Alberta Securities Commission Proposes Rules to Facilitate Cross-Border Offerings for Alberta Issuers

Written By Brent W. Kraus and Duncan D'Arcy

On April 17, 2018, the Alberta Securities Commission published a notice and request for comment of the proposed repeal and replacement of ASC Rule 72-501 Distributions to Purchasers Outside Alberta, which will provide new prospectus exemptions to Alberta issuers when distributing securities to investors outside of Canada. The proposed rule's significant expansion of exemptions for foreign issuances is intended to reduce regulatory impediments and facilitate cross-border offerings by removing the duplicative application of prospectus and registration requirements.

New Exemptions

When Alberta issuers distribute securities from Alberta they must comply with the prospectus requirements in the Securities Act (Alberta) or rely on exemptions from that requirement. The proposed rule retains certain prospectus exemptions from the current Rule 72-501 and provides additional exemptions available to issuers for distributions into foreign jurisdictions where the issuer has materially complied with applicable securities laws in the foreign jurisdiction.

Proposed exemptions for pre-marketing activities outside of Canada will facilitate solicitations, advertisements and other acts in furtherance of a distribution by Alberta issuers in foreign jurisdictions. An exemption from the dealer registration requirements will exempt certain foreign dealers, including dealers acting as underwriters, when distributions to investors outside of Canada are made under a prospectus filed in Alberta or made in reliance on a prospectus exemption. For distributions within Canada, a new offering memorandum exemption will allow Alberta issuers to rely on analogous offering memorandum exemptions of other securities regulatory authorities in Canada in order to more readily raise capital in other jurisdictions of Canada.

Additional Obligations

The proposed rule includes the addition of an anti-avoidance provision to the prospectus exemptions to ensure that sales and resales are bona fide, stating that reliance on the exemptions must be made in good faith and not as part of a plan or scheme to conduct an indirect distribution to a person or company in Canada.

Relaxation of Filing Requirements

The proposed rule would also require the filling of a Form 45-106F1 Report of Exempt Distribution when relying on the new prospectus exemptions, but provides exemptions from certain disclosure requirements for distributions into foreign jurisdictions. Currently, several of the disclosure requirements are difficult to comply with in connection with a prospectus offering in a foreign jurisdiction.

The comment period for the proposed rule is open until June 18, 2018.

Bennett Jones is pleased to help clients understand the implications of the new exemptions provided in the proposed rule and assist Alberta issuers in raising capital in jurisdictions outside of Alberta.

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