Canada: Yet More Enhancements Proposed For Private Placement Reporting

The Canadian Securities Administrators (CSA) have managed to harmonize their differences for reporting prospectus-exempt distributions since their earlier proposals in February and March 2014. They have now proposed a common form that would apply across Canada for both investment funds and other types of issuers. While the new proposal drops some of the information detail requirements originally proposed in 2014, it also adds new required information.

The original proposals were discussed in our April 2014 Blakes Bulletin: Haven't You Heard? It's All Being Changed – New Proposals to Private Placement Regime. One of the principal concerns then was that the different provinces' proposals could result in up to four different versions of a private placement report. This was heavily criticized and the CSA have made significant effort to achieve a single harmonized form. On the other hand, like most products with many cooks, the end result tends to be enhanced rather than boiled down.

APPLICATION SCOPE

The new common Form 45-106F1 (New Form) would apply across Canada, although it would need to be filed electronically as an e-form in Ontario, through a web portal in British Columbia and directly by PDF or paper copy in all other jurisdictions. The CSA pointed out that Ontario's version of the e-form can be used for the filing made in other jurisdictions, so that in many cases it should not need to be prepared more than once. Other jurisdictions are considering filing through System for Electronic Document Analysis and Retrieval (SEDAR) but no proposals are yet made.

The New Form clarifies in which jurisdictions reporting is required. Before, there was some uncertainty, given the different approaches in different Canadian jurisdictions interpreting where a distribution is made. Instructions for the New Form explicitly state that a distribution is considered to be made in each jurisdiction where a purchaser is resident. In addition, in all jurisdictions of Canada except Ontario, a distribution will be considered to occur in that jurisdiction if the issuer of the securities is located in or has a significant connection to that jurisdiction. Ontario has a different view, so a distribution made from Ontario may not be a distribution in Ontario if the securities do not come to rest in Ontario. Finally, the instructions also make clear that if the issuer is located outside of Canada, the New Form is only required to include information about purchasers resident in Canada.

The New Form instructions re-affirm that the CSA require disclosure of the beneficial owner of the securities purchased. In particular, if a registered adviser has purchased securities on behalf of a fully managed account, the report must provide information about both the registered adviser and the beneficial owner of the fully managed account. The CSA said this is not a new requirement but has been a requirement of the existing form. This may be challenging if advisers enter orders and subsequently allocate investments among their managed accounts. Full contact information for all beneficial owners, including telephone numbers and email addresses, must be disclosed. The New Form would require disclosure of the specific paragraph number in the definition of accredited investor that is applicable to the purchaser. Presumably in this one case, "purchaser" would mean only the registered adviser itself.

INFORMATION REQUIREMENT CHANGES

The following items of detailed information have been added since 2014 to this version of the New Form for all issuers:

  • Issuer's website, North American Industry Classification Standard Code (type of fund for investment funds) and legal entity identifier (under the Global Legal Entity Identifier System – n/a for investment funds)
  • Size of the issuer's assets (Net Asset Value for investment funds) (in bands)
  • Underwriter's National Registration Database number
  • Committee on Uniform Securities Identification Procedures (CUSIP) number and specified security codes for the security issued
  • Details for each person to whom the issuer directly provides or will provide any compensation as a result of the distribution, and must now include not only cash compensation or securities, but also gifts, discounts or other compensation (an example given in the sample New Form is "basketball tickets")
  • Email addresses of the purchasers

For issuers other than an investment fund, a reporting issuer or a subsidiary of a reporting issuer, a foreign public issuer or its subsidiary, or issuers distributing eligible foreign securities only to permitted clients (collectively, exempted issuers, described in more detail below), these items are also new:

  • All voting securities beneficially owned or directly or indirectly controlled by each director, executive officer, control person and promoter of the issuer, and the total amount paid for all such voting securities
  • For each director and executive officer of a control person or promoter of the issuer, their full name, residential jurisdiction and relationship to the control person or promoter
  • Residential addresses for each individual director, executive officer, control person and promoter of the issuer and directors and executive officers of control persons and promoters of the issuer

On the other hand, the New Form has dropped some of the information requirements that had been proposed in 2014, including:

  • Age range of purchasers
  • Full legal name of the parent of the issuer
  • Business email of the underwriter's CEO
  • Business email for the issuer's CEO (though dropped only for exempted issuers)
  • For investment funds, details of past redemptions and service providers

A "foreign public issuer" generally means Securities and Exchange Commission (SEC) filers and public companies in designated foreign jurisdictions, which are the same as those currently exempted from certain continuous disclosure requirements pursuant to National Instrument 71-102 – Continuous Disclosure and Other Exemptions Relating to Foreign Issuers. Foreign issuers of "eligible foreign securities" means the same as in the recent wrapper exemption, namely issuers that are incorporated or created under the laws of a foreign jurisdiction, not a reporting issuer in Canada, with a head office outside of Canada and with a majority of the executive officers and of the board of directors ordinarily resident outside of Canada.

The 2014 proposal to accelerate investment fund reporting to quarterly has been dropped, but the CSA now propose to change all investment fund annual placement reporting from a fund's financial year-end to a common calendar year basis.

COMMENT PERIOD

The proposed changes to the New Form are open for comment until October 13, 2015.

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 Mondaq.com.

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

Authors
Events from this Firm
14 Nov 2018, Speaking Engagement, Ontario, Canada

Join members of the Blakes Environmental and Enterprise Risk & Crisis Response groups for a discussion of hot topics and trends in Canadian environmental law.

15 Nov 2018, Webinar, Toronto, Canada

Join us for a live webcast with partners from our Employment & Labour and Litigation & Dispute Resolution groups as they discuss employment-related challenges and considerations surrounding the recent legalization of recreational cannabis in Canada.

15 Nov 2018, Webinar, Toronto, Canada

Join us for a live webcast with partners from our Employment & Labour and Litigation & Dispute Resolution groups as they discuss employment-related challenges and considerations surrounding the recent legalization of recreational cannabis in Canada.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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