On June 30, 2016, the Ontario Securities Commission (OSC) published for comment OSC Rule 72-503 – Distributions Outside of Canada and its related companion policy and form (collectively, the Proposed Rule). The Proposed Rule provides explicit exemptions from the requirement to file a prospectus in connection with a distribution of securities to investors outside of Canada in an effort to provide certainty to participants in cross-border transactions.

The 1983 OSC Interpretation Note 1 Distributions of Securities Outside Ontario provided guidance that, where an issuer and intermediaries take “reasonable precautions” to ensure securities distributed out of Ontario “come to rest” with investors outside of Ontario, and there are no other circumstances that would call into question the integrity of Ontario capital markets, the OSC would take the view that a prospectus was not required under the Securities Act (Ontario), nor was an exemption from the prospectus requirements necessary.

The OSC has indicated that the Interpretation Note no longer accurately represents OSC staff practice and will be replaced by the Proposed Rule, if adopted.

The Proposed Rule is open for comment until September 28, 2016. See further details here.