distribution is made: (a) under a Canadian prospectus exemption; and (b) only to "permitted clients" (as defined in National Instrument 33-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations) (permitted clients), an issuer is exempt from the Canadian-specific "connected issuer" and "related issuer" disclosures required under Section 2.1(1) and Section 4 of National Instrument 33-105 – Underwriting Conflicts (NI 33-105), that would otherwise need to be included in a Canadian Wrapper. Unlike the existing Québec Blanket Order (as defined below) and the Canadian Securities Administrators' (the CSA) exemptive relief orders (discussed below), the exemptions provided by BCI 51-512 are not limited to foreign issuers or securities primarily issued outside of Canada. Furthermore, there is no notification or consent requirement with which issuers and underwriters are required to comply. In addition, BCI 51-512 does not deal with listing representations, which the BCSC previously addressed in BC Notice 47-701 - Blanket Permission Under Section 50(1)(c) of the Securities Act, or statutory rights of action.

Alberta and Québec Blanket Orders: continuous disclosure exemptions

MI 51-105—adopted in 2012 by each of the provinces other than Ontario—provides that a foreign issuer that undertakes promotional activities in Canada and that is not listed or quoted on a designated exchange could be a reporting issuer in Canada, and therefore subject to extensive Canadian continuous disclosure requirements if the issuer's equity securities trade over-the-counter in the US. As a result, foreign issuers and dealers undertaking private placement offerings of foreign securities in Canada have, at times, limited sales to Ontario, which was not a party to MI 51-105, Québec (which issued a blanket order on August 14, 2012 exempting issuers from the rule so long as promotional activities concern only permitted clients (the Québec Blanket Order)) and Alberta (which issued Blanket Order 45-514 – Certain Private Placements on November 20, 2014 (the Alberta Blanket Order) which is similar to the Québec Blanket Order and will remain in place until November 20, 2017). The Alberta Blanket Order grants wholesale relief in Alberta from the requirement to comply with Canadian disclosure requirements regarding underwriter conflicts of interest and from the prohibition on making listing representations in an offering document, as long as: (a) the securities are distributed on a Canadian prospectus-exempt basis; and (b) every person who purchases securities is a permitted client.

CSA exemptive relief orders: "Canadian wrapper exemptions"

Prior to the adoption of BCI 51-512 and the issuance of the Alberta Blanket Order, the CSA issued two initial exemptive relief orders, dated April 21, 2013 and June 21, 2013, as well as a number of subsequent exemptive relief orders (collectively, the Canadian Wrapper Exemption Orders) that permitted specified Canadian and US dealers and their affiliates to make private placement offerings to permitted clients in Canada as part of a global offering without having to add supplemental prescribed Canadian disclosure in a Canadian Wrapper. The Canadian Wrapper Exemption Orders address the disclosure requirements imposed on foreign issuers and dealers including the "connected issuer" and "related issuer" disclosures imposed by NI 33-105 and the requirement to include a description of the statutory rights of action available to purchasers for a misrepresentation in a Canadian Wrapper. In parallel to these Canadian Wrapper Exemption Orders, the CSA also provided a side letter to the relevant dealers confirming that they were exempt from the prohibition on making representations in an offering memorandum about applications and intended applications to list securities on stock exchanges.

Aside from the effect of Canadian Wrapper Exemption Orders being limited to the named dealers listed therein as applicants, the Canadian Wrapper Exemption Orders include certain requirements for those relying thereon, including but not limited to requirements that:

  1. the offering is "primarily" made in a foreign jurisdiction;
  2. the offering is made only to a permitted client;
  3. the issuer is a foreign issuer that is not a reporting issuer in Canada, has its head office outside of Canada, and has a majority of its executive officers and directors resident outside of Canada; or the securities are issued or guaranteed by the government of a foreign jurisdiction;
  4. the issuer or dealer makes regular filings with the appropriate reporting Canadian securities regulator providing details of exempt distributions made in reliance on the Canadian Wrapper Exemption Orders;
  5. in the case of certain Canadian Wrapper Exemption Orders, the issuer is not an "investment fund", as defined under Canadian securities legislation (this restriction was not included in the June 21, 2013 Canadian Wrapper Exemption Order and has not appeared in certain subsequent Canadian Wrapper Exemption Orders);
  6. a prescribed form of notice (which includes certain specified disclosures) must be provided to, and acknowledged and counter-signed by, each prospective Canadian purchaser; and
  7. the issuer must comply with US laws on underwriter conflict disclosure applicable to US registered offerings, even for unregistered US offerings where these laws do not apply.

Thus, the Canadian Wrapper Exemption Orders provide some measure of relief to foreign issuers and dealers offering securities to Canadians. However, the requirement to exchange the signed notice and acknowledgement with the investor potentially hinders the sales process. In addition, the issuer and dealer must analyze and make legal judgement calls about whether the other criteria are satisfied, including whether the offering was "primarily" made outside Canada and whether conflicts disclosure in a non-registered offering is sufficient to satisfy the disclosure requirements of the Canadian Wrapper Exemption Orders. Finally, when making offerings to investors in British Columbia, Québec and Alberta, international issuers and their dealers must still consider the overlapping application of MI 51-105, the Alberta Blanket Order and the Québec Blanket Order, alongside the Canadian Wrapper Exemption Orders.

Proposed legislation

As the CSA granted this series of discretionary Canadian Wrapper Exemption Orders for various groups of Canadian and US dealers and their affiliates, the CSA also proposed corresponding revisions to Canadian securities legislation. The Canadian Wrapper Exemption Orders were, in fact, designed to expire upon legislative changes coming into effect. These legislative revisions would substantially codify the prior Canadian Wrapper Exemption Orders. Implementation would be through amendments to NI 33-105 and, in all jurisdictions other than Ontario and British Columbia, new Multilateral Instrument 45-107 - Listing Representation and Statutory Rights of Action Disclosure Exemptions. Exemptions similar to those in the new multilateral instrument were proposed for Ontario in April 2013, contemporaneously with the first Canadian Wrapper Exemption Order. The BCSC did not participate in the CSA proposals because it previously granted broader exemptive relief. Importantly, these proposed amendments would make changes to simplify the client notice process, as required in the Canadian Wrapper Exemption Orders. The offering document could be sent to clients simultaneously with the notice. In addition, a client-signed acknowledgment would no longer be required. Because these changes have been proposed by the CSA and by way of a National Instrument and Multilateral Instrument, it is expected that, upon implementation, these instruments will move the Canadian market towards a more coherent and predictable nation-wide regime for international issuers and dealers making offerings to sophisticated Canadian investors. Both proposals were published for a 90-day comment period, ending February 26, 2014, but their implementation has not yet occurred. Both the April 23, 2013 and June 21, 2013 Canadian Wrapper Exemption Orders are expressed to expire on the earlier of the effective date of legislation or June 22, 2016; the subsequent Canadian Wrapper Exemption Orders are expressed to expire on the earlier of the effective date of legislation or the date that is three years from the effective date of such orders; and the Alberta Blanket Order is due to expire on November 20, 2017. The market is hopeful that new legislation across Canada is imminent.

Navigate with care

Canada is unique within the G-20, in that it does not have a single national securities regulator. Notwithstanding the balkanization of securities regulation in Canada, at times the CSA works together to implement national policies which are Canada-wide and provide a more fulsome and consolidated regime. Unfortunately, in the case of foreign issuers and dealers offering securities to Canadians, such a uniform approach has not yet been adopted. The concurrent existence of BCI 51-512, the Canadian Wrapper Exemption Orders, MI 51-105, the Alberta Blanket Order and the Québec Blanket Order, has created a patchwork of exemptions and rules pertaining to offerings by foreign issuers to investors located in Canada. The hope is that legislation implemented by the CSA through National Instruments and/or Multilateral Instruments will address some of these existing gaps and inconsistencies to create a more clear and coherent position across Canada going forward. In the meantime, the requirements applicable to foreign issuers or dealers selling securities on a foreign issuer's behalf still need to be considered by foreign issuers and/or dealers on a case-by-case basis, in some cases with the advice of Canadian legal counsel.

This article was co-authored by Ben Iscoe, an Articling Student in Dentons' Toronto office.

About Dentons

Dentons is a global firm driven to provide you with the competitive edge in an increasingly complex and interconnected marketplace. We were formed by the March 2013 combination of international law firm Salans LLP, Canadian law firm Fraser Milner Casgrain LLP (FMC) and international law firm SNR Denton.

Dentons is built on the solid foundations of three highly regarded law firms. Each built its outstanding reputation and valued clientele by responding to the local, regional and national needs of a broad spectrum of clients of all sizes – individuals; entrepreneurs; small businesses and start-ups; local, regional and national governments and government agencies; and mid-sized and larger private and public corporations, including international and global entities.

Now clients benefit from more than 2,500 lawyers and professionals in 79 locations in 52 countries across Africa, Asia Pacific, Canada, Central Asia, Europe, the Middle East, Russia and the CIS, the UK and the US who are committed to challenging the status quo to offer creative, actionable business and legal solutions.

Learn more at

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. Specific Questions relating to this article should be addressed directly to the author.

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.

Events from this Firm
30 Aug 2017, Seminar, Rio de Janeiro, Brazil

The Dentons and Vella Pugliese Buosi Guidoni Tax Partners are pleased to invite you to a cocktail networking reception at Tano Cucina Italiana, located in the Grand Hyatt Rio de Janeiro.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.