Canadian Securities Administrators to Implement Multilateral Instrument 55-103 Insider Reporting For Certain Derivative Transactions (Equity Monetization)
The Canadian Securities Administrators (CSA) have published the final version of Multilateral Instrument 55-103 - Insider Reporting For Certain Derivative Transactions (Equity Monetization)[1]. The Multilateral Instrument was previously released for comment on February 28, 2003 and was a subject of our prior updates. The Multilateral Instrument is expected to come into force on February 28, 2004, subject to ministerial approvals. British Columbia is expected to adopt similar requirements in a different manner.
The Multilateral Instrument is stated to be intended to address concerns that current insider reporting requirements[2] may not cover certain derivative-based transactions[3], including equity monetization transactions. Derivative-based transactions, including monetization transactions, can enable an investor to transfer part or all of the economic risk associated with the ownership of securities of an issuer, without transferring legal and beneficial ownership of such securities. Investors enter into monetization transactions for a variety of reasons, including tax planning strategies, to improve liquidity and to achieve portfolio diversification.
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