CSA / ACVM Canadian Securities Autorités canadiennes Administrators en valeurs mobilières CSA Staff Notice 47-302 Pre-marketing of underwriters’ options on bought deals Paragraph 7.1(a) of National Instrument 44-101 - Short Form Prospectus Distributions provides an exemption from the prospectus requirement for pre-marketing bought deals. The exemption states that the prospectus requirement does not apply to solicitations of expressions of interest before the filing of a preliminary short form prospectus for securities to be qualified for distribution under a short form prospectus if, among other things, the issuer has entered into an enforceable agreement with an underwriter who has agreed to purchase the securities. A practice has developed on bought deal offerings for issuers to grant underwriters an option, exercisable prior to closing, to purchase securities in addition to the securities the underwriters agreed to purchase under the underwriting agreement (underwriters’ option). Rather than being underwritten securities, the securities that are the subject of the underwriters’ option are in effect “agency securities” (and for the purposes of this notice are referred to as optioned securities). In our view, the exemption in Part 7 does not extend to pre-marketing of the optioned securities because they are not the subject of an enforceable agreement with an underwriter who has agreed to purchase the securities. We intend to review the regulatory restrictions on pre-marketing and to specifically consider the issue of whether Part 7 should be amended to permit pre-marketing of optioned securities. We recognize that the exemption in Part 7 also does not extend to the pre-marketing of securities underlying post-closing over-allotment options to purchase up to 15% of the securities offered under the prospectus (also known as greenshoe options). To the extent that there is pre-marketing of securities underlying a greenshoe option, exemptive relief will be required before such pre-marketing occurs. We are willing to consider recommending such relief on a case-by-case basis. Questions Please refer your questions to any of the following people: Patricia Leeson Manager Corporate Finance Alberta Securities Commission (403) 297-5222 Andrew S. Richardson, CA Deputy Director, Corporate Finance British Columbia Securities Commission (604) 899-6730 Susan W. Powell Legal Counsel, Corporate Finance New Brunswick Securities Commission (506) 643-7697
Bill Slattery Deputy Director Corporate Finance and Administration Nova Scotia Securities Commission (902) 424-7355 Erez Blumberger Assistant Manager, Corporate Finance Ontario Securities Commission (416) 593-3662 David Coultice Senior Legal Counsel Ontario Securities Commission (416) 204-8979 Benoit Dionne Manager, Corporate Finance Autorité des marchés financiers (514) 395-0558 ext. 4411 Éric Boutin Securities Analyst Autorité des marchés financiers (514) 395-0558 ext. 4447 Ian McIntosh CA Deputy Director - Corporate Finance, Securities Division Saskatchewan Financial Services Commission (306) 787-5867 April 21, 2006
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.