OSC To Provide Exemptive Relief For Over-Allotment Options

On April 21, 2006, the OSC and other provincial securities commissions (together, the CSA) issued a Staff Notice in relation to the pre-marketing of underwriters’ options on bought deals. The Staff Notice was the result of a technical review of a practice that had developed on bought deal offerings, whereby an issuer grants underwriters an option, exercisable prior to closing, to purchase securities in addition to the base securities the underwriters agreed to purchase under the underwriting agreement. According to the CSA, insofar as the securities underlying these options were being marketed prior to the agreement to purchase them being entered into (i.e., prior to exercise of the options) and a receipt having been issued for the preliminary prospectus, issuers and their underwriters were violating securities law pre-marketing restrictions.