OSC Requests Comments On Proposed Amendments To Rule 13-502 (OSC Fee Structure)


[author: Elianeth Alicea]

Shamarkay Hersi, articling student, assisted in the preparation of this article.

On August 23, 2012, the Ontario Securities Commission (“OSC”) released a request for comments on proposed amendments to Rule 13-502 and Companion Policy 13-502CP, which deals with the OSC’s fees model. The proposed amendments are aimed at adjusting the current fee structure under the Ontario Securities Act (the “OSA”) and the Commodity Futures Act so that the fees charged by the OSC are aligned more closely with the OSC’s actual costs.

With the proposed amendments, the OSC projects to increase revenues by 14.8% in 2013/2014.

The proposed amendments include, among others:

• the use of “reference fiscal year” (which is the last fiscal year ending before May 1, 2012) in determining participation fees, as opposed to the issuer’s last completed fiscal year under the current rules;

• an additional tier of participation fees for corporate finance – the first tier will be applicable to reporting issuers with capitalization under $10 million (which will be subject to an initial lower participation fee of $800), and a second tier will be applicable to reporting issuers with capitalization between $10 million and $25 million (which will initially remain subject to a $960 participation fee);

• an additional tier for capital markets participation fees – the first tier will be applicable to participants with under $250,000 of specified Ontario revenues (which will be subject to a $800 participation fee), and a second tier will be applicable to participants with revenues between $250,000 and $500,000 (which will remain subject to a $1,035 participation fee). Participation fees would be increased as shown in the proposed rule during the last two years of the three-year fee cycle. Participation fees for participants within higher tiers of revenue would increase by 7.9% annually throughout the three-year fee cycle;

• fees for late filling of prescribed forms – including new forms 13-502F7 (Specified regulated entities – Participation Fees) and 13-502F8 (Designated Rating Organizations – Participation Fee); and a separate annual maximum aggregate fee of $5000 per fiscal year of an issuer for all Forms 45-501F1 and 45-106F1 (Reports on Exempt Distributions).

In addition, the following fees are proposed to increase from $3,250 to $3,750:

o the fee for filing a preliminary or pro forma prospectus in Form 41-101F1;

o the fee for filing a preliminary short form prospectus in Form 44-101F1; and

o the base fee for the filing by an investment fund of a preliminary or pro forma prospectus in Form 41-101F2.

With these amendments, the OSC is seeking to, among other things, rebuild its reserve fund to a level that is consistent with other securities regulators (e.g., the British Columbia Securities Commission, and the Alberta Securities Commission).

Comments on the proposed amendments are being accepted until November 21, 2012.

For more details, please refer to the OSC’s request for comments, which can be found here.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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