CSA Staff Notice 55-315 Frequently Asked Questions about National Instrument 55-104 Insider Reporting Requirements and Exemptions
Question 3

Can A Reporting Insider Rely On The Exemption In Part 5 Of NI 55-104 (Exemption For Automatic Securities Purchase Plans) For A Grant Of Related Financial Instruments Under A Compensation Arrangement?

Response

1. No. See section 5.3 of NI 55-104 which states that the exemption in section 5.2 does not apply to an acquisition of options or similar securities granted to a director or officer. Subsection 5.1(2) states that, in Part 5, a reference to a security of a reporting issuer includes a related financial instrument involving a security of the reporting issuer. See section 5.1 of Policy 55-104CP for related commentary.

A reporting insider can rely on the exemption in Part 6 of NI 55-104 (exemption for certain issuer grants) for a grant of related financial instruments under a compensation arrangement if the issuer files an issuer grant report in accordance with Part 6.

Despite the above, if a compensation arrangement provides for the automatic issuance of related financial instruments as dividend equivalents, staff would accept that aspect of the compensation arrangement as coming within the definition of “automatic securities purchase plan” for the purposes of Part 5 of NI 55-104. We would not consider an issuance in these circumstances to be a grant for the purposes of section 5.3 of NI 55-104.