Canadian Regulatory Environment Flashcards

To qualify as an 'accredited investor' under Canadian securities law and access the prospectus exemption, an individual generally must have:

Answer: Net financial assets exceeding $1 million, or net assets exceeding $5 million, or income exceeding $200,000 (or $300,000 combined with spouse) in each of the prior two years

The accredited investor exemption in NI 45-106 uses financial thresholds (net financial assets, net assets, or income) to identify sophisticated investors who do not require the protection of a prospectus.

Which statement correctly distinguishes a 'material fact' from a 'material change' under Canadian securities legislation?

Answer: A material change involves a change in the business, operations, or capital of the issuer; a material fact is any fact that would reasonably be expected to significantly affect the market price of a security

A material change is a specific event affecting the issuer's business, operations, or capital requiring prompt disclosure; a material fact is broader and includes any information that could affect the security's price.

Under continuous disclosure rules in NI 51-102, how quickly must a reporting issuer publicly disclose a material change?

Answer: Promptly and, in any event, within 2 business days via a press release

NI 51-102 requires issuers to issue a press release disclosing a material change promptly and in any event no later than 2 business days after the change occurs.

Under Canadian securities legislation, who qualifies as an 'insider' subject to trading restrictions and reporting requirements?

Answer: Directors, senior officers, the issuer itself, and any person or company that beneficially owns or controls more than 10% of the issuer's voting securities

Insiders include directors, senior officers, the issuer, and significant shareholders (generally 10% or more), all of whom have access to material non-public information.

Under National Instrument 55-104, how many calendar days does an insider typically have to file an insider report after executing a trade?

Answer: 5 calendar days

NI 55-104 generally requires insiders to file an insider report within 5 calendar days of the date of the trade.

SEDAR+ replaced the original SEDAR system in 2023. What is its primary function?

Answer: Serving as Canada's electronic filing and public access system for securities regulatory documents and continuous disclosure filings

SEDAR+ (System for Electronic Document Analysis and Retrieval) is the CSA's modernized online platform for filing and accessing public company disclosure documents such as prospectuses, AIFs, and financial statements.

The 'tipping' prohibition under Canadian securities law makes it illegal to:

Answer: Inform another person of material non-public information about a reporting issuer when it is reasonably foreseeable that the person may trade on that information

Tipping occurs when an insider communicates material non-public information to another person, knowing or reasonably foreseeing they may trade on it, and is prohibited under securities legislation even if the tipper does not trade themselves.