The Ontario Securities Commission (OSC) and the Canadian Securities Administrators (CSA) recently published the following notices relating to the filing of exempt distribution reports (Forms 45-106F1 and 45-106F6 in British Columbia):
- OSC Staff Notice 45-709 (Revised) Tips for Filing Reports of Exempt Distribution dated May 21, 2015
- CSA Staff Notice 45-308 (Revised) Guidance for Preparing and Filing Reports of Exempt Distribution under National Instrument 45-106 Prospectus Exemptions dated June 25, 2015
The notices highlight a number of deficiencies identified by OSC and CSA staff when reviewing these filings. While the notices generally do not contain new information (being revised versions of existing notices), they are useful quick reference guides that you may wish to keep at hand.
Some of the guidance may come as a surprise to market participants. In particular, market participants should note the statements in the notices relating to distributions in multiple jurisdictions (e.g., a distribution by an issuer in Alberta through an exempt market dealer based in Alberta to an investor resident in British Columbia) to the effect that:
- A distribution can occur in more than one jurisdiction. If a distribution occurs in multiple jurisdictions, the parties are generally required to comply with the law of all jurisdictions in which the distribution occurs.
- Not all exemptions are available in all jurisdictions. The issuer or underwriter may need to rely on multiple exemptions for the same purchaser in circumstances where the distribution is made in more than one jurisdiction and the same exemption is not available in those jurisdictions.
- If distributions are made in more than one jurisdiction, the issuer or underwriter must complete a single F1 identifying all purchasers, including purchasers that reside in the jurisdiction and those that do not, and file that report in each of the jurisdictions in which the distribution is made.
Although the statements in the notices are not new, they may not be consistent with some issuers’ market practice.