Proposed amendments to National Instrument 45-102 Resale of Securities (NI 45-102)

The Canadian Securities Administrators (CSA) recently published for comment proposed amendments to National Instrument 45-102 Resale of Securities (NI 45-102) that would introduce a new prospectus exemption for the resale of securities of a foreign issuer.

Proposed Exemptions

The proposed exemption would allow Canadian investors to resell, outside of Canada, securities of a foreign issuer acquired under a prospectus exemption where the issuer is not a reporting issuer in any jurisdiction of Canada.

Proposed Amendments

The proposed amendments introduce a definition of foreign issuer to replace the current 10 per cent Canadian ownership test. The proposed definition for “foreign issuer” means an issuer that is not incorporated or organized under the laws of Canada, or a jurisdiction of Canada, unless one or more of the following apply:

(a)          the issuer has its head office in Canada;

(b)          the majority of the executive officers or directors of the issuer ordinarily reside in Canada; and/or

(c)          the majority of the consolidated assets of the issuer are located in Canada.

In order for the exemption to apply the issuer of the security must not have been a reporting issuer in any jurisdiction of Canada on the distribution date or, alternatively, on the date of the trade, and the trade must be made through an exchange or market outside of Canada or to a person or company outside of Canada. If the selling security holder is an insider of the issuer of the security, no unusual effort can be made to prepare the market or to create a demand in Canada for the security that is the subject of the trade. The comment period for this proposal expires on September 27, 2017.

The foregoing is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, please contact the author who would be pleased to discuss the issues above with you, in the context of your particular circumstances.