On April 7, 2016, the Canadian Securities Administrators (CSA) published amendments (Amendments) to the reporting requirements in National Instrument 45-106 Prospectus Exemptions (NI 45-106). The amendments were previously published for public comment on August 13, 2015. Concurrently, the CSA published CSA Staff Notice 45-308 (Revised) Guidance for Preparing and Filing Reports of Exempt Distribution under 45-106 (CSA Notice 45-308) which provides helpful information for industry participants in navigating through the Amendments which come into force on June 30, 2016.

Background

Current Reporting Forms

The reporting forms required to report an exempt distribution presently consist of two forms, being Form 45-106F6 British Columbia Report of Exempt Distribution (Form 45-106F6) which is used for distributions in British Columbia and Form 45-106F1 Report of Exempt Distribution (Form 45-106F1) which is used for distributions in all other Canadian jurisdictions. Issuers who meet an exemption under BC Instrument 45-533 may file a Form 45-106F1 in British Columbia instead of filing a Form 45-106F6.

As described below, the amendments replace Form 45-106F1 and Form 45-106F6 with a single, new Form 45-106F1 (New Form 45-106F1).

Current Filing Systems

Form 45-106F1 or Form 45-106F6, as applicable, are filed with the British Columbia Securities Commission (BCSC) through the BCSC eServices website and issuers are required to have a profile created on the BCSC eServices system before a filing can be completed. Issuers who have a System for Electronic Document Analysis and Retrieval (SEDAR) profile automatically have a profile existing in BCSC eServices. Issuers who do not have a SEDAR profile are required to submit a profile form to the BCSC to create their profile on BCSC eServices at least 24 hours before they can submit the reporting form. BCSC eServices requires the filer to enter a few pieces of information from the Form 45-106F1/F6 into certain fields on the eServices submission page before attaching the reporting documents and completing the submission. The Form 45-106F1 or Form 45-106F6 is typically populated in Word format, and then converted into PDF format before being uploaded to BCSC eServices. In addition, the schedules to Form 45-106F1 and Form 45-106F6 are removed and filed as separate PDF documents.

Form 45-106F1 filings with the Ontario Securities Commission (OSC) are filed through the OSC’s Electronic Filing Portal (OSC Portal). Unlike the BCSC eServices system, the OSC Portal does not require a profile to be created by an issuer in order to make a filing. Also unlike the BCSC eServices system, where only a few pieces of information need to be entered into the submission page, the submission on the OSC Portal requires the filer to enter every piece of information in the entire Form 45-106F1 onto the submission page. In addition, Schedule I to Form 45-106F1 must be completed in Excel format and uploaded to the submission page. The Form 45-106F1 is typically originally populated in Word format, the Schedule I information is populated a second time in Excel format, and the filer populates the Form 45-106F1 in its entirety again electronically on the OSC Portal. If the Form 45-106F1 is being filed only in Ontario, a filer may draft the Form 45-106F1 in the OSC Portal and the Excel version of Schedule I and forgo the creation of the Word version.

Currently, Form 45-106F1 filings in all other Canadian jurisdictions simply require the executed Form 45-106F1 to be mailed to the securities commission. On May 24, 2016 the CSA will require the filing of Form 45-106F1 through SEDAR, subject to an exemption for foreign issuers outlined below.

Amendment Details

Investment Fund Filing Deadline

The amendments have changed the annual reporting deadline for investment funds to January 30 for the reporting of all distributions in the previous calendar year made using the exemptions in sections 2.3, 2.10 and 2.19 of NI 45-106. Currently, investment funds have until 30 days after the end of the investments fund’s financial year. The CSA have provided a transition period to allow investment fund issuers that file annually to file the current Form 45-106F1 or the New Form 45-106F1 for distributions that occur before January 1, 2017.

Format of Reporting Form

The amendments provide that all distributions on or after June 30, 2016 are to be reported using New Form 45-106F1 in all provinces and territories of Canada. The New Form 45-106F1 replaces the current Form 45-106F1 and the current Form 45-106F6. There are also two schedules to New Form 45-106F1, both of which are to be completed in Excel format.

Filing Systems

The New Form 45-106F1 will be filed with the BCSC through BCSC eServices, with the OSC through the OSC Portal and with all other jurisdictions through SEDAR (certain foreign issuers may still make paper filings, as provided below). The New Form 45-106F1 can be drafted within the OSC Portal or within BCSC eServices and the filed version from the OSC Portal or BCSC eServices, along with the Excel versions of the two proposed schedules can be submitted to the other jurisdictions.

Exemption from Filing on SEDAR

Under National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR), a foreign issuer that falls within the definition of “foreign issuer (SEDAR)” is not required to use SEDAR and may continue to file paper copies in all jurisdictions other than Ontario and B.C. (both of which require the use of their electronic filing systems). A foreign issuer can voluntarily elect to use SEDAR by filing a SEDAR Form 5 Notice of Election by Foreign Issuer(SEDAR).

Details Required in the New Form 45-106F1

The following is the list provided by the CSA in Annex 2 of CSA Notice 45-308:

All Issuers:

  • Most recent previous legal name (if issuer’s name has changed in last 12 months)
  • Website of issuer (if issuer has one) and underwriter (if underwriter has one and is not a registrant)
  • Legal entity identifier (if issuer has one)
  • Firm NRD number for underwriter
  • CUSIP numbers of securities distributed (if applicable)
  • Details about the distribution (number of purchasers and total amount raised) by jurisdiction and prospectus exemption relied on
  • List of (and if required to be filed with or delivered to the Ontario Securities Commission, electronic copies of) all offering materials required to be filed with or delivered to the securities regulatory authority or regulator for distributions in Saskatchewan, Ontario, Québec, New Brunswick or Nova Scotia
  • NRD number of registrant compensated (if applicable)
  • Whether person compensated facilitated distribution through funding portal or internet-based portal
  • Description of terms of any deferred compensation
  • Relationship of person compensated to issuer or investment fund manager (connected with issuer or investment fund manager/insider/director or officer/employee/none of the above)

Schedule 1 (non-public)

  • Email address of purchaser (if provided by purchaser)
  • Specific prospectus exemption relied on to distribute securities to each purchaser
  • Identification of whether purchaser is a registrant or insider
  • Name of person compensated for the distribution for each purchaser

Non-Investment Fund Issuers

  • NAICS industry code
  • Stage of operations for issuers in mining industry (exploration/development/production)
  • Areas of asset holdings for issuers involved in investment activities (mortgages/real estate/commercial/business debt/consumer debt/private companies)
  • Number of employees (within a range)
  • SEDAR profile number (if issuer has one)

If issuer does not have a SEDAR profile number:

  • Date of formation
  • Financial year-end
  • Jurisdictions of Canada where reporting
  • CUSIP number (if issuer has one)
  • Name of exchanges where publicly listed
  • Size of assets (within a range)

Investment Fund Issuers

  • NRD number of investment fund manager
  • Website of investment fund manager (if investment fund manager does not have a firm NRD number and has a website)
  • Type of investment fund (money market/equity/fixed income/balanced/alternative strategies/other)
  • Date of formation
  • Financial year-end
  • Jurisdictions of Canada where reporting
  • CUSIP number (if issuer has one)
  • Name of exchanges where publicly listed
  • Net asset value (within a range) and date of calculation
  • Net proceeds by jurisdiction

Issuers that are not any of the following:

Investment fund issuers

Reporting issuers and their wholly owned subsidiaries

Foreign public issuers and their wholly owned subsidiaries

Issuers distribution eligible foreign securities only to permitted clients

  • Names, titles and locations of directors, executives officers and promoters
  • If a promoter is not an individual, this information is also required for the directors and executive officers of the promoter

Schedule 2 (non-public)

  • Business email address and telephone number of issuer’s CEO
  • Residential addresses of directors, executives officers, promoters and control persons that are individuals
  • If a promoter or control person is not an individual, this information is required for the directors and executive officers of the promoter and control person
  • If control person is not an individual:
  • Organization or company name
  • Province or country of business location