The Canadian Securities Administrators have proposed amendments
to the rules relating to reports filed with securities regulators
in connection with private placements. The proposed amendments aim
to introduce a new harmonized report of exempt distribution across
Canada, which issuers will appreciate. However, some of the
information requested under the proposed form of report may lead to
a greater compliance burden.
Currently, issuers seeking to rely on prospectus exemptions are
required to file two different forms of report of exempt
distribution: Form 45-106F1 in all Canadian jurisdictions except
British Columbia, and Form 45-106F6 in British Columbia. The
proposed amendments would introduce a new harmonized report for all
Canadian jurisdictions so as to reduce the compliance burden for
issuers. The new harmonized report would also provide
securities regulators with additional information to facilitate
regulatory oversight and policy development for the exempt
Summary of the Proposed Amendments
Information in the report would be collected in a more
structured format to improve consistency and allow more efficient
regulatory oversight, for example by using North American Industry
Classification System (NAICS) codes to identify the primary
business of an issuer and 3-letter codes to identify the type of
The new form of report would require issuers to disclose
additional information, including:
details about the issuer including, for non-investment funds,
the number of employees and (if the issuer has no SEDAR profile)
the size of the issuer's assets and, for investment funds, the
net asset value of the fund (in all cases, expressed as a
identities of the directors, executive officers, control
persons and promoters of certain issuers, as well as the number of,
and total amount paid for, voting securities of those issuers
beneficially owned or directly or indirectly controlled by those
for certain jurisdictions, a list of all offering materials
filed with or delivered to the securities regulators in connection
with the distribution;
specific details about the exemptions relied on (including, in
the case of accredited investors, the specific category of
accredited investor applicable to each purchaser, although issuers
would not be required to identify all categories for which
the purchaser is eligible);
information about persons being compensated in connection with
the distribution, such as whether the person is a registrant, or an
insider or employee of the issuer, or connected with the issuer
(for example, through common control)
The proposed amendments contemplate carve-outs from some
information requirements for certain entities, including reporting
issuers, foreign public issuers and issuers distributing eligible
foreign securities only to permitted clients.
Comments and Further Information
The CSA is accepting comments on the proposed amendments until
October 13, 2015. If you are interested in providing comments, or
if you require more information on the proposals being made,
Gowlings would be pleased to assist.
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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