The Securities Commission granted an exemption from the prospectus requirements for the distribution of certain debt securities issued by the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF). The exemption was sought because the conditions under paragraph 2.34(2)(b) of National Instrument 45-106 Prospectus Exemptions were not met, as the debt securities were not issued by a single foreign government but were financially backed by multiple foreign governments.
The EFSF, a Luxembourg-based company, has its debt securities fully guaranteed by its member states, while the ESM, an intergovernmental organization, has a capital structure and emergency funding mechanisms to protect creditors. Both entities have high credit ratings and are recognized by banking supervisory authorities for their stability and low risk.
The exemption was granted under the condition that the debt securities maintain a designated rating and are distributed only to “permitted clients” that are not individuals, and through dealers registered or exempt in the jurisdiction of the trade. This exemption will remain in effect until any significant amendments to paragraph 2.34(2)(b) of NI 45-106 come into force. The decision was made in accordance with the Securities Act and relevant regulations, ensuring that the test set out in the legislation for granting such an exemption was met.