With the amendments to National Instrument 45-106, Prospectus Exemptions, the Canadian Securities Administrators (CSA) are introducing a new harmonized reporting structure (the New Reports) for exempt distributions, effective June 30, 2016 (subject to ministerial approval). The CSA is also making changes to Companion Policy 45-106, Prospectus Exemption (45-106 CP).
Currently, in all CSA jurisdictions except British Columbia, Form 45-106F1 Report of Exempt Distribution (Form 45-106F1, the Current Report) is in use. In British Columbia, Form 45-06F6 British Columbia Report of Exempt Distribution (Form 45-106F6, and together with Form 45-106F1, the Current Reports) is in use.
As of June 30th, 2016, the amendments replace the Current Reports with the New Report. The New Reports must be used for distributions that occur on or after June 30, 2016 with some exceptions.
The New Report will apply in all CSA jurisdictions to both investment fund issuers and non-investment fund issuers that distribute securities under certain prospectus exemptions. The New Report introduces new information requirements in most of the CSA jurisdictions, including disclosure of the following:
• additional details about the issuer including its size and primary business activity;
• identities of the directors, executive officers, and promoters of certain issuers;
• identities of control persons of certain issuers in a non-public schedule;
• additional details about the securities distributed and, for certain jurisdictions, details about the documents provided in connection with the distribution;
• specific details about the prospectus exemptions relied on, both on an aggregate and per investor basis, and;
• details about compensation paid to registrants, connected persons, insiders and employees of the issuer or the investment fund manager involved in the distribution.
For investment fund issuers, the New Report also requires disclosure regarding the size of the fund, the general type of the fund and net proceeds to the fund for the period for which the report is filed.
The New Report also provides carve-outs from certain information requirements for:
• investment fund issuers;
• reporting issuers and their wholly owned subsidiaries;
• foreign public issuers and their wholly owned subsidiaries, and
• issuers distributing eligible foreign securities only to permitted clients.
In addition, an issuer is not required to provide certain information in the New Report if the information can be gathered through the issuer’s continuous disclosure filings, the issuer’s profile on the System for Electronic Document Analysis and Retrieval (SEDAR), or a registrant firm’s profile on the National Registration Database (NRD).
For more information on the New Reports, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.