National Instrument 45-106 – Prospectus Exemptions (NI 45-106) exempts certain distributions of securities from the prospectus requirements. However, reliance on many of these exemptions requires issuers to report prospectus-exempt distributions to every securities regulator where a distribution of securities was made to a resident in that province. Generally, the deadline for issuers to file a completed Form 45-106F1 Report of Exempt Distribution (Form 45-106F1) is ten days after the date of distribution. However, issuers that are investment funds can opt to file their Form 45-106F1 once yearly by January 30 for distributions made in the preceding calendar year, provided the distributions were made in reliance on any of the following prospectus exemptions:
- Accredited investor;
- Minimum investment of $150,000; and
- Additional investment in investment fund units.
Form 45-106F1 must be filed electronically as follows:
- In British Columbia, through the online eServices portal of the BCSC;
- In Ontario, through the online Electronic Filing Portal of the OSC; and
- In all other jurisdictions, through SEDAR.
Profiles must be set up on both the BCSC online eServices portal and on SEDAR prior to the filings being made.
Securities regulators charge separate filing fees for Form 45-106F1. In B.C. and Ontario, fees are paid online when the form is submitted, while filing fees payable to other jurisdictions must be made through SEDAR.
A brief reminder that securities regulators have a different approach when sales of securities are made to managed accounts (i.e. to discretionary portfolio managers), as follows:
- In Manitoba and Québec, the Form 45-106F1 may be required to be filed and fees paid with respect to beneficial owners of securities, regardless of the location of the managed account (note as well that fees in Québec are based on the gross value of securities distributed in the Province);
- In other jurisdictions (including Saskatchewan through blanket relief), the Form 45-106F1 would generally be filed (and fees paid) based on the location of the discretionary adviser/managed account.
We would be pleased to assist our clients with investment funds prepare and file the required Form 45-106F1 for 2021 distributions by the January 30, 2022 deadline. We would strongly encourage clients to begin this process soon, or as early as possible in the new year, to avoid a potential late filing, as the process can be time consuming. There is typically a last-minute “filing crunch” towards the end of January, which can lead to a missed deadline.
November 30, 2021