The Canadian Securities Administrators have finalized amendments to eliminate the need to prepare a “wrapper” when foreign issuers offer securities in Canada to permitted clients under a prospectus exemption. The amendments to National Instrument 33-105 Underwriting Conflicts, Multilateral Instrument 45-107 Listing Representation and Right of Action Disclosure Exemptions, Ontario Securities Commission (OSC) Rule 45-501 Ontario Prospectus and Registration Exemptions and an Ontario-specific amendment to Form 45-106F1 Report of Exempt Distribution are expected to be effective on September 8, 2015.
The amendments codify and expand the relief previously granted to several investment dealers to prevent the additional disclosure requirements under Canadian securities law from acting as a deterrent for foreign issuers to make offerings available to Canadian institutional investors. Although the required disclosure is generally boilerplate and provided through the use of a short addendum or “wrapper” to the foreign disclosure document, the additional disclosure is seen as limiting opportunities for Canadian institutional investors. Given the presumed sophistication of permitted clients, the justification for the disclosure is generally not considered to be significant.
The relief is limited only to offerings to permitted clients of certain foreign securities. Accordingly, wrappers will still be necessary if foreign offerings are extended to other classes of investors, such as accredited investors. In addition, the required disclosure will still be required for offerings by Canadian issuers, regardless of whether the investors are permitted clients.