The Ontario Securities Commission has recently granted
relief to dealers distributing foreign securities by way of
private placement into Canada to address uncertainties caused
by new forward-looking information disclosure requirements.
Effective December 31, 2007, the Canadian Securities
Administrators (CSA) made significant amendments to
forward-looking information disclosure requirements under
continuous disclosure rules applicable to Canadian reporting
issuers. The Ontario Securities Commission (OSC) also
concurrently amended requirements relating to offering
memoranda disclosure contained in OSC Rule 45-501. As a result
of these amendments to OSC Rule 45-501, any offering memorandum
provided to purchasers in Ontario that contains material
forward-looking information (including future-oriented
financial information and financial outlooks) is required to
also contain certain prescribed forward-looking information
disclaimers or safe-harbour type of disclosure. While this
disclosure is similar to safe-harbour disclosure provided under
U.S. or foreign securities law requirements, it also requires
the issuer to address additional matters not typically
encompassed by the equivalent non-Canadian disclosure.
As a result of the amendments to OSC Rule 45-501,
uncertainty has arisen in the market in the context of foreign
issuer private placements and the disclosure requirements, if
any, regarding forward-looking information, including
future-oriented financial information and financial outlooks.
To address this uncertainty, the OSC recently granted exemptive
relief to certain foreign dealers allowing for the distribution
of securities by way of private placement to "accredited
investors", provided the foreign offering documents
contain safe-harbour disclosure that complies with U.S. federal
securities laws or a disclaimer that the disclosure may differ
from that which is required under Ontario securities laws. To
deal with this issue in the long-term, the OSC has also
proposed to repeal these requirements from OSC Rule 45-501.
However, if implemented, this proposed repeal will not take
effect until December 2008. Until then, staff at the OSC have
advised that they will attempt to deal with exemptive relief
applications on an expedited basis.
Until such time as the OSC repeals the forward-looking
information disclosure requirements in OSC Rule 45-501, foreign
dealers and issuers offering foreign securities into Canada
should be aware of these potential issues in order to avoid any
unnecessary delays when carrying out private placements into
Canada. In addition, consideration should be given to applying
for exemptive relief from the forward-looking information
disclosure required under OSC Rule 45-501 consistent with the
relief recently granted by the OSC.
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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