On May 2, 2019 the Canadian Securities Administrators (“CSA“) issued a press release introducing the National Systems Renewal Program (“NSPR“) aimed at developing a new centralized information technology system (the “Renewed System“) to replace various local records filing systems, as well as the System for Electronic Development Analysis and Retrieval (“SEDAR“), the System for Electronic Disclosure by Insiders (“SEDI“), and the National Registration Database (“NRD“).
In conjunction with the NSPR, the CSA proposes to revise Multilateral Instrument 13-102 — System Fees for SEDAR and NRD (“MI 13-102“), and to repeal and replace National Instrument 13-101 — System for Electronic Document Analysis and Retrieval (SEDAR) with National Instrument 13-103 — System Replacement Rule (“Proposed MI 13-103“). Proposed MI 13-103 will require that, subject to certain exceptions, all documents required or permitted to be filed with or delivered to a securities regulatory authority or regulator be transmitted electronically in accordance with the proposed legislation.
This change can be seen as overdue as the fee structure in MI 13-102 has not been changed since the models were implemented in 1997 (for SEDAR) and in 2003 (for NRD).
Phase One of Four
The first phase (“Phase One“) is expected to replace SEDAR, the National Cease Trade-Order Database, the Disciplined List, and certain filings in specific provincial portals (including the British Columbia Securities Commission eServices system and the Ontario Securities Commission Electronic Filing Portal). It is expected that additional phases of the Renewed System, including those related to filings made by insiders, registrants, derivative market participants and regulated entities, will also be addressed in the future.
What Issuers Need to Know
(1) The Flat Fee Design
If effected, the NSPR is intended to simplify the filing process, as well as minimize costs for issuers. Rather than have issuers pay principal and nonprincipal regulator fees, a new “flat fee design” will be introduced. It is expected that this will minimize the complexities of having to pay fees across different jurisdictions.
(2) Specific Filing Fee Elimination
The CSA is also proposing to eliminate system fees with respect to certain types of filings, including those relating to prospectus-distributions outside Quebec, the registration of an individual in an additional jurisdiction, related party transaction filings, going private transaction filings, as well as the one-time fee imposed when an issuer creates a profile on SEDAR.
(3) International Dealer and Advisors Fees
Presently international dealers and advisers are required to pay an annual participation fee. The Proposed MI 13-103 will require international dealers and advisers to instead pay a fee for filing a notice of reliance on the international dealer or adviser registration exemption in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. It is expected that the proposed document will not be required under Phase One of the Renewed System, but will be introduced in a future phase.
(4) Exempt Distribution Reports
Following the implementation of Phase One, all Form 45-106F1 — Report of Exempt Distribution reports will also need to be filed in accordance to the Renewed System. Ontario and British Columbia do not presently require that a fee be paid for using local filing systems, however under the proposed Renewed System, a filing fee is expected to be required.
If effected, it is expected that the Renewed System will be delivered in four phases, with Phase One to be implemented in early 2021.
The CSA is inviting comments pertaining to Phase One until July 31, 2019.
To better understand how these proposed changes could impact your business and filing practices, please contact any one of the lawyers in our securities group.