On August 13, 2015, the Canadian Securities Administrators (CSA) published proposed amendments to the reporting requirements in National Instrument 45-106 Prospectus Exemptions (NI 45-106).
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.
In March 2014, the provinces of Alberta, Saskatchewan, Ontario and New Brunswick published proposed amendments to NI 45-106 that would result in the creation of two additional reporting forms which would be Form 45-106F10 Report of Exempt Distribution for Investment Fund Issuers and Form 45-106F11 Report of Exempt Distribution For Issuers Other Than Investment Funds (March 2014 Proposed Forms).
As described below, the CSA proposes to replace Form 45-106F1, Form 45-106F6 and the March 2014 Proposed Forms with a single, revised 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. However, 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 only being filed 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.
Form 45-106F1 filings in all other Canadian jurisdictions simply require the executed Form 45-106F1 to be mailed to the securities commission. A recent proposal by the CSA would allow the filing of Form 45-106F1 reports through SEDAR.
The time and costs to issuers to complete the reporting for an exempt distribution have been increasing as a result of the introduction of BCSC eServices and OSC Portal filing systems requiring the creation of different forms, completion of different formats of the schedules, and population of the electronic submission pages. The CSA have received this feedback from the industry in response letters to various proposed amendments to NI 45-106 and are therefore proposing the current amendments, in part, to harmonize the reporting forms into one.
In addition, the proposed amendments include the requirement to provide additional information to the CSA to assist them in regulatory oversight of the exempt market and to provide information for future policies.