NEW FORM OF CANADIAN EXEMPT DISTRIBUTION REPORT SOON TO BE REQUIRED
On June 30, 2016, most issuers that distribute securities in Canada under exemptions from the prospectus requirements will be required to file a new harmonized form of exempt distribution report. Once effective, the new Form 45-106F1 will be used in all Canadian provinces and territories. Issuers completing private placements in British Columbia will no longer be required to complete and file a separate form (Form 45-106F6) from that required for the rest of Canada.
Enhanced Disclosure Requirements
In addition to harmonizing the form of report required across Canada, the new Form 45-106F1 will require enhanced disclosures about the issuer, the distribution and the participating investors. Among other things, these requirements will include the following:
Information about the Issuer:
The size of the issuer’s assets (or net asset value if the issuer is an investment fund).
The number of persons employed by the issuer.
If the issuer is a mining issuer, the issuer’s stage of development (exploration, development or production).
The issuer’s NAICS code, indicating the industry in which the issuer operates.
The issuer’s website address (if any).
Each Canadian jurisdiction in which the issuer reports (if any).
The name of each Canadian or foreign exchange on which the issuer’s securities trade.
If the issuer is not reporting in Canada, the United States or certain designated foreign jurisdictions, then the issuer must also provide additional information about each of its directors, executive officers, and promoters, including their names, jurisdiction of residence and contact information. (This information is currently required under the British Columbia Form 45-106F6, but not under the current form of exempt distribution report used for the rest of Canada.)
Information about the Distribution:
The currency in which the distribution was completed.
The CUSIP number (if any) and 3 digit security code for the securities distributed.
Information about the relationship between persons compensated in connection with the private placement (eg. finders or brokers) and the issuer.
Details regarding the cash and/or securities issued to persons compensated in connection with the private placement.
Confidential Information about Participating Investors*:
The name and address of each participating investor.
Details regarding the prospectus exemption relied upon for each participating investor, including, as applicable, the particular accredited investor category claimed (accredited investor exemption) or the director, officer or control person with whom a relationship is claimed (friends, family and business associates exemption).
* This information is currently made publicly available in British Columbia either online (for non-individual investors) or at the offices of the British Columbia Securities Commission (for individual investors). Under the new Form 45-106F1, this information will no longer be made publicly available in British Columbia or any other Canadian province or territory (although it is possible such information could be made available pursuant to requests made under freedom of information legislation).
Filing of New Reports
The new Form 45-106F1 will be filed on SEDAR for each jurisdiction except British Columbia and Ontario, which maintain their own electronic filing systems under which the new Form 45-106F1 will need to be filed. Issuers may choose to file a single report in each Canadian jurisdiction (naming all of the participating investors) or may choose to file separate reports for each jurisdiction.
Most issuers will need to use the new Form 45-106F1 for distributions that complete after June 30, 2016. Issuers completing private placements before that date will be required to use the existing form of exempt distribution reports applicable to the jurisdiction in which the distribution occurs, even if the report is due after June 30, 2016. Investment fund issuers that file reports annually may choose to use the existing form of reports for distributions up until January 1, 2017.
For additional information, contact any member of O'Neill Law Corporation. Contact information can be found here.
About O'Neill Law Corporation
O'Neill Law Corporation is a boutique law firm located in Vancouver, British Columbia that focuses on Canadian and U.S. securities law, mergers and acquisitions, corporate law and commercial law. O'Neill Law Corporation has a particularly strong focus on U.S. and Canadian cross-border transactions and issues. Each lawyer at O'Neill Law Corporation is licensed to practice law in British Columbia and at least one jurisdiction in the United States.
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