Earlier this month on October 5th, the Ontario Securities Commission (OSC) released Rule 33-509 Exemption from Underwriting Conflicts Disclosure Requirements. Provided the rule is approved by the Minister of Finance, it will provide an exemption from the requirement to include specific underwriting conflicts disclosure in an offering document when foreign securities are distributed on a private placement basis to investors in Ontario. The rule would replace a blanket order that currently is in place.
National Instrument 33-105 Underwriting Conflicts (NI 33-105) requires that disclosure be provided of certain conflicts of interest where there is a direct or indirect relationship between the issuer or selling securityholder and the underwriter that might result in a perception that they are not independent in connection with the distribution. An exemption from the underwriting conflicts disclosure requirements would be available if:
- The distribution is made under an exemption from the prospectus requirement;
- The distribution is of a security that is an “eligible foreign security” as defined in NI 33-105; and
- Each purchaser in Ontario is a “permitted client” as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
In NI 33-105, an eligible foreign security means a security offered primarily in a foreign jurisdiction as part of a distribution of securities in either of the following circumstances: (a) the security is issued by an issuer (i) that is incorporated, formed or created under the laws of a foreign jurisdiction; (ii) that is not a reporting issuer in a jurisdiction of Canada; (iii) that has its head office outside of Canada; and (iv) that has a majority of the executive officers and a majority of the directors ordinarily resident outside of Canada; or (b) the security is issued or guaranteed by the government of a foreign jurisdiction.
The proposed rule is expected to be in force by February 17, 2024.
October 31, 2023