Canada: Publication Of Research Reports During Distributions

Last Updated: September 1 2015
Article by Tal Cyngiser

On August 25, 2015, the participating provinces and territory in the Cooperative Capital Markets Regulatory System achieved an important milestone towards implementation of the system by publishing a revised consultation draft of the uniform provincial and territorial capital markets act (now known as the Capital Markets Act), along with the drafts of the initial regulations proposed for adoption by the participating provinces and territory under the draft uniform act. These materials have been published for a 120-day public comment period.

This article is part of Gowlings'  Guide to the Proposed Initial Regulations and related materials. In this segment of our guide, we discuss the proposed initial regulations relating to the publication of research reports during distributions of an issuer's securities. To view other sections of the guide,  click here.


The participating provinces and territories are proposing to provide exemptions from the prospectus requirement under the draft uniform act to permit certain dealer communications relating to an issuer during a distribution of an issuer's securities. These are set out in section 6 of CMRA Regulation 41-501 Prospectus Requirement and Exemptions and are based on Part 4 of OSC Rule 48-501 Trading During Distributions, Formal Bids and Share Exchange Transactions. The adoption of the exemptions will represent a change in British Columbia.


Under section 6 of CMRA Regulation 41-501:

Compilations and Industry Research ― A person falling within the category of "dealer-restricted person" may, despite the prospectus requirement, publish or disseminate any information, opinion or recommendation relating to the issuer of a "restricted security", provided that it is: 

contained in a publication that (i) is disseminated with reasonable regularity in the normal course of business of the dealer-restricted person, and (ii) includes similar information with respect to a substantial number of companies in the issuer's industry or a comprehensive list of securities recommended by the dealer-restricted person; and
given no materially greater space or prominence in the publication than that given to other securities or issuers.

Issuers of highly-liquid securities ― A dealer-restricted person may, despite the prospectus requirement, publish or disseminate any information, opinion or recommendation relating to the issuer of a restricted security that is a "highly-liquid security", provided it is contained in a publication that is disseminated with reasonable regularity in the normal course of business of the dealer-restricted person.

For the definitions of "dealer-restricted person", "restricted security" and "highly-liquid security", see note (1) below.

Rationale behind Part 4 of OSC Rule 48-501

The prospectus exemptions under Part 4 of OSC Rule 48-501 are needed as advertising or marketing activities directly or indirectly in furtherance of a distribution of securities, including research reports, are subject to the prospectus requirement. Although the exemptions will be new for British Columbia, section 6 of CMRA Regulation 41-501 will minimize disruption for dealers in Ontario that have been relying on the exemptions when they distribute research reports about an issuer during a distribution of that issuer's securities.

How does section 6 of CMRA Regulation 41-501 differ from OSC Rule 48-501?

Section 6 of CMRA Regulation 41-501 adopts Part 4 of OSC Rule 48-501, largely, in its current form as of March 2, 2015. There are no noteworthy changes that have been proposed.

Much of the balance of OSC Rule 48-501 (including, for example, trading restrictions imposed on dealers in the distribution of restricted securities) is now reflected in the Universal Market Integrity Rules of IIROC and is therefore not proposed to be carried forward.

What are the implications for British Columbia?

Liberalizing the research rules across the participating provinces and territories to allow research reports to be published during a distribution of restricted securities could serve useful to increase the information that is available to clients. However, the exemption will only permit research (other than relating to a highly-liquid security) in the form of compilation reports providing similar coverage in respect of a significant number of other issuers. As some commentators noted when OSC Rule 48-501 was published for comment, this could limit the content of the report to investors, making it difficult for dealers to respond to client inquiries and hindering the ability of the client to make an informed decision.


(1) "dealer-restricted person" includes:

(a)  a dealer that:

(i)   is an underwriter in a prospectus offering or a restricted private placement;

(ii)   is participating in a restricted private placement as agent and has been allotted to sell more than 25% of the securities to be issued under the restricted private placement;

(iii) is the dealer-manager, manager, soliciting dealer or adviser appointed by an offeror in respect of a securities exchange take-over bid or issuer bid, or

(iv)  is appointed by the an issuer to be the soliciting dealer or adviser in connection with amalgamations, arrangements, capital reorganizations or similar transactions;

(b)  related entities of any person or company referred to above, unless there are written policies and procedures in place designed to prevent information flow between related entities and the operations of such policies and procedures is assessed annually, the dealer has no officers or employees that solicit orders or recommend transactions in securities in common with the related entity and the related entity does not act as a market maker for the restricted security, solicit orders from clients or enter principal orders or otherwise engage in proprietary trading;

(c)  partners, directors, officers or employees of dealers or related entities; or

(d)  any person or company acting jointly or in concert with a person referred to above for a particular transaction.

"restricted security" includes, generally, any security being offered by way of a prospectus or restricted private placement, or by an offeror in a take-over bid, or issuable to security holders pursuant to an amalgamation, arrangement, capital reorganization or similar transaction. A restricted security also includes a security into which any of the foregoing securities is convertible or that may be convertible into a restricted security.

"highly-liquid security" means a listed security that trades during a 60-day period an average of at least 100 times per trading day with an average trading value of $1 million per trading day, or a listed security that is subject to Regulation M under the Securities Exchange Act of 1934 as an "actively-traded security".

"restricted private placement" means a distribution of offered securities made pursuant to sections 2.3 or 2.30 of National Instrument 45-106 Prospectus Exemptions.

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.

Events from this Firm
8 Nov 2016, Seminar, Ottawa, Canada

The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.

22 Nov 2016, Seminar, Ottawa, Canada

From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.

7 Dec 2016, Seminar, Ottawa, Canada

Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.

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.