CSA clarify disclosure requirements when relying on U.S. disclosure documents to satisfy Canadian disclosure obligations

Tim McCormick -

Today, members of the Canadian Securities Administrators in all jurisdictions other than British Columbia and Alberta released a multilateral staff notice that provides information with regards to the continuous disclosure and prospectus requirements that apply to documents prepared in accordance with the U.S. Securities and Exchange Act of 1934 and filed in Canada.

According to the regulators, staff have noticed that some issuers relying on U.S. filings to satisfy Canadian disclosure obligations are neglecting to include in their Canadian SEDAR filings or disclosure documents all schedules and exhibits to, or documents incorporated by reference in, U.S. filings. In particular, the guidance relates to issuers relying on an annual report under the 1934 Act (on Form 10-K or Form 20-F) as their "annual information form" or "AIF".

As such, the notice reminds SEC issuers filing their (i) 1934 Act annual report as a Canadian AIF; (ii) U.S. disclosure documents in reliance on an exemption under Part 4 of National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers; or (iii) incorporating by reference a 1934 Act annual report in a short form prospectus; that they must file (or incorporate by reference in the case of a short form prospectus) the entire document, including all schedules and exhibits to, and documents incorporated by reference in, the U.S. filings. In the case of short form prospectuses filed in Quebec, any document required to be incorporated by reference (which includes schedules, exhibits and documents incorporated by reference in 1934 Act annual reports), must also satisfy French language requirements unless exemptive relief is obtained.

In filing a 1934 Act disclosure document on SEDAR, issuers can satisfy the requirements by attaching the schedules, exhibits and documents incorporated by reference as (i) attachments to the version of the disclosure document filed on SEDAR; (ii) a single filing under the document type "Other" in the same SEDAR project; or (iii) separate filings under the document type "Other" in the same SEDAR project. Where a disclosure document has already been filed under the appropriate document type on SEDAR, it is not necessary to re-file it with the 1934 Act annual report where it is incorporated by reference into that annual report. 

The notice also states that exemptive relief has been granted on a case-by-case basis related to the filing in Canada of certain schedules, exhibits and documents incorporated by reference in applicable 1934 Act disclosure documents as well as the incorporation of those materials into a short form prospectus. In determining whether to grant such relief, regulators will consider whether the schedules and exhibits consist of documents that only have to be filed under a specific requirement of U.S. securities legislation that has no Canadian equivalent, or whether they contain material information that the issuer is required to disclose under Canadian securities legislation.

For more information, see CSA Multilateral Notice 51-338.

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