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CCCA62_046.qxd:CCCA_V1No2_Col-CorpLaw-V1.qxd 09/14/2007 04:07 PM Page 46 Corporate Law Fast-track disclosure Climbing on the MJDS express train to U.S. capital markets. anadian issuers are increasingly turning with Canadian takeover bid rules instead of applicable MJDS form, and must be Cto the U.S. capital markets for their U.S. tender offer rules. currently in compliance with those dis- financing needs. There are obviously MJDS offers Canadian issuers a number closure requirements; and numerous benefits to this approach:for one of significant advantages over other types c. must not be an “investment company” thing, a public offering of securities in the of U.S. registration forms: within the meaning of the Investment United States provides an opportunity to Canadian Prospectus Requirements Company Act of 1940. reach a broader and deeper range of insti- Apply. An MJDS registration statement Additional eligibility requirements may tutional and retail investors than is available filed with the SEC will include a prospec- apply, depending on which MJDS form is in the Canadian capital markets. tus prepared in accordance with Canadian being used. As well, a listing on a U.S. national form and content requirements,with only stock exchange enhances the potential for slight modifications. Civil liability coverage of the company by research ana- No SEC Review. Although the SEC The use of MJDS does not change the fact lysts, which in turn may result in a high- reserves the right to review an MJDS regis- that Canadian issuers, their directors, cer- er valuation of the company. tration statement,it will generally not do so tain executive officers and the underwriters except to confirm that the issuer meets the involved in offering securities in the United A faster route eligibility requirements and that the regis- States must comply with, and will be sub- A useful tool for facilitating cross-border tration statement complies with applicable ject to, the civil liability standards and anti- public offerings is the Multi-Jurisdictional U.S. GAAP reconciliation requirements. fraud provisions of U.S. securities laws. Disclosure System (MJDS). It enables eli- Simplified Ongoing Periodic Reporting. As such, the Canadian prospectus that gible Canadian issuers to file a registration Like any other registration statement under forms the basis of the MJDS registration statement with the Securities & Exchange the U.S. Securities Act of 1933, an MJDS statement must contain all material informa- Commission (SEC) that becomes effec- registration statement subjects a Canadian tion necessary to make the statements con- tive immediately, without SEC review. company to ongoing periodic reporting tained in the Canadian prospectus,in light of MJDS is a reciprocal initiative adopted obligations under the U.S. Securities the circumstances in which they were made, by the SEC and the Canadian Securities Exchange Act of 1934 and to requirements not misleading. Administrators, allowing issuers to meet of the Sarbanes-Oxley Act. However, under While MJDS provides Canadian issuers their disclosure obligations in both MJDS,Canadian issuers can meet U.S.peri- the ability to offer securities to the U.S. Canada and the United States by comply- odic disclosure obligations by filing their public primarily on the basis of a ing with the issuer’s home country disclo- Canadian continuous disclosure documents Canadian prospectus, U.S. marketing con- sure standards and to permit the review of with the SEC, supplemented by certain siderations raised by the underwriters may that disclosure solely by the securities reg- SOX-mandated disclosure. To use any sometimes result in the inclusion of infor- ulator in the issuer’s home country. MJDS form, the issuer: mation or a method of presentation that MJDS offerings can be made in connec- a. must be a foreign private issuer incor- more closely aligns with the expectations tion with a concurrent Canadian offering, porated or organized under the laws of of target U.S. investors. or they can be made on a U.S.-only basis. Canada or a province or territory; MJDS issuers are also able to use their b. must have been subject to the continuous Jason Comerford (jcomerford@osler.com) is Canadian disclosure documents to meet disclosure requirements of any securities an associate in the Business Law Department their periodic reporting obligations in the commission or equivalent regulatory of Osler, Hoskin & Harcourt LLP’s New United States (subject to certain additional authority in Canada for at least 12 York office, where his primary emphasis is on requirements) and,in certain cases,to make months (in some cases, 36 months) assisting Canadian and U.S. clients with tender offers to U.S. holders by complying immediately preceding the filing of the U.S. corporate finance transactions. 46 CCCA Canadian Corporate Counsel Association FALL 2007