Federal Register, Volume 76, Number 149, August 3, 2011, Pages 46595-47054 Page: 46,610
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46610 Federal Register/Vol. 76, No. 149/Wednesday, August 3, 2011 /Rules and Regulations
Congress intended to substantially alter
the companies eligible to use Form S-
3 and Form F-3, we are adopting a
standard that we believe balances the
goals of preserving Form S-3 and Form
F-3 eligibility for current users while
reserving the forms for issuers that are
widely followed in the marketplace.
B. Technical Amendment to General
Instruction I.B.5. of Form S-3
General Instruction I.B.5. to Form S-
3 provides transaction requirements for
offerings of investment grade asset-
backed securities. That instruction
contains a cross-reference to the
definition of "investment grade
securities" that currently is found in
General Instruction I.B.2. of Form S-3.
As one commentator noted, the
amendments we are adopting today
would remove the definition of
investment grade securities from
General Instruction I.B.2.82 In April
2010, we proposed to remove references
to credit ratings as a requirement for
shelf eligibility for offerings of asset-
backed securities.83 Among other
things, the proposal would have
required risk retention by the sponsor as
a condition to shelf eligibility. Those
proposals are still outstanding. As a
result, such issuers still look to General
Instruction I.B.5. for their offerings.
Therefore, we are adopting an
amendment to General Instruction I.B.5.
of Form S-3 to move the definition of
investment grade securities to that
instruction until such time as new shelf
eligibility requirements for asset-backed
issuers are adopted that do not reference
C. Rescission of Form F-9
Form F-9 allows certain Canadian
issuers 84 to register investment grade
debt or investment grade preferred
securities that are offered for cash or in
connection with an exchange offer, and
which are either non-convertible or not
convertible for a period of at least one
year from the date of issuance.85 Under
the form's requirements, a security is
rated "investment grade" if it has been
rated investment grade by at least one
NRSRO, or at least one Approved Rating
82 See letter from American Securitization Forum
dated March 28, 2011 (ASF).
83 See Asset-Backed Securities, Release No. 33-
9117 (Apr. 7, 2010) [75 FR 23328]. In 2010, we
proposed amendments that would remove General
Instruction I.B.5. of Form S-3 and move shelf
offerings of asset-backed securities to a new form.
4 Form F-9 is the Multijurisdictional Disclosure
System ("MJDS") form used to register investment
grade debt or preferred securities under the
Securities Act by eligible Canadian issuers.
5 Securities convertible after a period of at least
one year may only be convertible into a security of
another class of the issuer.
Organization, as defined in National
Policy Statement No. 45 of the Canadian
Securities Administrators ("CSA").86
This eligibility requirement was
adopted as part of a 1993 revision to the
MJDS originally adopted by the
Commission in 1991 in coordination
with the CSA.87
Under Form F-9, an eligible issuer
has been able to register investment
grade securities using audited financial
statements prepared pursuant to
Canadian generally accepted accounting
principles ("Canadian GAAP") without
having to include a U.S. GAAP
reconciliation. In contrast, a MJDS filer
must reconcile its home jurisdiction
financial statements to U.S. GAAP when
registering securities on a Form F-10.88
However, the CSA has adopted rules
that will require Canadian reporting
companies to prepare their financial
statements pursuant to International
Financial Reporting Standards as issued
by the International Accounting
Standards Board ("IFRS") beginning in
2011.89 Foreign private issuers that
prepare their financial statements in
accordance with IFRS are not required
to prepare a U.S. GAAP reconciliation.90
Since a Canadian issuer will not have to
perform a U.S. GAAP reconciliation
under IFRS, one of the primary
differences between Form F-9 and Form
F-10 will be eliminated. Once the
Canadian IFRS-related amendments
become effective,91 the disclosure
requirements for an investment grade
86 See General Instruction I.A. to Form F-9.
87 See Amendments to the Multijurisdictional
Disclosure System for Canadian Issuers, Release No.
33-7025 (Nov. 3, 1993) [58 FR 62028]. See also
Multijurisdictional Disclosure and Modifications to
the Current Registration and Reporting System for
Canadian Issuers, Release No. 33-6902 (June 21,
1991) [56 FR 30036].
88 See Item 2 under Part I of Form F-10 [17 CFR
239.40]. Form F-10 is the general MJDS registration
statement that may be used to register securities for
a variety of offerings, including primary offerings of
equity and debt securities, secondary offerings, and
exchange offers pursuant to mergers, statutory
amalgamations, and business combinations.
89 See, for example, CSA IFRS-Related
Amendments to Securities Rules and Policies
(2010), which are available at: http://
supp3.pdf. Canadian reporting companies that are
U.S. registrants may elect to prepare their financial
statements in accordance with U.S. GAAP. See Part
3.7 of National Instrument 52-107.
90 See Item 17(c) of Form 20-F.
91 Canadian reporting issuers and registrants with
financial years beginning on or after January 1,
2011, will be required to comply with the new IFRS
requirements. For companies with a year-end of
December 31, 2011, the initial reporting period
under IFRS will be the first quarter ending March
31, 2011. See the "Transition to International
Financial Reporting Standards" of the Ontario
Securities Commission ("OSC"), which is available
ifrs_index.htm ?wloc= 141RHEN&id=21789EN.
securities offering registered on Form F-
10 will be the same as the disclosure
requirements for one registered on Form
In the 2011 Proposing Release, we
proposed to rescind Form F-9 due to
the Canadian regulatory developments
described above. One commentator
noted that Canadian issuers who have a
later fiscal year end will have a later
effective date for required IFRS financial
statements.92 If Form F-9 were to be
rescinded before an issuer is required to
prepare IFRS financial statements, then
that issuer would be required to provide
a reconciliation to U.S. GAAP in
connection with the filing of a
registration statement during the interim
period before its IFRS financial
statements are available. In order to
address this concern and ease transition
for these issuers, we are adopting a
delayed effective date of December 31,
2012 for the rescission of Form F-9.
Commentators also noted that a gap
remains between the eligibility
requirements for Form F-9 and Form F-
10.93 Currently, issuers using Form F-9
are not required to have a public float
while issuers using Form F-10 must
either have a $75 million public float or
be debt issuers with a guarantee from a
parent meeting the requirements of
Form F-10. As a result, to the extent a
Form F-9 issuer does not have the
requisite public float and does not have
a parent guarantee of its debt, it would
not be eligible to use Form F-10.
As we noted in the 2011 Proposing
Release, MJDS issuers have infrequently
used Form F-9. Of the 40 Form F-9s
filed by 22 issuers since January 1, 2007,
we believe only one of these issuers
would not qualify to file on Form F-10
if Form F-9 is rescinded. Consistent
with the temporary "grandfather"
provision we are adopting for Form S-
3 and Form F-3 filers, in order to
address this concern and ease the
transition, we are adopting a temporary
"grandfather" provision in Form F-10
that would permit any issuer that
discloses in the registration statement
that it has a reasonable belief that it
would have been eligible to file on Form
F-9 as of the effective date of the
amendments, and discloses the basis for
that belief, to file a final prospectus for
an offering on Form F-10 for a period
of three years from the effective date of
the new rules even if it does not satisfy
92 See letter from Bank of Nova Scotia dated
March 28, 2011 (Scotiabank).
9 See letters from Davies Ward Phillips &
Vineberg LLP dated March 28, 2011 (Davies), Osler,
Hoskin & Harcourt LLP dated March 28, 2011
(Osler) and Fraser Milner Casgrain LLP dated March
28, 2011 (FMC).
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United States. Office of the Federal Register. Federal Register, Volume 76, Number 149, August 3, 2011, Pages 46595-47054, periodical, August 3, 2011; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc52326/m1/24/: accessed January 22, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.