Canada: Proposed Amendments To Report Of Exempt Distribution

Last Updated: September 30 2015
Article by Ralph Shay, Andrea C. Johnson, Daniel McElroy, Andreas Kloppenborg and Eric Dalke


On August 13, 2015, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 45-106 Prospectus Exemptions and its Companion Policy. The proposed amendments seek to harmonize the form of report for prospectus exempt distributions across Canada, while increasing the disclosure requirements.

The market for securities distributed under exemptions from the prospectus requirement—known as the "exempt market"— has been the subject of increased regulatory focus since the 2007-2008 financial crisis. The proposed amendments are the latest in a series of proposed or enacted reforms in this area,1 and they supersede changes to exempt market reporting proposed by provincial securities regulators in February and March of 2014.

The CSA is accepting comments on the proposed amendments until October 13, 2015. If you have any questions about the proposed amendments, or require support to submit a comment, please contact one of our securities lawyers.

Background and comparison

Currently, issuers and underwriters are required to file a report on Form 45-106F1 following an exempt distribution in any Canadian jurisdiction other than British Columbia.  Since 2011, British Columbia has required reporting of exempt distributions on its own, more comprehensive, Form 45-106F6. Under the proposed amendments there would once again be a single, national form of report (the Proposed Form), which would replace Form 45-106F1, and Form 45-106F6 would be rescinded.

For a tabular comparison of the requirements of Form 45-106F1, Form 45-106F6 and the Proposed Form, please click here.

Proposed reporting requirements

As described below, the proposed amendments increase the amount of information that must be disclosed about the issuer, certain individuals related to the issuer, and investors. The increase is significant relative to the current Form 45-106F1, and less so relative to Form 45-106F6.

The main question being asked by the CSA is whether the Proposed Form strikes the appropriate balance between the benefits associated with greater public information and the associated cost and burden on issuers.

Other than as noted below, the information reported would be accessible to the public. For information that is to be reported confidentially, freedom of information legislation may require regulators to make the information available under certain conditions if requested.

Identifying numbers for issuers, underwriters and securities being distributed. The Proposed Form would require disclosure of certain identifying numbers, as follows:

Summary details of non-SEDAR filers. The following would have to be disclosed by issuers that do not file continuous disclosure documents on SEDAR: date of formation, financial year-end, value of assets and, if applicable, jurisdictions where reporting and stock exchange listings. This would apply primarily to private Canadian companies, and public and private non-Canadian companies.

Number of employees. The Proposed Form would require disclosure of the number of employees of the issuer, expressed as one of four listed ranges varying from below 50 to 500 or more.

Key individuals related to certain non-public issuers. The Proposed Form includes significant disclosure requirements for key individuals in respect of most non-public issuers. This is similar to a requirement of the current Form 45-106F6, but is new to all jurisdictions other than British Columbia. Specifically, these new rules apply to any issuer that is neither: (i) a reporting issuer in Canada; (ii) a "foreign public issuer";2 nor (iii) only distributing "eligible foreign securities" to "permitted clients"3 in Canada.

The following disclosure would be required by the applicable non-public issuers. This will likely be the most contentious aspect of the proposed amendments, particularly for large shareholders who expect to keep their holdings confidential for business or strategic reasons.

  • For directors, executive officers, control persons and promoters:
    • Names, jurisdiction of residence, relationship to the issuer, number of voting securities and the amount paid for such securities would be made publicly available. Where a control person or promoter of an applicable non-public issuer is a company, the Proposed Form would also require public disclosure of the name and jurisdiction of residence of the company's directors and executive officers.
    • Residential addresses would be reported confidentially to the applicable securities commission(s).
  • The CEO's email address would be reported confidentially.

Details of certain prospectus exemptions, by investor. The Proposed Form requires additional information about investors subscribing under the "accredited investor", "family, friends and business associates" and "offering memorandum" exemptions. In each case the applicable criterion of the exemption that the investor satisfies would be specified, whereas currently only the applicable exemption must be disclosed. As with other details of each purchaser, the information is to be reported confidentially. If an investor satisfies multiple exemptions or categories, only one need be identified.

  • For a person investing under the "family, friends and business associates" exemption, the Proposed Form would require the name and position of the individual at the issuer with whom the investor has a relationship.
  • For accredited investors, the Proposed Form would require disclosure of the applicable category of the definition under which the investor qualifies. In many cases this will involve specifying whether an individual satisfies the income, net assets or financial assets test, as set out in National Instrument 45-106.
  • For an investor qualifying under the offering memorandum exemption as an "eligible investor", the applicable category must be specified. This applies only in Alberta, Manitoba, Prince Edward Island, Quebec, Saskatchewan and the territories.

This is a new reporting requirement, but it should not impose a significant burden on issuers. It is consistent with recent changes to National Instrument 45-106 and its Companion Policy requiring issuers to gather additional information about investors participating under these exemptions.

Other information about each investor. The Proposed Form would require a statement as to whether each investor is a registrant and/or an insider of the issuer, to be reported confidentially. This is a current requirement of Form 45-106F6.

The existing forms of report and the Proposed Report require disclosure of all investors, not just those in the jurisdiction where the report is being filed. An exception exists for non-Canadian issuers, which only must disclose information about Canadian investors.

Notably, under Form 45-106F6 certain information about each investor—including the name and the amount being invested—is made publicly available. This would not be the case under the Proposed Form.

Information about persons being compensated. As under the current forms, the identity of persons being compensated in connection with the distribution, and the details of such compensation, would be made publicly available. The Proposed Form would also require disclosure of the relationship between any person being compensated and the issuer and, confidentially, the relationship between any person being compensated and each purchaser associated with that person.

Offering materials. For an exempt distribution in New Brunswick, Nova Scotia, Ontario, Quebec or Saskatchewan, the Proposed Form mandates a listing of all offering materials (such as offering memoranda) that are required to be filed with the applicable regulator in connection with the distribution. There is no new filing requirement in respect of such materials; the Proposed Form only requires that they be listed.

Investment fund issuers. Issuers that are investment funds would have the following new reporting obligations under the Proposed Form: the type of fund, net asset value (expressed as a range), date of formation, financial year-end, reporting issuer status and net proceeds of the offering (being gross proceeds less redemptions). If applicable, investment funds would also have to disclose CUSIP numbers and exchange listings. The proposed amendments provide that for distributions made in reliance on certain prospectus exemptions, reporting would be required by investment funds within 30 days after the calendar year-end, i.e. by January 30. The current deadline is 30 days after the investment fund's financial year-end.

Comparison of disclosure requirements

The following table compares the disclosure requirements of Form 45-106F1, Form 45-106F6 and the Proposed Form, to the extent of any significant differences. For a PDF version of the table, please click here.

Issuer contact and other information

  Form 45-106F1 Form 45-106F6 Proposed Form
Employees/SEDAR profile number No requirement No requirement Size of issuer, by number of employees
SEDAR profile number, if applicable
Identifying information Address and telephone number of issuer's head office Address, email address and telephone number of issuer's head office Address and telephone number of issuer's head office, if without SEDAR profile
Legal entity identifier, if applicable
Industry information Industry type from CSA-selected categories Industry type from CSA-selected categories North American Industry Classification Standard code
Other information No requirement No requirement If without SEDAR profile:
- date of formation
- financial year-end
- CUSIP number and listed exchange(s), if any
- assets as at most recent financial year-end

Underwriter information

  Form 45-106F1 Form 45-106F6 Proposed Form
General information Name, address and telephone number Name, address, telephone number, email address and website Name, address, telephone number, website and Firm NRD number, if applicable

Directors, executive officers, control persons and promoters of the issuer

  Form 45-106F1 Form 45-106F6 Proposed Form
Disclosure of directors, executive officers, control persons and promoters No requirement Disclosure requirement only if issuer is not a reporting issuer Disclosure requirement only if issuer is not (a) a reporting issuer or a subsidiary; (b) a foreign public issuer or a subsidiary; or (c) distributing eligible foreign securities only to permitted clients
Information required for individuals No requirement Name, municipality and country of principal residence Name, residential address, municipality, province/state and country of principal residence
    Positions held (e.g. director, officer, promoter, control person) Positions held (e.g. director, officer, promoter, control person)
    Number and type of securities of the issuer beneficially owned, or controlled, on the distribution date Number and type of securities of the issuer beneficially owned, or controlled, on the distribution date
    Total price paid for all securities beneficially owned, or controlled, on the distribution date Total price paid for all securities beneficially owned, or controlled, on the distribution date
      Business contact information of Chief Executive Officer
Information required for non-individual control persons or promoters No requirement Same information as above for all directors and officers of the control person or promoter Same information as above for all directors and officers of the control person or promoter

Information about the distribution

  Form 45-106F1 Form 45-106F6 Proposed Form
Type of securities distributed Type of security Type of security Type of security, 3-letter code and CUSIP
Total dollar amount per type of security
Summary of the distribution by jurisdiction Number of purchasers, price per security and total amount raised, by jurisdiction Number of purchasers, price per security and total amount raised, by jurisdiction Number of purchasers and total amount raised, by jurisdiction and exemption
Distribution date State the distribution date(s) State the distribution date(s) State the distribution start and end date(s)
Offering materials No requirement No requirement List offering materials if distribution occurred in Saskatchewan, Ontario Quebec, New Brunswick or Nova Scotia
Currency No requirement No requirement State foreign currency if distribution not in Canadian dollars

Information about the purchasers

  Form 45-106F1 Form 45-106F6 Proposed Form
General information Name, address and telephone number Name, address and telephone number Name, address, telephone number and email address
Details of securities purchased Number and type of securities purchased Number and type of securities purchased  Number and type of securities purchased, using 3-letter code
Details of exemption relied on Exemption relied on Exemption relied on Exemption relied on, with section and (if applicable) subsection. If relying on section 2.5 (family, friends or business associates), name and position of the individual claiming a relationship to the purchaser
Insider/Registrant No requirement Status as insider or registrant Status as insider or registrant
Publicly available information about individual purchasers N/A Name
Number and type of securities
Status as insider or registrant
Total purchase price
 Publicly available information about non-individual purchasers N/A As above, plus address and exemption relied on N/A

Information about persons being compensated

  Form 45-106F1 Form 45-106F6 Proposed Form
Information other than contact and compensation details No requirement Status as insider or registrant Status as insider or registrant
Relationship to the issuer
Purchaser(s) with whom person is associated
NRD number, if applicable
Deferred compensation details, if applicable

Investment fund issuer information

  Form 45-106F1 Form 45-106F6 Proposed Form
Investment fund manager information Contact information Contact information Firm NRD number, if applicable; otherwise contact information and website
Type of investment fund No requirement No requirement Type of investment fund and whether fund primarily invests in other investment funds or is a UCITs Fund
Offering proceeds, in addition to disclosure required by all issuers No requirement No requirement Net proceeds by jurisdiction
Other information No requirement No requirement Date of formation
Financial year-end
Reporting issuer status
CUSIP number
Listed exchange(s), if any
Net asset value as of the most recent NAV calculation


1 See, for example, the Ontario Securities Commission's Exempt Market Review, published in 2014 and the CSA's Notice of Amendments to National Instrument 45-106 Prospectus and Registration Exemptions published in February of this year.

2 "Foreign public issuer" is a new term being introduced by the proposed amendments. Broadly speaking, it means a public company in the United States, the United Kingdom, Australia, France, Germany, Hong Kong, Italy, Japan, Mexico, the Netherlands, New Zealand, Singapore, South Africa, Spain, Sweden or Switzerland. Wholly-owned subsidiaries of such companies are also exempt from the additional reporting requirements.

3 The term "permitted client" is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. It includes institutions, registrants and individuals with greater than $5 million in financial assets. An "eligible foreign security" is defined in the proposed amendments. Broadly, it means a security issued by a non-Canadian company or issued or guaranteed by a non-Canadian government.

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.

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.