Upcoming Changes to Filing Securities Reports

Effective May 24, 2016, issuers who engage in the private placement of exempt market securities in Saskatchewan and some other provinces will be required to file their Reports on Exempt Distribution via the Canadian Securities Administrator’s System for Electronic Document Analysis and Retrieval (“SEDAR”).

An issuer is able to rely on a number of exemptions to avoid the rigorous prospectus requirements of securities legislation when raising capital through the use of securities. Some of these exemptions include: offerings which rely on the “accredited investor” exemption; offerings under the “family, friends and business associates” exemption; offerings based on an offering memorandum; offerings which fall under the “crowd funding” exemption; and offerings which rely on the “private issuer” exemption. Aside from the offerings under the “private issuer” exemption, issuers who rely on these exemptions must complete a Report on Exempt Distribution, file it with their securities regulator, and pay the prescribed fees within 10 days, in each jurisdiction which the investors under said offering reside.

Previously, issuers (whether reporting issuers or not) who engaged in a private placement of exempt market securities could simply send the completed Report on Exempt Distribution form to their securities regulator. In Saskatchewan, the securities regulator is the Financial and Consumer Affairs Authority. Under the new filing requirements, non-reporting issuers will first have to become a SEDAR filer or retain the services of an existing SEDAR filer, and create a SEDAR profile.

Filing of the Report on Exempt Distribution via SEDAR, is now broken into two components, private and public. The public component contains general information on the offering and the amount of funds raised, as well as the amount of commissions paid to raise such funds. The private component contains a list of investors who participated in the exempt offering as well as their contact information. The regulators have split the Report on Exempt Distribution into a private/public format in order to maintain the confidentiality of investors who do not want their contact information made public. However, it will still be the responsibility of the issuer (and/or their SEDAR filer) to ensure the form is properly filed and that confidential information is not inadvertently publically disclosed.

On its face, these amendments require only the Report on Exempt Distribution to be filed via SEDAR, as well as any materials related to an offering under the offering memorandum exemption. The amendments also require the filing by the issuer with the applicable securities regulatory authorities via SEDAR of any materials used by the issuer with reliance on the crowd funding exemption. The proposed amendments do not currently appear to require an issuer to file via SEDAR, any supplementary materials (such as PowerPoint presentation or confidential information memorandum that falls within the deemed definition of an “offering memorandum” in certain provinces, including Saskatchewan and Ontario) provided by such issuer to help a prospective investor make an investment decision with reliance on certain other exemptions that trigger a report on trade filing requirements, such as the accredited investor exemption.

For further information on filing Reports on Exempt Distributions on SEDAR, or to engage McDougall Gauley LLP to assist in SEDAR filings, please contact a member of our Securities Law team.