Canadian Securities Regulators Adopt More Flexible Approach to Resale of Securities of Non-Canadian Issuers

April 19, 2018
  • Effective June 12, 2018, Canadians holding securities of “foreign issuers” (i.e., non-Canadian issuers) will have more flexibility to resell those securities outside of Canada in reliance on a new prospectus exemption.

The Canadian Securities Administrators have adopted amendments to National Instrument 45-102 Resale of Securities (NI 45-102) which will provide a new prospectus exemption for the resale of securities of foreign issuers purchased by Canadian investors. The amendments will apply in all jurisdictions other than Alberta and Ontario, where an equivalent exemption is being adopted in Alberta Securities Commission Blanket Order 45-519 Prospectus Exemptions for Resale Outside Canada (ASC Blanket Order 45-519) and Ontario Securities Commission Rule 72-503 Distributions Outside Canada (OSC Rule 72-503), respectively.

Conditions for reliance on the new exemption are as follows:

  • The issuer is not incorporated or organized under the laws of Canada and does not have its head office located, or a majority of its directors or officers resident, in Canada;
  • The issuer is not a reporting issuer in any jurisdiction of Canada; and
  • The resale is on an exchange or market outside of Canada or to a person or company outside of Canada.

As previously discussed, it was initially proposed that the new exemption would replace the “10% shareholder ownership tests” under section 2.14 of NI 45-102; however, after reviewing comments received, the CSA have decided to retain the exemption in section 2.14 and adopt the new exemption as an alternative to the existing regime.

For further information, please see CSA Notice of Amendments to National Instrument 45-102 Resale of Securities, Changes to Companion Policy 45-103CP to National Instrument 45-102 Resale of Securities, Consequential Amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, and Consequential Changes to National Policy 11-206 Process for Cease to be a Reporting Issuer Applications (March 29, 2018).

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