On July 27, 2011, the U.S. Securities and Exchange Commission (SEC) issued its final rule release (the Final Release) setting out the timing and other details for the elimination of Form F-9, which currently allows eligible Canadian issuers to register investment-grade debt and preferred securities for sale in the United States utilizing the U.S.-Canada Multi-jurisdictional Disclosure System (MJDS).1  The Final Release also makes related amendments to Form 40-F,2  the MJDS annual report form used by eligible Canadian issuers.  The SEC’s action follows its February 9, 2011 proposal based on the provisions of Section 939A  of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the SEC to remove references to or requirements relying on credit ratings in its regulations. 

The Final Release provides that:

  • Form F-9 will be rescinded, but not until December 31, 2012 in order to address concerns raised by Canadian issuers that do not have a December 31 fiscal year end and therefore may not have the IFRS financial statements necessary to utilize Form F-103 without a U.S. GAAP reconciliation available before then.
  • To facilitate the transition to Form F-10 by issuers currently eligible to use Form F-9, there will be a three-year temporary “grandfather” period, ending on December 31, 2015, during which any issuer that would have been eligible to use Form F-9  will be able to register securities using Form F-10, if it meets the eligibility requirements of Form F-10 other than the requirement to have at least a U.S. $75 million public float of its outstanding equity securities (the Public Float Requirement) or, as an alternative, be issuing debt or preferred securities which are fully and unconditionally guaranteed by a parent which itself meets the Public Float Requirement.  In order to use this “grandfather” provision, the issuer must disclose in its prospectus for the offering the basis for its reasonable belief that it would have been eligible to utilize Form F-9 as in effect on December 30, 2012.  The final prospectus for any offering being made under the “grandfather” provision must be filed on or before December 31, 2015.
  • Form 40-F will be amended effective December 31, 2012, to delete the provision allowing registrants to report on Form 40-F, even if they do not meet the Public Float Requirement, if they are reporting under the U.S. Securities Exchange Act of 1934 (the U.S. Exchange Act) solely by reason of having filed a Form F-9 registration statement.    Registrants who are reporting under the U.S. Exchange Act solely by reason of having filed a Form F-10 registration statement, including those who have filed a Form F-10 under the temporary “grandfather” provision allowing the use of Form F-10 by registrants formerly eligible to use Form F-9, will continue to be eligible to use Form 40-F without meeting the Public Float Requirement.
  • The SEC is adopting a permanent “grandfather” provision in Form 40-F which will allow a registrant to continue to file annual reports on Form 40-F without meeting the Public Float Requirement if the reporting obligation relates to previously issued securities that were sold under a Form F-9 registration statement prior to December 31, 2012.  The Final Release explains the SEC’s view that it would not be appropriate to change the reporting requirements applicable to issuers who may have relied upon their understanding of the reporting requirements that would apply to them at the time that their offering was first made.

Although the elimination of Form F-9 could mean that a small number of Canadian issuers currently eligible to utilize MJDS may not be eligible to do so in the future, the SEC has effectively delayed the impact of these changes for more than four years by deferring the effective date of the amendments to Form F-9 until December 31, 2012, and providing “grandfather” provisions that will then run for an additional three years.