On July 13, 2017, the Canadian Securities Administrators (“CSA”) published CSA Staff Notice CSA 33-320, The Requirement for True and Complete Applications for Registration to state its concern to stakeholders regarding what it calls the “serious problem” of applications for registration that contain false or misleading statements, and to warn of the consequences of submitting such applications.
The registration application process is governed by National Instrument 33-109 Registration Information (“NI 33-109”) and National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations (“NI 31-103”). NI 33-109 requires, among other things, that applications for individual registration be submitted through the National Registration Database using a Form 33-109F4 Registration of Individuals and Review of Permitted Individuals (Form F4).
Registration applications, notes CSA staff, may be false or misleading when it includes information that is untrue, omits relevant information, provides vague information, or mischaracterizes information. In addition, applications may be false or misleading because of things said (or not said) on the application form, or in information and materials provided in connection with the application, such as correspondence from the applicant or statements made during interviews with CSA staff. The CSA warns that explanations based on carelessness or misunderstanding are not acceptable.
There is an onus on registrants, according to the CSA staff notice, to provide continuous disclosure to the OSC or other applicable securities regulator. If any of the information provided on an individual’s Form F4 changes, the registrant is required to update the information via a Form 33-109F5 Change of Registration Information within the time period provided for in NI 33-109. Failure to disclose in a timely fashion not only is a breach of securities legislation, warns CSA staff, but also may affect the individual’s suitability for registration.
CSA staff points out that section 5.1(1) of NI 33-109, requires the sponsoring firm to make “reasonable efforts” to ensure that the information in the registration is accurate. The notice clarifies that because Form F4 is intended to foster investor protection, applicants should always err on the side of disclosure, following the “golden rules” for registration applications:
- read the application form carefully; and
- complete the application form truthfully and with candor.
CSA staff strongly warned against any “novel, aggressive, or otherwise self-serving interpretations.”
CSA Staff Notice 33-320 is available for download from the websites of the participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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