In conjunction with publishing the final rules relating to registration reform on July 17, 2009 (in the form of National Instrument 31-103 Registration Requirements and Exemptions), the Canadian Securities Administrators (CSA) also published an amended and restated National Instrument 45-106 Prospectus and Registration Exemptions (the Revised NI 45-106) along with revised forms and companion policy. Most of the changes reflected in Revised NI 45-106 were required in order to harmonize that instrument with the new registration regime.
Pursuant to the new registration regime, in most jurisdictions of Canada, registration as a dealer will be triggered based on a “business trigger” as opposed to a trade-based trigger. The former NI 45-106 contained prospectus and registration exemptions based on the nature of the trade being undertaken. Since a trade-based trigger will not longer apply in most Canadian jurisdictions, NI 45-106 has been restructured in order to, primarily, be a prospectus exemption rule. The registration exemptions have been moved to a separate part of the instrument and are set to expire after a six-month transition period. However, certain trade-based exemptions (including “accredited investor” and “$150,000 minimum investment amount”) will continue to be available in the provinces of British Columbia, Alberta, Manitoba and in each of the three Territories. These exemptions will, however, be subject to new conditions setting out the circumstances in which they may be used, which conditions are to be set out in blanket orders issued by the respective regulators. Notably, these exemptions will be available only to those who are not otherwise registered. Saskatchewan is also considering whether to adopt this approach and will release a separate notice once it has made this decision.
In addition to changes relating to registration reform, the CSA have also taken the opportunity to reflect other changes in the Revised NI 45-106, mainly to clarify certain provisions, reflect policy decisions that were made in the course of granting exemptive relief and to harmonize certain previously issued local exemptions.
Finally, the Revised NI 45-106 also results in certain consequential amendments, including amendments relating to National Instrument 45-102 Resale of Securities, OSC Rule 45-501 Ontario Prospectus and Registration Exemptions, National Instrument 33-105 Underwriting Conflicts, National Instrument 51-102 Continuous Disclosure Obligations and related forms and companion policies.
These amendments are scheduled to come into force, subject to Ministerial approval, on the later of September 28, 2009 and the day on which sections 5 and 11, subsection 12(1) and section 13 of Schedule 26 of the Budget Measures Act, 2009 (Ontario) are proclaimed into force.