The Alberta and the British Columbia Securities Commissions have issued exemption orders (the Exemption Orders) which provide limited relief from Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets (MI 51-105). Both MI 51-105 and the Exemption Orders are currently in effect.

For our Osler Update regarding the initial adoption of MI 51-105, click here.

The Exemption Orders provide that an “OTC issuer,” as defined in MI 51-105 (OTC issuer) is exempt from the provisions of the rule provided that it has a “primary listing” that is in effect each time the issuer:

  • carries on any promotional activity, as defined in MI 51-105, in or from Alberta or British Columbia;  or
  • distributes a security to a person resident in Alberta or British Columbia.

“Primary listing” is defined as an issuer’s first listing of a class of its securities on a “designated exchange.” We are seeking interpretive guidance from the regulators because it is not clear what is intended by “first listing”. The designated exchanges are:

  • NASDAQ OMX
  • Borsa Italiana, MTA Tier
  • London Stock Exchange, except AIM
  • Hong Kong Stock Exchange
  • Deutsche Börse, except the First Quotation Board and the Entry Standard tier
  • Xetra, Prime Standard and General Standard tiers
  • SIX Swiss Exchange
  • Bourse de Luxembourg, except Euro MTF
  • Tokyo Stock Exchange, 1st Section and 2nd Section
  • Shanghai Stock Exchange
  • The Stock Exchange of Thailand, except The Market for Alternative Investment (mai)
  • National Stock Exchange of India
  • Bombay Stock Exchange
  • Osaka Stock Exchange
  • Korea Exchange
  • Singapore Exchange

In addition, the Exemption Orders provide an exemption from MI 51-105 for an OTC issuer that distributes a non-convertible debt security to a person resident in Alberta or British Columbia if the issuer “does not have any class of securities other than non-convertible debt listed on an exchange or quoted on a quotation and trade reporting system.” It is not clear why a listing of any class of securities other than non-convertible debt on any exchange or trade reporting system renders the exemption unavailable. We are seeking interpretive guidance from the regulators regarding the exemption.

It is anticipated that the Canadian Securities Administrators in each other province and territory of Canada where MI 51-105 is in effect will issue exemptive relief similar to the Exemption Orders. In addition, we are expecting the Canadian Securities Administrators to issue interpretive guidance regarding both MI 51-105 and the Exemption Orders. We will provide updated information as it becomes available.