Overview

On September 17, 2020, the Canadian Securities Administrators (CSA) published for comment proposed changes to the offering memorandum prospectus exemption. The changes are reflected in proposed amendments to National Instrument 45-106 "Prospectus Exemptions" (NI 45-106), as well as proposed changes to Companion Policy 45-106CP "Prospectus Exemptions".

The proposed amendments set out new disclosure requirements for issuers that are engaged in “real estate activities” or issuers that are “collective investment vehicles”. These include a new requirement for issuers with real estate activities to provide an independent appraisal of the real property, if it discloses a value for the real property other than in its financial statements, will use a material amount of the proceeds to acquire an interest in real property, or acquire an interest in real property from a related party. It is proposed that issuers that are collective investment vehicles will need to provide better disclosure to investors about the issuer’s investment decision-making process and the composition and performance of the issuer’s portfolio.

Many issuers using the offering memorandum prospectus exemption are issuers that would meet these proposed definitions, and some already provide disclosure that would meet the proposed requirements. The new requirements are intended to set out a clearer framework for these issuers, giving them greater certainty as to what they must disclose, while giving investors more complete and relevant information.

In addition, the proposed amendments include a number of general amendments, which are meant to clarify or streamline parts of NI 45-106 or improve disclosure for investors.

The CSA Notice and Request for Comment setting out the proposed amendments can be found on the websites of CSA members. Comments should be submitted in writing by December 16, 2020.

Review the press release on the CSA's website and the proposed changes on the OSC's website.

On December 8, 2022, the CSA issued the final Amendments to NI 45-106 as a result of this project. The Amendments set out new disclosure requirements for issuers that are engaged in "real estate activities" (Real Estate Issuers) and issuers that are "collective investment vehicles" (CIVs), when those issuers are preparing an offering memorandum (OM). Both definitions are new in NI 45-106. Many issuers using the OM Exemption (as defined below) are Real Estate Issuers or CIVs. The new requirements are intended to set out a clear disclosure framework for these issuers, giving them greater certainty as to what they must disclose, and giving better information to investors.

In addition, the Amendments include a number of general amendments (the General Amendments), which are meant to clarify or streamline parts of NI 45-106 or improve disclosure for investors.

Provided all necessary ministerial approvals are obtained, the Amendments will come into force on March 8, 2023.

Other de­vel­op­ments

December 2022

On December 8, 2022, the CSA issued the final Amendments to NI 45-106 as a result of this project. Provided all necessary ministerial approvals are obtained, the Amendments will come into force on March 8, 2023.

September 2020

On September 17, 2020, the Canadian Securities Administrators published for comment proposed changes to the offering memorandum prospectus exemption. The changes are reflected in proposed amendments to National Instrument 45-106 "Prospectus Exemptions" (NI 45-106), as well as proposed changes to Companion Policy 45-106CP "Prospectus Exemptions".