CSA National Instrument 45-106 Prospectus and Registration Exemptions

February 24, 2015

Download PDF:

CSA National Instrument 45-106 Prospectus and Registration Exemptions

Letter Summary:

Given the availability of other prospectus exemptions, we do not foresee any problems relating to capital formation for non-reporting issuers if the exemption were repealed for those entities. We also do not believe that changes to the Minimal Connection Exemption should be necessary. Foreign issuers should be treated the same as other non-reporting issuers in Canada, regardless of whether such issuers are public issuers in other jurisdictions. Canadian investors should be able to easily access current information about issuers relying on the rights offering exemption and it may be difficult for many investors to retrieve such information from filings made in a foreign jurisdiction, even if such information is available online.

Overview of the Council’s Comments:

As a general comment, the CAC supports efforts to improve the ease with which issuers can raise capital in Canada while balancing investor protection considerations. In addition, we agree that the proposed exemption should only be available to reporting issuers in Canada. Investors are generally familiar with the ability to access current information about issuers on SEDAR and current shareholders may also be receiving specified financial and other continuous disclosure information from the issuer directly. Ideally, investors should be required to hold securities of an issuer for a minimum of one calendar quarter prior to achieving eligibility to participate in a rights offering, such that they would have the opportunity to experience the volatility of the security’s price on the exchange and the issuer’s track record prior to making a subsequent investment, but we recognize that
such a requirement might be difficult for an issuer to administer and would lead to dilution for some shareholders.