OSC Rule For Distributions Outside Of Canada Coming Into Force

The Ontario Securities Commission (the "OSC") has adopted OSC Rule 72-503 Distributions Outside Canada (the "Rule") along with Companion Policy 72-503CP ("72-503CP"), both of which will come into force on March 31, 2018.

The purpose of the Rule is to replace the OSC's longstanding Interpretation Note 1 Distributions of Securities of Ontario (the "Note") and to provide issuers and underwriters with clarity and more certainty on the application of Ontario prospectus and dealer registration requirements when distributing securities outside Canada.

The Note, which was published over 30 years ago, stated that when an issuer and its intermediaries had taken "reasonable precautions" to ensure that securities distributed outside Ontario would "come to rest" with investors outside Ontario and would not "flow back" into Ontario, such distributions did not require a prospectus or reliance on an exemption from the prospectus requirement.