The Canadian Securities Administrators (CSA) are seeking input on the development of an integrated and comprehensive records filing system for Canada's capital markets (Renewed System) that will, among other things, replace the System for Electronic Document Analysis and Retrieval (SEDAR), the System for Electronic Disclosure by Insiders (SEDI), the National Registration Database (NRD) and various local records filing systems.

On May 2, 2019, the CSA released CSA Notice 13-103 and Request for Comment – Proposed National Systems Renewal Program Rule and Related Amendments and CSA Notice 13-102 and Request for Comment – Proposed Repeal and Replacement of Multilateral Instrument 13-102 System Fees for SEDAR and NRD (Notices), which relate to:

  1. Proposed National Instrument 13-103 – System Replacement Rule (NI 13-103), including the repeal of National Instrument 13-101 – System for Electronic Document Analysis and Retrieval (SEDAR) (NI 13-101)
  2. Proposed Companion Policy 13-103 – System Replacement Rule
  3. Proposed amendments to 17 existing rules, including National Instrument 41-101 – General Prospectus Requirements, National Instrument 44-101 – Short Form Prospectus Distributions and National Instrument 51-102 – Continuous Disclosure Obligations
  4. Proposed changes to 35 existing policies
  5. Proposed amendments to Multilateral Instrument 13-102 – System Fees for SEDAR and NRD

(collectively, the Proposed Amendments).

The Renewed System is expected to be implemented in four phases beginning in early 2021. Phase 1 will include the replacement of SEDAR, the National Cease Trade Order Database, the Disciplined List and certain filings in the British Columbia Securities Commission eServices system and the Ontario Securities Commission Electronic Filing Portal. Filings made by insiders, registrants and other regulated entities are to be addressed in future phases.

PROPOSED AMENDMENTS

Purpose and Rationale

The primary purpose of the Proposed Amendments in Phase 1 is to introduce NI 13-103, the new central rule outlining the requirements and procedure for the electronic transmission of documents using the Renewed System.

The Proposed Amendments also aim to assist market participants to interpret NI 13-103, amend the existing rules and policies that refer to the required or permitted transmission of documents, repeal NI 13-101 and update the existing filing requirements related to SEDAR and the Ontario and British Columbia provincial filing systems for Form 45-106F1 – Report of Exempt Distribution (Form 45-106F1).

According to the Notices, the Renewed System will have several anticipated benefits once it is fully implemented, by being more uniform, expanding public search functionality, enforcing modern access controls and providing more secure, single-window access for market participants to file documents and pay fees. From the perspective of fees, the Proposed Amendments have been designed by the CSA to reduce annual system fees by seven per cent or C$1.7-million, minimize fee changes (especially for smaller filers) and simplify the fee design by adopting flat fees and eliminating some fees, as well as to add new fees for significant new services.

At a Glance

Once amended, NI 13-103 will require issuers to electronically transmit each document required or permitted to be filed with or delivered to a securities regulatory authority through the Renewed System, excluding a limited number of specified documents (e.g., documents in connection with a hearing, compliance review, proceeding or investigation, or predecessor and successor auditor non-compliance reports concerning issuers). In addition, filers must pay regulatory and system fees through the Renewed System.

The Proposed Amendments would also replace principal and non-principal regulator fees with flat fees per filing type, paid only to a filer's principal regulator. These flat fees are intended to better align system fees that users must pay with the CSA's anticipated costs to operate the Renewed System, based on market participants' expected system usage. System fees will rise in some cases and fall in other cases, based primarily on filing behaviour and volume of use. Further, system fees for certain filing types would be removed (i.e., fees for prospectus distributions outside Quebec, related party and going private transaction fees and registration fees for an individual in an additional jurisdiction) while some new fees for filing types would be introduced (e.g., Form 45-106F1 in Ontario and British Columbia and fees for "pre-filings" or "applications" transmitted through the Renewed System).

In particular, international dealers and advisers would be required to pay a new system fee for filing a notice of reliance on the international dealer or adviser registration exemption in National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations. However, international dealers and advisers will not be required to file this document using the Renewed System until a future phase.

Most of the Proposed Amendments relating to the existing rules and policies are focused on adding necessary references to the Renewed System, deleting references to SEDAR and updating cross-references (e.g., replacing "NI 13-101" with "NI 13-103" in the applicable instances). In a number of cases, such as Companion Policy 41-101CP to National Instrument 41-101 General Prospectus Requirements, Companion Policy 45-102 – Resale of Securities, National Policy 11-206 – Process for Cease to be a Reporting Issuer Applications and National Policy 11-207 – Failure to File Cease Trade Orders and Revocations in Multiple Jurisdictions, a new provision with respect to "electronic transmission" pursuant to NI 13-103 is being added. In certain instruments, housekeeping amendments are also proposed.

NEXT STEPS

The Proposed Amendments have been published for a 90-day public comment period expiring on July 31, 2019. It is currently contemplated that Phase 1 will commence in 2021, with three additional roll-out phases to follow thereafter.

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