So, for “tax reasons”, you have been advised to reorganize your affairs in order to hold shares if your registrant through a holdco. And perhaps you have been advised to set-up a trust for “estate freeze” purposes.

As we well know, a registered firm must notify the regulators usually within 10 days after most changes to information regarding a Registered Individual, Permitted Individual or the registered firm flowing from the reorganization (i.e., directorships). A failure by a registrant to notify the OSC of such amendments may result in significant late fees or other regulatory action.

However, it is also important to know that an internal reorganization may also trigger pre-approval by the regulators. A registered firm must give the regulators 30 days written notice in accordance with subsection 11.10(2) “if it knows or has reason to believe that any person or company, alone or in combination with any other person or company, is about to acquire, or has acquired, for the first time, direct or indirect ownership, beneficial or otherwise, of 10% or more of the voting securities or other securities convertible into voting securities of (a) the registered firm; or (b) a person or company of which the registered firm is a subsidiary”. Again, this fun provision may capture your new holdco or trust, thereby subjecting a straightforward internal reorganization to pre-approval by one or more securities regulators.