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Do you need to file after issuing shares or SAFEs?
Three quick questions about a share or SAFE sale by an Ontario company. See whether the exemption you’re relying on generally needs a report to the Ontario Securities Commission, and how soon.
General information about Ontario and Canadian law, not legal advice or an opinion on your situation. Results depend on your facts and documents, so check with a lawyer before you act.
Questions
Is a SAFE a security in Ontario?
Generally, yes. The Securities Act (Ontario) defines “security” to include any agreement providing that money received will be treated as a subscription to shares, as well as any document that is evidence of a subscription or other interest in a security. So issuing a SAFE, like issuing shares, needs a prospectus exemption.
Which exemptions need a report of exempt distribution?
Under section 6.1 of National Instrument 45-106, a Form 45-106F1 report is required for distributions under exemptions including accredited investor (in Ontario, s. 73.3 of the Securities Act), family, friends and business associates (s. 2.5) and offering memorandum (s. 2.9). The private issuer and employee, executive officer, director and consultant exemptions aren’t on that list.
When and how is the report filed?
No later than 10 days after the distribution, in each jurisdiction where the distribution takes place (NI 45-106 s. 6.1(2)). In Ontario, the OSC says to file Form 45-106F1 through SEDAR+ and pay the filing fee set out in OSC Rule 13-502.
Read next: SAFE roundSAFEs in CanadaAccredited investorProspectus exemption
This tool gives general information and estimates about Ontario and Canadian law only, not legal, tax or financial advice. Results depend on the exact terms of your documents. Legal services are provided by lawyers licensed by the Law Society of Ontario. See our Terms of Use.