Frequently Asked Questions about Exempt Distributions


We suggest that you review CSA Staff Notice 45-308 (Revised) Guidance for Preparing and Filing Reports of Exempt Distribution under National Instrument 45-106 Prospectus Exemptions for additional Frequently Asked Questions about filing reports of exempt distribution on Form 45-106F1 adopted by the CSA on September, 2016.

Are filed copies of Form 45-106F1, Forms 45-106F6 and offering memoranda available on the BCSC website?
Exempt distribution reports prepared on Form 45-106F1 adopted on June 30, 2016 and offering memoranda are available on our website. Exempt distribution reports prepared on Form 45-106F6 that was in force prior to June 30, 2016 are also available on our website. Our website contains a summary of reports filed with us within the last 7 calendar days.

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Can I file a Form 45-106F1 Report of Exempt Distribution with more than one distribution date?
You can only file 45-106F1 with more than one distribution date if all distributions take place within a 10-day period and the report is filed within 10 days of the first distribution.

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Can I file Form 45-106F1 Report of Exempt Distribution on a confidential basis?
You may request information be held in confidence by making an application under section 169(4) of the Securities Act.

Applications for confidentiality under section 169(4) should be directed to our Corporate Finance Division, Attention: Director, Corporate Finance. These applications must be made under the Exemption Application Process procedures. To ensure that purchaser information and residential address information of insiders of the issuer does not appear on our website, make sure the Schedule 1 and Schedule 2 to the report are filed as separate attachments.

If the exemption order is granted, prior to submitting the report on BCSC eServices, please contact Financial Reporting at finreport@bcsc.bc.ca so we can make the report private.

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Do I need to file Form 45-106F1 for distributions by non-British Columbia companies?
If your company has a substantial connection with British Columbia, you need to provide information in the report, including the exemption relied on, for the distribution of all securities. This includes securities distributed as compensation, and all securities sold to purchasers, regardless of where the purchaser is resident.

Please refer to the guidance in BC Interpretation Note 72-702 Distribution of Securities to Persons Outside British Columbia on how to determine if an issuer has a substantial connection to BC.

If your company does not have a substantial connection with British Columbia, you must provide information in the report for all securities distributed to British Columbia residents. You need not include any information on distributions to persons who are not British Columbia residents. If you compensate a finder in connection with a BC resident, you need to provide information on the compensation to the finder.

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Do I need to file Form 45-106F1 for distributions under a Commission order?

You must file a Form 45-106F1 Report of Exempt Distribution if your company distributes securities under a Commission order, only if the order makes the filing of a Form 45-106F1 a requirement or condition of the exemption.

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Do I need to file Form 45-106F1 for securities issued by a company on conversion or exercise of warrants, special warrants or debentures of the company?
If the company is relying on the exemption in section 2.42(1)(a) to issue securities on conversion or exercise of warrants, special warrants or debentures of the company, you do not need to file a Form 45-106F1.

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How do I report the "proceeds" for non-cash transactions for calculating the filing fees?
The fee is based on the "fair value" of the assets acquired, securities exchanged or debt settled. Section 4.3 of Companion Policy 45-106CP, which states “Where securities are issued for non-cash consideration such as assets or resource properties, it is the responsibility of the issuer and its board of directors to determine the fair market value of the assets or resource properties and to retain records to demonstrate how that fair market value was determined. In some situations, cash assets that make up working capital could also be considered in the total calculation of the fair market value.

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What are the fees for filing Form 45-106F1?
When you file Form 45-106F1 Report of Exempt Distribution, you must pay the greater of:

a.     $100.00, or

b.     (i) for a money market fund, as defined in NI 81-102, 0.01%
        (ii) for all other exempt distributions, 0.03%
         of the total dollar value in Canadian funds of proceeds realized from the distribution of
         securities to purchasers who reside in British Columbia.

For example, if $3,000,000 of securities were distributed by an issuer that is not a money market fund to BC residents, the fee would be $900 ($3,000,000 x 0.03%).

Fees are not payable on securities sold to purchasers who are not residents of British Columbia, but there is a $100 minimum filing fee for filing Form 45-106F1. 

Reference: Item 16 of BC Form 11-901F Securities Regulation Fee Checklist

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What exempt distributions require a company to file an exempt distribution report?

Your company is required to file a report of exempt distribution on Form 45-106F1 when it distributes securities under the following exemptions:

You must also file a Form 45-106F1 report when you sell securities under the following local instruments:

  • BCI 45-504 Trades to Trust Companies, Insurers and Portfolio Managers Outside British Columbia  
  • BCI 45-529 Bonus or Finder's Fee
  • BCI 45-534 Exemption from prospectus requirement for certain trades to existing security holders
  • BCI 45-535 Start-up Crowdfunding Registration and Prospectus Exemptions (Form 45-106F1 report only)  
  • BCI 45-536 Exemption from prospectus requirement for certain distributions through an investment dealer  
  • BCI 72-503 Distribution of Securities Outside of British Columbia
  • BCI 72-504 Distribution of Eurobonds
  • BCI 72-505 Exemption from prospectus requirement for crowdfunding distributions to purchasers outside British Columbia (Form 45-106F1 report only)   

National Instrument 45-106 was amended and the new, harmonized Form 45-106F1 became effective on June 30, 2016.

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What exempt distributions require a company to file a Form 45-505F1 and Form 45-505F2?
Your company must determine if it qualifies to use BC Instrument 45-505. If your company is qualified to use BCI 45-505, your company must file Form 45-505F1 by paper. If your company sold securities, your company must file a Form 45-505F2 by paper.

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When am I required to file Form 45-106F1?
You must file the Form 45-106F1 Report of Exempt Distribution online through BCSC eServices on or before the 10th day after completing each distribution (sale of security). For example, if you complete a distribution on February 1, you must file a Form 45-106F1 by February 11. If you complete a further sale on February 15, you must file another report by February 25. If an investment fund who files reports on annual basis for any distributions other than sections 2.3, 2.10 or 2.19 of NI 45-106, you must file reports online through BCSC eServices these distributions for every 10 day period as required under section 6.1 of NI 45-106. 

There are four exceptions and the exceptions require the report by paper:

  1. For distributions under section 2.3 of NI 45-106 by an investment fund to accredited investors: you are required to file the Form 45-106F1 by January 30th for distributions that occurred within the previous calendar year.
  2. For distributions under section 2.10 of NI 45-106 by an investment fund to purchasers who purchased a minimum amount of $150,000: you are required to file the Form 45-106F1 by January 30th for distributions that occurred within the previous calendar year.
  3.  For distributions under section 2.19 of NI 45-106 by an investment fund to existing security holders: you are required to file the Form 45-106F1 by January 30th for distributions that occurred within the previous calendar year.
  4. For distributions by eligible pooled funds under BC Instrument 45-505 you have the option of filing a Form 45-505F2 by January 30th for trades made during the prior calendar year.

For more information: Sections 6.1 and 6.2(2) of NI 45-106 and BCI 13-502.

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When must I file an offering memorandum?
If you use the exemption in 2.9(1) or (2) of NI 45-106, you must file an offering memorandum at the same time you file your report of exempt distribution on BCSC eServices. If you voluntarily give an offering memorandum or other form of disclosure document to purchasers who are buying securities under an exemption other than 2.9(1) or (2) of NI 45-106, you do not have to file the offering memorandum or other disclosure documents with us. You should not file your offering memorandum before you sell securities.

Refer to section 2.9(17) of NI 45-106.

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When must I file an offering document?
If you use the exemption in BC Instrument 45-535, you must file an offering document each time you file a distribution report on BCSC eServices.

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Who can I contact with questions about Form 45-106F1?
If you have questions on completing Form 45-106F1 Report of Exempt Distribution, please contact Financial Reporting, Corporate Finance Group by email finreport@bcsc.bc.ca.

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Can I file Form 45-106F1 by fax?
No. You must file your report electronically using BCSC eServices. Annual filings for investment funds must be filed by paper. Refer to BCI 13-502 and Companion Policy 13-502CP.

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When do I need to file a technical report (Form 43-101F1) with an offering memorandum?
If your company is a mining or exploration company, you must file a current technical report (Form 43-101F1) for each of the mineral properties that are material to your company. You must file the technical reports at the same time you file or make the offering memorandum available to the public in Canada. If you previously filed a technical report that is still current, you do not have to file a new technical report. If you have any questions on technical reports, contact our Corporate Finance Group by email finreport@bcsc.bc.ca.

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What do I do if I can't provide the phone number or email address of the purchaser when filling out Form 45-106F1?
If after making a reasonable effort to obtain the purchaser's phone number or email address you are unable to do so, you may complete the Schedule 1 to Form 45-106F1 Report of Exempt Distribution and leave blank the applicable cell in the Excel template.

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Does Item 8 of the report require a mortgage investment entity to disclose compensation paid by its manager in connection with a distribution?
Yes. If the manager of a mortgage investment entity (MIE) pays compensation on behalf of, or for the benefit of, the MIE in connection with a distribution, all such compensation must be disclosed in item 8 of the report. Compensation includes cash commissions, finder’s fees, securities-based compensation, gifts, discounts or other compensation paid in connection with the distribution.

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The Notice for the collection and use of personal information in Form 45-106F1 provides that an issuer or underwriter signing a report of exempt distribution is confirming that each purchaser has been notified of, among other things, the “title, business address and business telephone number” of the public official in the each jurisdiction who can answer questions about the regulator’s indirect collection of personal information. What is the title of such public official in British Columbia?
While Form 45-106F1 includes the address and business telephone number of the public official in British Columbia, it does not set out the title of the public official who can answer questions about the indirect collection of personal information. The issuer should advise purchasers that the title of the public official at the BCSC who can answer such questions is “FOI Inquiries” and their email address is FOI-privacy@bcsc.bc.ca. The titles of such public officials in other CSA jurisdictions are available on the CSA website.

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How do I complete item 3 of Form 45-106F1 to provide the full legal name of the issuer where the distribution is a joint distribution of two issuers?
Item 3 of Form 45-106F1 only allows a filer to enter one issuer name because a separate report is required to be filed for each issuer that completes a distribution. If two issuers complete a joint distribution of a security, then each such issuer must file a report of exempt distribution. We will refund the filing fees, less the $100 minimum fee, for the second issuer in cases where the filing is a joint distribution. Please contact Financial Reporting at finreport@bcsc.bc.ca prior to submitting a report on BCSC eServices for a joint distribution.

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How do I complete item 9a of Form 45-106F1 if the issuer is a trust that does not have directors or executive officers?
The definition of director and officer in the Securities Act include not only directors and officers but also includes individuals performing a similar function or occupying a similar position. Trusts or other entities that do not have directors and officers must disclose in item 9a the names of the individuals who are performing the functions of directors and officers for that entity.

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How do I complete Schedule 1 of Form 45-106F1 if the issuer is filing the report under paragraph 6.1(1)(j) of NI 45-106, and relying on the TSX Venture Exchange offering document exemption in section 5.2 of NI 45-106?
The instructions for Schedule 1 state that, for reports filed under paragraph 6.1(1)(j) [TSX Venture Exchange offering] of NI 45-106, Schedule 1 needs to list the total number of purchasers by jurisdiction only, and is not required to include the name or contact information of purchasers. To complete the Excel template for Schedule 1 in this circumstance, the filer should:

  • enter the total number of purchasers in a jurisdiction in the first column, “Family name”
  • indicate the jurisdiction in which such purchasers reside by completing the “Province/State” and “Country” columns
  • complete the “Details of securities purchased” and “Details of exemption relied on” columns on an aggregate basis for such purchasers

The filer does not need to complete the following columns in the Excel template for Schedule 1 in this circumstance:

  • the columns related to the legal name and contact information of the purchaser, other than entering the total number of purchasers under the first column, “Family name”
  • the columns related to issuers relying on section 2.3, 2.5, 2.9(2) or 2.9(2.1) of NI 45-106
  • the columns related to other information about purchasers

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How do I add the security codes for convertible securities in item 7(d) and item 7(e) of a report filed in eServices where the filer has distributed units, consisting of common shares and warrants (exercisable to acquire common shares)?
The filer would provide the security codes in item 7(d) and item 7(e) of the report as follows:

  • the security code in item 7(d) is “UBS”
  • the security codes in item 7(e) are:    
    • “WNT” in the first column, Security Code, to represent the convertible security that forms part of the unit distributed
    • “CMS” in the second column, Underlying security code, to represent the common shares acquired on exercise of the warrants
     
  •   the security code in Schedule 1 is “UBS”

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