On December 1, 2016, the Alberta Securities Commission (ASC) will be replacing the current fee rule in Alberta with ASC Rule 13-501 Fees (ASC Rule 13-501) which will increase registrant and capital market activity fees, and for the first time in Alberta, will introduce a participation fee model.

Any issuers that are currently a reporting issuer in Ontario are already familiar with the concept of a participation fee. The participation fee is an annual payment based on the capitalization of the issuer (the larger the issuer’s capitalization is, the larger the fee is). The ASC participation fee will be payable at the time that the issuer files its annual financial statements on SEDAR. Under the ASC’s current fee rule, the maximum an issuer would pay when it file its annual financial statements is $2,400 (which is the amount paid by short form eligible issuers).

As a result of the introduction of the new participation fee model, any reporting issuer with a capitalization of over $50 million will see an increase in the payment that it submits to Alberta with its annual financial statements. In some cases, issuers will see a significant increase as the maximum amount payable under the participation fee model is $48,000.

Types of Reporting Issuers

The ASC participation fee rates are based on the type of reporting issuer it is – either a Class 1 reporting issuer, a Class 2 reporting issuer, a Class 3A reporting issuer or a Class 3B reporting issuer. Each type of reporting issuer is defined below:

Class 1 reporting issuer” means a reporting issuer, other than a Class 2 reporting issuer, Class 3A reporting issuer or a Class 3B reporting issuer, that at the end of its previous financial year, has securities listed or quoted on a marketplace.

Class 2 reporting issuer” means a reporting issuer that does not have securities listed or quoted on a marketplace, and that is incorporated or organized under the laws of Canada or a jurisdiction in Canada.

Class 3A reporting issuer” means a reporting issuer that is not incorporated under the laws of Canada or a province or territory and that:

(a) had no securities listed or quoted on any marketplace at the end of its previous financial year, or

(b) had securities listed or quoted on a marketplace at the end of its previous financial year and all of the following apply:

(i) at the end of its previous financial year, securities registered in the names of persons or companies resident in Alberta represented less than 1% of the market value of all of the reporting issuer’s outstanding securities for which it or its transfer agent or registrar maintains a list of registered owners;

(ii) the reporting issuer reasonably believes that, at the end of its previous financial year, securities beneficially owned by persons or companies resident in Alberta represented less than 1% of the market value of all its outstanding securities;

(iii) the reporting issuer reasonably believes that none of its securities traded on a marketplace in Canada during its previous financial year;

(iv) the reporting issuer has not issued any of its securities in Alberta in the last 5 years, other than

(A) to its employees or to employees of one or more of its subsidiaries, or

(B) to a person or company exercising a right previously granted by the reporting issuer or its affiliate to convert or exchange its previously issued securities without payment of any additional consideration.

Class 3B reporting issuer” means a reporting issuer that:

(a) is not a Class 3A reporting issuer, and

(b) is a designated foreign issuer or an SEC foreign issuer as those terms are defined in National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers.

Alberta Participation Fees

For Class 1 reporting issuers and Class 2 reporting issuers, Alberta’s participation fee will be based on the reporting issuer’s capitalization as determined in accordance ASC Rule 13-501 for its previous financial year pursuant to the following table:

Capitalization for the Previous Fiscal Year Participation Fee
under $10 million $400
$10 million to under $25 million $500
$25 million to under $50 million $1,200
$50 million to under $100 million $3,000
$100 million to under $250 million $6,500
$250 million to under $500 million $14,000
$500 million to under $1 billion $19,000
$1 billion to under $5 billion $28,000
$5 billion to under $10 billion $36,500
$10 billion to under $25 billion $42,500
$25 billion and over $48,000

 

The participation fee for a Class 3A reporting issuer will be $400, and for a Class 3B reporting issuer will be based on the reporting issuer’s capitalization as determined in accordance ASC Rule 13-501 for its previous financial year pursuant to the following table:

 

Capitalization for the Previous Fiscal Year Participation Fee
under $10 million $400
$10 million to under $25 million $500
$25 million to under $50 million $600
$50 million to under $100 million $1,000
$100 million to under $250 million $2,000
$250 million to under $500 million $4,500
$500 million to under $1 billion $6,000
$1 billion to under $5 billion $9,000
$5 billion to under $10 billion $11,500
$10 billion to under $25 billion $13,500
$25 billion and over $15,500

 

Reporting Issuer Filings

A Class I reporting issuer and a Class 3B reporting issuer must file a completed Form 13-501F1 Class 1 Reporting Issuers and Class 3B Reporting Issuers – Participation Fee at the time of payment of their participation fee. A Class 2 reporting issuer must file a completed Form 13-501F2 Class 2 Reporting Issuers – Participation Fee at the time of payment of its participation fee, and a Class 3A reporting issuer must file a completed Form 13-501F4 Class 3A Reporting Issuers – Participation Fee at the time of payment of its participation fee.

Investment Fund Reporting Issuers

Under the new ASC Rule 13-501, an investment fund that has to file an annual financial statement pursuant to National Instrument 81-106 Investment Fund Continuous Disclosure, must pay a fee of $350 and file a completed Form 13-501F5 Investment Fund- Participation Fee at the time of payment of the participation fee.

Late Fees

Similar to Ontario, late fees will apply if a reporting issuer’s annual financial statements are not filed on a timely basis at a cost of $100 per day to a maximum of $5,000 per year.

Other Participation Fees

ASC Rule 13-501 also deals with participation fees for certain specified regulated entities (e.g., recognized exchanges, recognized quotation and trade reporting systems, alternative trading systems and recognized clearing agencies).