Canada: Good News To Report About Canadian Trade Reports - Private Placement Trade Reporting Becomes Easier In October

In June 2016, the Canadian Securities Administrators (CSA) introduced new rules for reporting sales of securities in Canada under private placement prospectus exemptions.  These new rules introduced additional complexity to the reporting process, especially for foreign dealers extending U.S. and other non-Canadian securities offerings to institutional investors in Canada.  While the CSA has already implemented a number of helpful changes to address unintended consequences of the June 2016 rules, further amendments to the rules and guidance (the Amendments), which will be even more helpful, are now scheduled to come into effect on October 5, 2018.

Here are the most significant and helpful changes to the Canadian private placement trade reporting process that will be made by the Amendments:

Achieving certification gratification

The problem:  One of the major concerns about the June 2016 rules was the introduction of a requirement that an officer or director of the issuer, or the securities dealer acting as underwriter or initial purchaser, personally certify the contents of the report, including making a statement that he or she had read and understood the report, and that all of the information in the report was true.  The trade report instructions expressly stated that the certification function could not be delegated to anyone other than an officer or director of the issuer or underwriter.  Further, the form suggested that the individual was making the required certification in his or her personal capacity, and not on behalf of the issuer or dealer, and stated that it was an offence to make any misrepresentation in the report.  This certification requirement caused serious concerns about the risk of personal liability to the individual directors and officers involved.  In addition, the report also required officers of multinational securities dealers to take time out of their day to become personally involved with the trade reporting process, something that had previously been considered a more administrative function. 

The solution:  The Amendments will allow the certification function to be delegated to an agent, such as a law firm. Further, the certification form now clearly states that the person signing the certification is doing so on behalf of the issuer or securities dealer filing the report (and by implication, not in a personal capacity).  The certification wording has been revised to state that the person signing the report has reviewed it and that, to his or her knowledge, having exercised reasonable diligence, the information provided is true and, to the extent required, complete. As a result of the Amendments, officers of U.S. and other non-Canadian securities dealers will no longer need to be personally involved in the Canadian private placement trade reporting process.

Ending the accreditation investigation

The problem:  For sales of securities made in Canada under the "accredited investor" prospectus exemption, which is the one most commonly relied on for Canadian institutional private placement sales, the June 2016 rules required that the trade report identify the specific subparagraph of the "accredited investor" definition applicable to the purchaser.  This requirement introduced the need for securities dealers acting as underwriters or initial purchasers, and their advisors, to develop systems to identify and keep track of which subparagraph of the accredited investor definition applied to which Canadian investor.  Institutions purchasing securities from a particular dealer for the first time would typically have to complete an accredited investor questionnaire for the dealer, so that it could correctly report the basis on which the purchaser qualified for status as an accredited investor.

The solution:  The Amendments will permit sales to institutional accredited investors that also qualify as "permitted clients" of an international dealer to be reported simply as sales to a permitted client, without the need to identify specifically which subparagraph of the accredited investor definition applies to that institutional purchaser.  As U.S. and other non-Canadian dealers operating under the "international dealer" exemption from dealer registration requirements are only permitted to trade in securities with permitted clients, those international dealers will no longer have to maintain detailed records regarding how their Canadian institutional purchasers specifically qualify as accredited investors, and will need only follow the procedures they otherwise would follow to ensure that the purchaser does in fact qualify as both an accredited investor and permitted client.

Resolving the co-issuer conundrum

The problem:  The June 2016 rules imposed requirements to disclose fairly specific details regarding the issuer of the security.  If there were two or more co-issuers of the security, information about each issuer simply didn't fit on the form.  This created a requirement to file multiple reports, one for each co-issuer, adding significant additional time and expense to the reporting process – including, in some provinces, the need to pay potentially significant duplicate filing fees.

The solution:  For a security with more than one issuer, the Amendments will allow any of the co-issuers to file a single report, including only the information applicable to the issuer making the filing, and simply include the name of any other co-issuer in the report, without any additional information about it.

Ending industry code anxiety

The problem:  The June 2016 rules required identifying the six-digit NAICS industry code applicable to the issuer of the securities. This was a problematic requirement as the characterization of an issuer into a particular industry code requires fairly specific knowledge of the issuer's business, as well as often requiring the application of subjective judgment. The difficulty of selecting the appropriate NAICS industry code was compounded by the fact that an officer or director of the issuer or underwriter had to certify that the NAICS code was correct, along with all of the other information in the report.

The solution:  The Amendments will allow filers to provide the NAICS code that in their reasonable judgment most closely corresponds to the issuer's primary business activity.

Alleviating duplicative due diligence

The problem:  The June 2016 rules required information about the issuer's directors, executive officers and promoters to be disclosed in the report unless an exemption from that requirement was available. Virtually all U.S. and other non-Canadian private placements to Canadian institutional investors were exempt from this requirement for one or more reasons.  The June 2016 rules required the filer to check a box for every exemption that actually applied, rather than just picking one that clearly applied, meaning that it was necessary to determine whether or not each of the possible exemptions was available.

The solution:  The Amendments will allow the filer to check any one of the boxes that is applicable to indicate that an exemption from this disclosure requirement is available, rather than requiring that all applicable boxes be checked, making it faster and easier to complete the report.

Shortening the listings list

The problem:  The June 2016 rules required the report to identify the names of all securities exchanges on which the issuer's securities trade. For some issuers, especially those with debt securities listed on many exchanges around the world, producing the list of listings could be a daunting task.

The solution:  The Amendments will only require identifying the name of the exchange on which the issuer's equity securities primarily trade, without having to name all the exchanges on which equity securities trade, or any exchanges on which the issuer's debt securities trade.

There are also a number of other changes introduced by the Amendments, including new securities designations for reporting sales of digital coins and tokens as well as other specific types of securities, and new requirements to identify whether or not an issuer's primary business or investments involve cryptoassets.  The Amendments also codify guidance provided by the CSA since June 2016 regarding the reporting requirements, and make a number of other technical changes.

The Amendments coming into effect on October 5, 2018 to address a number of remaining difficulties with the Canadian private placement trade reporting requirements introduced in June 2016 will be a welcome improvement to the Canadian reporting process, and should be especially helpful for the U.S. and other foreign dealers who routinely extend securities offerings into Canada on a private placement basis.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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 (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

To Use 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.


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.


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