On June 25, 2015, the Canadian Securities Administrators (CSA) announced rule amendments, slated to come into force September 8, 2015, which are intended to eliminate certain disclosure requirements that give rise to the need to prepare a Canadian “wrapper” for foreign securities offered by way of prospectus exemption in Canada as part of a global offering.  The CSA’s intention is to codify and expand the discretionary relief previously granted in 2013 to several investment dealers in respect of Canadian wrappers.

In general, the amendments provide relief from the standard disclosure requirements relating to (i) underwriter conflicts of interest, and (ii) the availability of statutory rights of action.  The amendments also provide relief from the prohibition on making certain listing representations in offering documents.

The exemptions are available only where (i) the offering is made to “permitted clients”, and (ii) the offering is in respect of “eligible foreign securities”, which includes securities issued by a foreign issuer that is incorporated, formed or created under the laws of a foreign jurisdiction, is not a reporting issuer anywhere in Canada, has its head office outside of Canada, and has a majority of its executive officers and directors resident outside of Canada, or securities issued or guaranteed by a foreign jurisdiction’s government.

In general, for non-government issuers, the conditions to rely on the underwriter conflict of interest exemption include:

  • a concurrent distribution of the security to investors in the United States;
  • delivery to the Canadian investors of an offering document containing the same disclosure as provided to investors in the United States; and
  • compliance with applicable U.S. federal securities law and, if applicable, the disclosure requirements of FINRA Rule 5121.

There are still notice requirements under these CSA amendments, however, the notice requirement is now greatly simplified and there is no requirement to obtain a signed acknowledgement.

Under the amendments, notice must be provided to Canadian investors which refers to the reliance on the exemption from the underwriter conflicts disclosure requirements, and the requirement to disclose statutory rights will be deemed to be satisfied if a prescribed disclosure statement is provided. Such notice may be provided in three ways:

  • the offering document may include a notice to Canadian investors;
  • a dealer can provide the notice to its clients at the same time as the offering document but in a separate document; or
  • a dealer can provide a one-time notice to each Canadian investor covering all future Canadian securities offerings, which notice must state that the dealer intends to rely on the exemption for any distribution in the future of eligible foreign securities to the permitted client.

Although these rule amendments will help alleviate the need for Canadian wrappers it is important to remember that private placement post-trade reports must still be filed with the Canadian regulators.

On November 28, 2013, the Canadian Securities Administrators (CSA) in all jurisdictions except Ontario and British Columbia published for comment a proposed Multilateral Instrument 45-107 Listing Representation and Statutory Rights of Action Disclosure Exemptions (Proposed MI 45-107).

Proposed MI 45-107 is not being proposed in Ontario and British Columbia as existing or proposed local instruments address or are expected to address the issues discussed below.


Proposed MI 45-107 provides exemptions from certain requirements of the securities legislation of the participating jurisdictions that apply in the context of prospectus exempt financings, conducted primarily in a foreign jurisdiction by foreign issuers and by investment dealers or international dealers acting as underwriters, and which are also offered to certain institutional and other sophisticated investors in Canada.

The purpose of Proposed MI 45-107 is as follows:

(1) to provide an exemption from the statutory prohibition against making a representation about the intention to list securities on an exchange or market in the context of international financings; and

(2) to provide an exemption from the requirement that applies in Saskatchewan, Nova Scotia and New Brunswick, that an offering document used in connection with a prospectus exempt distribution include a prescribed statement with respect to certain statutory rights of action.

Proposed MI 45-107 will codify discretionary exemptive relief that the CSA has been granting in the context of U.S. and international offerings of securities to Canadian institutional and other sophisticated investors and consequently will alleviate the need for these discretionary exemption applications.

The Proposed MI 45-107 Continue Reading Canadian Securities Regulators Propose Amendments to Disclosure Rules for Exempt Offerings by Foreign Issuers

The Canadian Securities Administrators (CSA) published proposed amendments to National Instrument 33-105 Underwriting Conflicts (NI 33-105) last week which will remove in certain instances the need for foreign issuers to provide a Canadian wrapper when distributing foreign securities on an exempt basis to Canadian permitted clients.   The comment period on the proposed amendments ends on February 26, 2014.   The CSA have also proposed other amendments to provide exemptions from other securities law disclosure requirements.  Please do not hesitate to contact Garth Foster if you have any questions.