Raising Capital in the United States Under the Multijurisdictional Disclosure System

Canadian companies have a long and successful record of raising capital in the United States by offering a wide range of equity, debt and hybrid securities to U.S. investors. The depth and liquidity of the U.S. capital markets are very attractive to Canadian companies, and public offerings in the United States are often an integral part of Canadian companies' financing activities.

One reason why U.S. public offerings are so appealing to Canadian companies is the Canada-U.S. Multijurisdictional Disclosure System (MJDS). The MJDS is a system of mutual recognition between securities regulators in Canada and the United States that was established in 1991 out of a desire to streamline cross-border regulation and encourage cross-border capital raising. The MJDS permits eligible Canadian and U.S. issuers to raise capital in cross-border public financings, conduct various cross-border M&A transactions and make continuous disclosure filings while complying primarily with their home country securities regulations, including disclosure and procedural rules. The MJDS allows issuers to avoid dual regulation and oversight by two sets of securities regulators. The rationale underlying the MJDS is that because the two countries' capital markets are so interrelated and their securities regulations are so similar, it makes sense to afford deference to issuers' home country rules by treating those rules as sufficient for the protection of investors in the other jurisdiction. By reducing the costs, timing issues and other complications associated with dual regulation, the MJDS provides significant opportunities for eligible Canadian and U.S. issuers to access each other's capital markets.

This guide is meant to provide Canadian issuers and their investment bankers with an overview of the financing opportunities presented by the MJDS in the U.S. capital markets. It also describes the ongoing reporting and corporate governance obligations that apply to Canadian issuers that access the U.S. capital markets under the MJDS. Since this guide is an overview of the MJDS, we recommend that readers seek advice regarding particular facts and legal issues. If you have any questions about the MJDS or would like to discuss any aspect of this guide in greater detail, please contact us.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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