Exempt Distributions FAQ
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.
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) 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 your company has a substantial connection with B.C., 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 to determine if an issuer has a substantial connection to B.C.
If your company does not have a substantial connection with B.C., you must provide information in the report for all securities distributed to B.C. residents. You need not include any information on distributions to persons who are not B.C. residents. If you compensate a finder in connection with a B.C. resident, you need to provide information on the compensation to the finder.
You must file Form 45-106F1 Report of Exempt Distribution if your company distributes securities under a BCSC order, only if the order makes the filing of a Form 45-106F1 a requirement or condition of the exemption.
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.
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".
For the purposes of reporting on items 7d and 7f of Form 45-106F1, the fair value must be disclosed in the “Total amount” columns. For Schedule 1, the fair value must be disclosed in the “Amount paid” column. The information provided in item 7 must reconcile with the information provided in Schedule 1.
When you file Form 45-106F1 Report of Exempt Distribution, you must also pay fees to the BCSC. For most issuers, the fee will be $200.00 or 0.03% of the total Canadian dollar value of proceeds realized from the distribution of securities to purchasers who reside in British Columbia, whichever is greater.
For example, if $3,000,000 of securities were distributed by an issuer that is not a money market fund to B.C. residents, the fee would be $900 ($3,000,000 x 0.03%).
Issuers that are money market fund as defined in NI 81-102 Investment Funds calculate fees in a similar manner, except that the fee is calculated at 0.01% instead of 0.03%.
Fees are not payable on securities sold to purchasers who are not residents of British Columbia, but there is a $200 minimum filing fee for filing Form 45-106F1.
Please refer to Item 16 of BC Form 11-901F Securities Regulation Fee Checklist.
- NI 45-106 (sections 2.3, 2.5, 2.9(1), 2.10, 2.12, 2.13, 2.14, 2.19, 2.30, 5.2 and 5A.2),
- NI 45-110 Start-Up Crowdfunding Registration and Prospectus Exemptions
- an order under section 76 of the Securities Act, if filing of a report is a condition of the order.
- BCI 45-501 Mortgages
- 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 or
- BCI 72-505 Exemption from prospectus requirement for crowdfunding distributions to purchasers outside British Columbia
Your company must determine if it qualifies to use BC Instrument 45-505 Alternate reporting requirements for exempt distributions of securities of eligible pooled funds. If your company is qualified to use BCI 45-505, your company must file Form 45-505F1 on SEDAR+. If your company sold securities, your company must file a Form 45-505F2 on SEDAR+.
You must file a report on Form 45-106F1 Report of Exempt Distribution online through SEDAR+ 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.
An investment fund that is relying on section 2.3, 2.10 or 2.19 of NI 45-106 and is filing Form 45-106F1 on an annual basis under section 6.2(2) of NI 45-106 must file the report online through SEDAR+.
An investment fund reporting on annual basis must file reports through SEDAR+ for distributions other than those under sections 2.3, 2.10 or 2.19 of NI 45-106 as required under section 6.1 of NI 45-106.
An issuer reporting a sale of security made under the start-up crowdfunding exemption must file the report on or before the 30th day after completing the distribution.
If you use the exemption in 2.9(1) of NI 45-106, you must file an offering memorandum on SEDAR+ at the same time you file your Form 45-106F1 Report of Exempt Distribution on SEDAR+. If you voluntarily give an offering memorandum or other form of disclosure document to purchasers who are buying securities under an exemption other than subsections 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.
Please refer to subsection 2.9(17) of NI 45-106.
If your company has a mineral project, you must file a current technical report (Form 43-101F1) for each mineral property that is material to your company. This technical report must be filed at the same time as the offering memorandum. If you have any questions on technical report filing requirements, please see the Mining page of the BCSC website.
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.
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, management fees, securities-based compensation, gifts, discounts or other compensation (including fees) paid in connection with the distribution.
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 the Privacy Officer and their email address is FOIemail@example.com. The titles of such public officials in other CSA jurisdictions are available on the CSA website.
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.
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
The filer would provide the security codes in item 7d and item 7e of the report as follows:
- the security code in item 7d is “UBS”
- the security codes in item 7e 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”
Item 3 of Form 45-106F1 allows a filer to enter one issuer name, in the “Full legal name” field, but permits the additional issuer names in the “Full legal name(s) of co-issuer(s)” so that one report of exempt distribution is filed to report the joint distribution. Please contact Financial Reporting at firstname.lastname@example.org prior to submitting a report on SEDAR+ for a joint distribution.
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 June 9, 2023, as amended.