Canada: Changes To Ontario Participation Fees For Reporting Issuers


In 2015, the Ontario Securities Commission (OSC) approved the replacement of OSC Rule 13-502 Fees (Ontario Fee Rule) and its companion policy with a new version, which came into force as of April 6, 2015. The new Ontario Fee Rule applies to all reporting issuers when filing annual financial statements after April 6, 2015, including when filing annual financial statements for the year ended December 31, 2015.

Key changes from the previous version of the Ontario Fee Rule include:

  • ​Changes to the method of calculation of a reporting issuer's capitalization and the reference year for such calculation
  • Changes to the prescribed classes of reporting issuers, including certain classes of non-Canadian reporting issuers
  • New forms that must be filed with a reporting issuer's annual financial statements, setting out the calculation of capitalization and applicable Ontario fees
  • A requirement that all Ontario fee forms submitted by a reporting issuer must be certified by an officer of the reporting issuer

Reporting issuers should ensure they determine their capitalization and resulting Ontario participation fees under the new version of the Ontario Fee Rule and complete, submit and certify the proper new forms, when filing their annual financial statements.


For many years, the OSC has levied a "corporate finance participation fee" on all Ontario reporting issuers, payable each year at the time the issuer files its annual financial statements for its prior fiscal year. Generally, the fee is based on the size of the reporting issuer's capitalization, which is calculated in a prescribed manner under the Ontario Fee Rule. For most reporting issuers, the Ontario Fee Rule provides for prescribed ranges of capitalization value, with increasing participation fees as the amount of an issuer's capitalization increases.

Under the previous version of the Ontario Fee Rule, the value of an issuer's capitalization was determined based on a "reference fiscal year", which was either (i) the most recent fiscal year ended before May 1, 2012, if the issuer was a reporting issuer at that time, or (ii) otherwise, the reporting issuer's most recent fiscal year. Accordingly, most reporting issuers had previously been required to determine their Ontario participation fee based on their capitalization for a fiscal year ended prior to May 1, 2012. Those reporting issuers who subsequently had a decline in their market capitalization did not see any reduction in fees and, conversely, those who had an increase in market capitalization did not see an increase in fees.

The value of a reporting issuer's equity capital was previously calculated, for the reference fiscal year, as:

  • For "Class 1" and "Class 3C" reporting issuers, the sum of, for each class of listed securities, the average of the closing price of the listed securities on the primary exchange on which they were traded in Canada (or, if not traded in Canada, in the United States) on the last trading day of each month during the reference fiscal year, multiplied by the number of such outstanding securities at year-end, plus the market value of any other classes of securities of the issuer, if any of such securities had been issued in Canada and traded over the counter or were generally available for purchase through investment dealers
  • For "Class 2" reporting issuers, the total of certain specified balance sheet line items as at the end of the reference fiscal year
  • For "Class 3B" reporting issuers, the sum of, for each class of listed securities, the average of the closing price of the listed securities on the primary exchange on which they were traded on the last trading day of each month during the reference fiscal year, multiplied by the number of such outstanding securities at year-end

As described below, the new Ontario Fee Rule eliminates the "reference fiscal year" concept and changes certain classes of reporting issuer and methods of calculation of an issuer's capitalization.


The most significant changes in the new Ontario Fee Rule are the elimination of the previous concept of a "reference fiscal year", changes to the classes of reporting issuer and introduction of new methods for calculation of a reporting issuer's capitalization for Ontario fee purposes. Under the new Ontario Fee Rule, a reporting issuer's capitalization will now be determined for all reporting issuers based on their most recently completed financial year. According to the OSC, the new adjustments have the intention of aligning the fees to more closely mirror the OSC's costs as well as address concerns regarding the previous use of the reference fiscal year.

The new Ontario Fee Rule also changes specified classes of reporting issuer for Ontario fee purposes as follows:

​​Previous Rule New Rule​
Class 1 – Canadian reporting issuer with securities listed in Canada or the United States​ Class 1 – a reporting issuer, other than a Class 3A or 3B reporting issuer, with listed securities​
Class 2 – Canadian reporting issuer other than a Class 1 reporting issuer (generally, this would be an issu​er without listed securities, such as an issuer of debt securities guaranteed by a parent issuer)​ ​Class 2 – a reporting issuer other than a Class 1, 3A or 3B reporting issuer
Class 3A – non-Canadian reporting issuer without listed securities, or with listed securities but specified de minimis connections to Ontario​ ​Class 3A – non-Canadian reporting issuer without listed securities, or with listed securities but specified de minimis connections to Ontario
Class 3B – non-Canadian reporting issuer that is not a Class 3A reporting issuer, with trading volume on Canadian marketplaces less than on marketplaces outside Canada​ ​Class 3B – a reporting issuer that is not a Class 3A reporting issuer, and that is a "designated foreign issuer" or "SEC foreign issuer" as defined under NI 71-102
Class 3C – non-Canadian reporting issuer with trading volume on Canadian marketplaces higher than on marketplaces outside Canada​ ​No longer applicable

Reporting issuers, particularly non-Canadian reporting issuers, should review these new definitions in relation to their own circumstances to determine if their category under the Ontario Fee Rule has changed.

The amendments also introduce new methods of calculation for determining the market capitalization of a reporting issuer for purposes of determining the Ontario participation fee. For a Class 1 and Class 3B reporting issuer, the capitalization will now be the total of:

  1. ​The sum of the market values of each class or series of listed equity securities (including shares, warrants, subscription receipts and rights) for the previous financial year, calculated for each class or series as (i) A x B, where A is equal to the closing price of the security on the last day of each specified trading period (generally defined as each quarter of the financial year) on the marketplace on which each such security trades in the greatest volume, and B is equal to the number of securities in the class or series outstanding at the end of the specified trading period, divided by (ii) the number of specified trading periods in the previous financial year in which the security was listed on the last trading day of the specified trading period
  2. The fair value of the outstanding debt securities of the reporting issuer at the end of the previous financial year that are (i) listed or quoted on a marketplace, (ii) traded over the counter, or (iii) available for purchase or sale without regard to a statutory hold period 
  3. As applicable, the capitalization for the previous financial year of a subsidiary that is exempt from fees under the Ontario Fee Rule, excluding any securities of the subsidiary held by the parent that have been included in the capitalization of the parent for the previous financial year

The calculation of the capitalization of Class 2 reporting issuers is largely unchanged from the previous version of the rule, as are the availability of exemptions for subsidiary reporting issuers in certain circumstances, such as where a parent reporting issuer has guaranteed the securities of the reporting issuer and paid its own participation fee. Class 3A reporting issuers will continue to pay a flat fee that is not determined based on the value of their capitalization.

The new Ontario Fee Rule requires the use of new forms by each class of reporting issuer, and the forms must now be certified by an officer of the reporting issuer. Issuers with year ends after April 6, 2015 will have to submit the applicable new, certified forms going forward, including with their annual financial statements for the year ended December 31, 2015 (for issuers with a December 31 year-end).

Certain activity fees have also seen modest increases, including for filing a prospectus and certain exemption applications. 


Certain other amendments to the Ontario Fee Rule have been made since the changes discussed above. On September 22, 2015, the OSC further amended the Ontario Fee Rule (effective December 15, 2015) to remove the requirement that an applicant pay an activity fee in respect of certain applications for the revocation of cease trade orders. 

Most recently, on January 7, 2016, the Ontario Fee Rule was again amended by the OSC to introduce a new fee in connection with the new offering memorandum private placement exemption included in National Instrument 45-106 – Prospectus Exemptions. The new rule provides that a fee of the greater of C$500 or 0.025 per cent of the gross proceeds realized by an issuer from the distribution in Ontario is payable in connection with the filing of a private placement report for a distribution of securities relying on the offering memorandum exemption. A C$500 fee remains payable in connection with the filing of a private placement report under other prospectus exemptions. Issuers undertaking private placements in Ontario should carefully consider which prospectus exemptions they are relying upon, given the potentially significant higher fees for reliance on the offering memorandum exemption. 

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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