Streamlined Canadian Rules for Reselling Foreign Securities Will Benefit Investors with Global Portfolios

Investors holding foreign securities will soon have the benefit of a new, liberal rule permitting resales outside of Canada. This will enhance Canadian investors' ability to participate in foreign issuers' securities offerings. The new rule is expected to become effective on June 12, 2018.

Canadian resident investors who acquire securities of foreign issuers in prospectus-exempt transactions will be able to resell those securities without a prospectus and without further resale restrictions, if:

• the foreign issuer is not a reporting issuer in Canada; and
• resales are made on a market or exchange outside Canada or otherwise to a person or company outside Canada.

A "foreign issuer" under the rule is an issuer that is incorporated or organized under the laws of a foreign jurisdiction, whose head office is outside Canada, and a majority of whose directors and executive officers ordinarily reside outside Canada. It does not matter whether the issuer has a significant number or proportion of Canadian securityholders or has substantial assets in Canada. Foreign issuer status is determined at the time the issuer distributes the securities to the Canadian investor. Reporting issuer status may be determined at that time or at the time of resale.

The existing resale rule is being retained and will continue to permit offshore resales of securities of Canadian non-reporting issuers, subject to the existing 10% Canadian ownership tests.