memorandum or another available prospectus exemption.
EMDs provide many valuable services to small and medium
size enterprises, large businesses, investment funds, merchant
banks, financiers, entrepreneurs, and individual investors, through
their ability to participate in the promotion, distribution and trading
of securities, as either a principal or agent.
Comments and Analysis of the Proposed Amendments
The PCMA supports the Proposed Amendments for the
reasons set out below.
1. Need for accessible database - There is an urgent and pressing
need for a publicly accessible and searchable database for information
and documents involving non-reporting issuers in the private capital
markets similar to that of SEDAR for reporting issuers in the public
markets. We commend the CSA for proposing such an initiative and
believe there is merit is extending SEDAR, as a commonly known
industry tool, into this new area of the private markets.
2. Need for searchable database for reports of trade – We
also believe there is a need for having a searchable database
rather than a non-searchable database of exempt market filings.
We believe such search capabilities should be more than just
document type. As discussed in the Proposed Amendments, we
concur with the CSA that it would be very helpful to break down
the sections of an F1 and F6 report of exempt distribution into a
specific template provided by the CSA and filed in a certain format.
We commend the CSA for taking this approach which would
require using specific templates and formats that will enable the
CSA, issuers, academics, industry, investors and others to receive
the information in the report of exempt distribution in a manner
that can be more easily analyzed.
3. Need for search capabilities for offering memoranda - The
PCMA requests that such search functions be available in a template
form and filed in certain formats for offering memoranda prepared
under the offering memorandum exemption set out in s. 2.9 of
NI 45-106. However, we believe this may be more appropriately
addressed during Phase II of the Exempt Market Review when the
CSA will examine the prescribed form of disclosure form used in
connection with the offering memorandum exemption.
4. Issuer benefits under the Proposed Amendments - The Proposed
Amendments state that the benefits to issuers for using SEDAR for
exempt market filings include:
a. enabling issuers to make filings in multiple jurisdictions
through a single electronic system;
b. allowing both reporting and non-reporting issuers to have
their filings, including exempt market filings, in one location
under a SEDAR profile, while still maintaining confidential
treatment of sensitive investor information; and
c. allowing issuers to verify the accuracy and completeness
of their filing record without having to make an information
request to the applicable jurisdictions.
We agree that these are compelling reasons, however, there
are additional considerations as noted below.
5. Other benefits and advantages of introducing the Proposed
Amendments - The PCMA submits that there are also benefits
for others if issuers are required to use SEDAR for exempt market
filings. These include:
a. investors who may want to research and read certain exempt
market filings to assist them in making an investment decision;
b. other issuers who may want to see what their competitors are
doing, or innovate by doing something different in terms of an
offering and its structure;
c. securities regulatory authorities who may want to assess
current market practices; and
d. securities industry professionals who want the transparency
of having publicly available information for educational,
comparable, research, precedent and industry purposes.
6. System fee - The system fee of $25 is nominal and we have no
issue with imposing such a cost in lieu of the benefits of having
this information available.
7. Harmonization and nationalized requirements - For the
sake of having a harmonized and nationalized filing system,
it would be preferred that the BCSC and OSC be a part of the
Proposed Amendments. We recognize that currently the BCSC
is the only jurisdiction in Canada to require the electronic filing of
offering documents under, for example, the offering memorandum
exemption under s. 2.9 if National Instrument 45-106 and it may
be difficult to adopt a new system. However, we believe it is more
important for the private markets to have such an electronic filing
system in all markets than not, albeit three different systems (i.e.,
Ontario BC and the other jurisdictions if they all were to adopt the
Proposed Amendments), with the hope that the OSC and BCSC
will work towards adopting the SEDAR platform in the future.
We note that it would be helpful if the CSA explain why the OSC
and BCSC have decided not to adopt the SEDAR platform for exempt
market filings and more importantly, its views as to future harmonization.
8. Filings by foreign issuers – We support the CSA maintaining the
status quo for foreign issuers who may continue to file its exempt
market filings in paper format or elect to do so electronically on SEDAR.
We thank for considering our submissions and we would be pleased
to respond to any questions or meet with you to discuss our comments.
For more information contact: