On June 20, 2024, the securities regulatory authorities in Alberta, British Columbia, Nova Scotia, Ontario, Québec and Saskatchewan (the participating jurisdictions) published a temporary exemption from the restrictions set out in subsection 7.1(2) (d) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations so that exempt market dealers may participate in prospectus offerings as members of selling groups (the Blanket Orders).
The participating jurisdictions have implemented the relief through local blanket orders that are substantively harmonized across the participating jurisdictions. Although the intended outcomes of the Blanket Orders are similar; the language of each Blanket Order may vary according to jurisdiction. The Financial and Consumer Services Commission of New Brunswick (FCNB), which is the securities regulator in that province, anticipates publishing a similar local blanket order in the coming weeks.
The Blanket Orders provide that an exempt market dealer may act as a dealer in a distribution of securities made under a prospectus, provided that certain conditions are satisfied. Details on these conditions, as well as the other terms and conditions necessary to be satisfied, are included in the Blanket Orders:
(a) the exempt market dealer acts as a dealer only in accordance with the terms of a selling group agreement with the issuer or an investment dealer acting as the lead underwriter in the distribution of the securities made under the prospectus;
(b) the exempt market dealer acts as a dealer only to a person or company in respect of whom an exemption from the prospectus requirement would have been available if the distribution of securities had been made under an exemption from the prospectus requirement;
(c) the exempt market dealer does not act as an underwriter in connection with the distribution of the securities under the prospectus and limits its interest in the transaction such that it comes within the exemption for selling group members in clause (a) of the definition of “underwriter” in the Ontario Securities Act; and
(d) the total compensation paid or payable to the exempt market dealer does not exceed 50% of the lowest total amount of compensation paid or payable in connection with the distribution of the securities under the prospectus to any selling group member that is an investment dealer.
The Blanket Orders come into effect on June 20, 2024, and remain in effect until December 20, 2025, unless extended by the participating jurisdictions.
CSA Notice Regarding Coordinated Blanket Order 31-930 Exemption to allow Exempt Market Dealer Participation in Selling Groups in Offerings of Securities under a Prospectus from the website of the Ontario Securities Commission: https://www.osc.ca/en/securities-law/instruments-rules-policies/3/31-930/osc-coordinated-blanket-order-31-930-exemption-allow-exempt-market-dealer-participation-selling
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
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.
