Certain members of the CSA proposed regulatory amendments yesterday that would relieve underwriters, under certain circumstances, of the obligation to provide connected and related issuer disclosure in offering documents for certain distributions of securities that qualify as "designated foreign securities" as defined in the proposed amendments. To rely on the exemption, among other things, the offering would have to be restricted to "permitted clients" and the exempt offering document would have to comply with U.S. disclosure requirements on conflicts of interest between issuers and underwriters, regardless of whether or not the U.S. requirements applied to the distribution.
The proposed amendments will not apply to a distribution if a prospectus has been filed with any Canadian securities regulatory authority, as these provisions are intended to relate solely to private placements made to investors that qualify as permitted clients. Finally, the proposal would require specified firm registrants to notify permitted clients that they were relying on the exemptions.
In conjunction with this proposal, securities regulators, except for those in Ontario and B.C., also proposed certain limited exemptions from prohibitions relating to making listing representations and to require disclosure of statutory rights of action. These exemptions would be available in similar circumstances as the proposed NI 33-105 exemptions and are detailed in the proposed Multilateral Instrument 45-107 Listing Representation and Statutory Rights of Action Disclosure Exemptions. Similar amendments were proposed by Ontario earlier this year and are not required in B.C.
Both of these proposals are intended to codify, on a broader basis, exemptive relief granted earlier this year to certain applicants. Comments on both proposals will be accepted until February 26, 2014.