On the Plus Side: An Overview of SEDAR+ and How to Get Ready by May 1, 2023

On the Plus Side: An Overview of SEDAR+ and How to Get Ready by May 1, 2023

On June 13, 2023, Canadian securities regulators will launch the new centralized platform, System for Electronic Data Analysis and Retrieval + (“SEDAR+”), to replace the existing national records filing systems, with the goal of streamlining the process for regulatory compliance, thereby increasing accessibility and convenience.

SEDAR+ seeks to address evolving market needs and improve user experience when electronically filing information required under Canadian securities laws and performing due diligence on reporting issuers. Market participants, including all filers and filing agents, must complete the onboarding process by May 1, 2023 to secure access to SEDAR+.

What do we know about SEDAR+?

• New features include a single web-based filing portal, improved privacy management, and a flat fee model with modifications to certain system fees.
• Multilateral Instrument 13-102 System Fees (“New MI 13-102”) and National Instrument 13-103 System for Electronic Data Analysis and Retrieval + (SEDAR+) (“NI 13-103”) will replace the existing instruments relevant to SEDAR. New MI 13-102 will modify the fee structure and, subject to limited exceptions, NI 13-103 will provide that all documents required by Canadian securities regulators be transmitted electronically through SEDAR+.

Background

The Canadian Securities Administrators (“CSA”) published, among other things, proposed NI 13-103 and Companion Policy 13-103 SEDAR+ (“CP 13-103”) to (i) provide requirements and procedure for electronically transmitting documents through SEDAR+; and (ii) guide market participants on how to interpret and apply NI 13-103.[1]

It is expected that SEDAR+ will be implemented in three phases, with Phase 1 replacing SEDAR, CTO, DL, and certain filings in the British Columbia Securities Commission eServices system and the Ontario Securities Commission Electronic Filing Portal. Future phases will address additional requirements applicable to insiders (SEDI), registrants (NRD), regulated entities including exchanges and self-regulatory organizations, and derivatives market participants. It is worthy to note that certain documents will never be filed or delivered through SEDAR+, including documents related to a hearing, compliance review, proceeding, or investigation.

On March 23, 2023, the CSA published the following notices regarding SEDAR+:

1. CSA Notice of Repeal and Replacement of MI 13-102[2], which addressed the repeal and replacement of the existing MI 13-102 with New MI 13-102 to change the fee structure and reduce annual system fee revenue. The proposed amendments, effective June 9, 2023 and summarized below under “Features”, will simplify fee design and minimize fee changes, particularly for smaller filers, such that SEDAR+ will be easier to use and more cost-efficient to operate and update.
2. CSA Notice of NI 13-103[3], which addressed the adoption of NI 13-103 and CP 13-103. NI 13-103 requires filers to complete a profile and electronically transmit each document required or permitted to be filed with or delivered to a securities regulatory authority or regulator under securities legislation through SEDAR+. Since SEDAR+ will be implemented in phases, NI 13-103 will not apply to certain documents until future phases take effect, though certain types of filers may still be required to file or deliver such documents through SEDAR+ in the interim (e.g. pursuant to an order). CP 13-103 provides guidance on various system-related matters, jurisdiction for paying system fees, and public accessibility of documents in SEDAR+.

The CSA also summarized minor changes to NI 13-103 and CP 13-103 following the Comment Period. Aside from replacing references to “the Renewed System” with “SEDAR+”, the CSA removed the restriction in NI 13-103 of one profile per person or company on SEDAR+ as the new system is equipped to manage profile administration and prevent potential duplication. Likewise, the CSA updated CP 13-103 to broaden the circumstances in which it will change a document from public to private access in SEDAR+ absent a formal request for confidentiality. The provision will now account for the following limited circumstances: a document transmitted under the incorrect profile; a fee form transmitted with an incorrect calculation; a document transmitted that contains a virus; a non-redacted material contract or agreement being filed in error; and the inadvertent publication of a document, which should have remained private, in connection with a prospectus filing. Instead of submitting an application to the securities regulatory authority or regulator, filers should make a written request to their principal regulator for the change.

Features

1. SEDAR+ consolidates multiple systems and databases into one web-based application that is available 24/7.

SEDAR+ provides market participants with a user-centric, single-window access design to file documents and pay fees. In contrast to the existing systems which are standalone systems that do not communicate with one another, SEDAR+ will integrate systems and databases into one web-based platform to standardize inputs and simplify the filing process, as well as expand public search functionality. Furthermore, unlike SEDAR which requires software to be installed and a VPN connection, SEDAR+ is accessed through a browser and readily available 24 hours a day, seven days a week to permit filings at any time and provide immediate access to public information of a reporting issuer. The expectation is that this will ultimately facilitate and enhance communication among filers, securities regulatory authorities, and the general public.

2. SEDAR+ improves privacy management with user groups and designation of issuer and filing permissions.

Market participants will have more control and flexibility over their organization’s use of SEDAR+ through new functionality and security, such as unique login credentials for each user, the creation of user groups with specific filing and profile access permissions, and the designation of Authorized Super Users to fully manage user access and permissions for the organization. Currently, the CSA Service Desk completes and authorizes all user account changes, which may be more cumbersome for parties.

Through SEDAR+’s enhanced user access management, each organization will have a single SEDAR+ account such that clients and filings can be separated or shared across multiple locations. Currently, organizations with multiple branches, such as national law firms, have multiple SEDAR accounts to manage user filing access. Under one subscriber account, user accounts can be created for each filing employee irrespective of location.

3. SEDAR+ simplifies the system fee structure with a flat fee design and changes to system fees, with automatic fee calculations upon filing submission.

Under the fee structure in the current system, most system fees are based on the number of jurisdictions in which market participants file documentation. Per the amendments in New MI 13-102, principal and non-principal regulator fees will be replaced with flat fees per filing type (the “flat fee design”) which will be paid solely to a filer’s principal regulator. The flat fee design will improve administration for both the CSA and market participants. Additionally, system fees for the following filing types will be eliminated to reduce and simplify costs: prospectus distributions outside Québec, registration of an individual in an additional jurisdiction, related party transaction filings, and going private transaction filings. Furthermore, there will not be a charge for creating a profile in SEDAR+.

SEDAR+ will also harmonize system fees for similar filings and introduce system fees for new filing types. Of note is the requirement under New MI 13-102 of a system fee for all applications transmitted through SEDAR+, including applications for exemptions. This aligns with the current requirement to pay a system fee for exemptions sought for a prospectus filing or exemptions relating to National Instrument 81-102 Investment Funds. Nevertheless, if a system fee is already paid for a related pre-filing, then there would not be a system fee for the application.[4]

Likewise, all jurisdictions will require a Form 45-106F1 Report of Exempt Distribution (the “Exempt Trade Report”) to be filed through SEDAR+ with a system fee. Currently, British Columbia and Ontario use local filing systems for filing an Exempt Trade Report and do not have a system fee.

Under New MI 13-102, international dealers and advisers will also pay a new system fee for filing a notice of reliance on the international dealer or adviser registration exemption in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. However, since this new filing type is not part of Phase 1, system fees will not be in effect until it is required to be filed through SEDAR+ in future phases.

While system fees will increase or be created in certain cases, the aggregate system fees collected by the CSA are projected to decrease by roughly $1.7 million (7%) with the new system fee regime.

SEDAR+ further provides for automatic fee calculations by requiring filers to enter data upfront when uploading documents. This initial time and data entry will save filers time in calculating fees and eliminate the need for regulators to validate fees or correct manually calculated fees. Fees can then be paid using electronic funds transfer (EFT) (all fees) or credit card (applicable only to Exempt Trade Report filings) with the single pre-authorized debit account associated with each SEDAR+ account.

Onboarding

The CSA has outlined a three-step onboarding process for organizations to set up SEDAR+ accounts and access SEDAR+ on and after June 13, 2023, namely signing the organization up to participate, preparing by reviewing requirements and gathering relevant information, and submitting requisite information. This onboarding must be completed by May 1, 2023 and include execution of at least one of the following administrative agreements to formally accept the legal terms of SEDAR+:

• Electronic Filer Agreement (“EFA”) – All organizations that file in SEDAR+ must complete the EFA to set up an issuer profile and submit issuer filings.
• Filing Agent Authorization Form (“FAAF”) – Issuers that use filing agent(s) must complete the FAAF to permit the filing agent(s) to complete specific filing types in SEDAR+ on behalf of the issuer.
• Supplementary information – Organizations must provide new account and issuer profile information to create an account and be granted issuer filing access.

Organizations that missed the pre-launch onboarding deadline must register for an account in SEDAR+ after June 13, 2023. As this post-launch registration process requires additional steps and a third-party review process, access to SEDAR+ will not be immediately available.

Next Steps  

In anticipation for the launch of SEDAR+ on June 13, 2023, market participants should complete their onboarding process by May 1, 2023 and be aware of the changes outlined in New MI 13-102, NI 13-103, and CP 13-103. Clients should also provide legal counsel with their completed and signed FAAF to name legal counsel (for example, McMillan LLP (“McMillan”)) as their filing agent so that assistance with filings can continue in SEDAR+.

In the coming years, the CSA will transition the remaining systems to SEDAR+ in Phases 2 and 3. McMillan will provide more updates during this time. For more information on SEDAR+, please review the CSA’s SEDAR+ information site. For more information on New MI 13-102, NI 13-103, and CP 13-103, please review the above CSA notices as linked.

Please contact a member of McMillan’s Capital Markets and M&A Group if you have any questions with respect to the above information.

[1] The CSA sought input over a 90-day comment period in May 2019 (the “Comment Period”) on a new integrated records filing system, SEDAR+, to replace the existing national records filing systems, namely the System for Electronic Document Analysis and Retrieval (“SEDAR”), the System for Electronic Disclosure by Insiders (“SEDI”), the National Registration Database (“NRD”), the National Cease Trade Order Database (“CTO”), the National Registration Search, the Disciplined List (“DL”), and various local records filing systems. For more information on the original proposals, see our earlier bulletin.
[2] CSA Notice of Repeal and Replacement of Multilateral Instrument 13-102 System Fees for SEDAR and NRD (23 March 2023).
[3] CSA Notice of National Instrument 13-103 System for Electronic Data Analysis and Retrieval + (SEDAR+) (23 March 2023).
[4] Per New MI 13-102, an application does not include a pre-filing. An “application” is a request transmitted through SEDAR+ for a decision of the regulator or securities regulatory authority, while a “pre-filing” is a request to consult with the principal regulator about the application of securities legislation or directions generally, or the application of such to a particular (or proposed) transaction or matter.

by Leila Rafi,  Michelle C. Wong and Barbara Zee (Law Clerk)

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2023