On January 22, 2021, the Capital Markets Modernization Taskforce (Taskforce) released its final report (Report). The Taskforce was established by the Ontario Provincial Government to help transform the regulatory landscape for the capital markets sector, and advise the Minister of Finance on how to improve the innovation and competitiveness of the Province’s capital markets and best help build Ontario’s economy.

The Report includes 74 policy recommendations designed to amend securities laws in the following areas:

  • improving regulatory structure to enhance governance
  • improving competitiveness through regulatory measures
  • ensuring a level playing field between large and small market players
  • improving the proxy system, corporate governance and the process of mergers and acquisitions
  • fostering innovation
  • modernizing enforcement and enhancing investor protection

Because of the far reaching nature of the numerous recommendations, BAX will do a series of articles over the next few weeks on recommendations of interest to small and midcap issuers and the registrants that service them. 

Recommendation #15 – Dealer Registration “Safe Harbour” for Issuers and “Associated Persons”

Currently if an issuer distributes its own securities with regularity and without the involvement of a registered dealer, the issuer and/or officers, directors, employees or agents of the issuer (Associated Persons), in some circumstances, may be considered in the business of trading securities that “trips” the business trigger and requires registration as a exempt market dealer under National Instrument 31-103 Registration Requirements Exemptions and Ongoing Registrant Regulations (NI 31-103). There is currently some uncertainty among market participants as to when an issuer or its Associated Persons may be considered in the business of trading securities.

The Taskforce recommends creating a dealer registration “safe harbour” exemption for issuers and their Associated Persons through an OSC blanket order or rule change that would allow an issuer to engage in certain passive “permitted investor relations activities” (PIRA) without requiring registration.

Passive activities may include:

  • Preparing offering documents and subscription agreements;
  • Passively offering shares of the issuer to investors through the issuer’s website; and
  • Passively accepting subscription requests that have not been solicited by the issuer or Associated Persons.

According to the Report the effect of implementing this recommendations would be that issuers could conduct some capital raising activities with regularity and without needing to employ the services of a registered dealer.

For a full copy of the Report:

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.