SEC Form F-7

What Is SEC Form F-7?

SEC Form F-7 is a filing with the Securities and Exchange Commission (SEC). The form is required by publicly-traded Canadian foreign private issuers offering rights to U.S. investors. The SEC requires that if an issuer is registered using SEC Form F-7, the rights must be granted to U.S. shareholders on terms no less favorable than those extended to the foreign shareholders. This form is a wraparound form for the relevant Canadian offering documents required by securities regulation in Canada.

Understanding SEC Form F-7

SEC Form F-7 is also known as the Registration Statement for Securities of Certain Canadian Issuers Offered for Cash upon the Exercise of Rights Granted to Existing Security Holders under the Securities Act of 1933. It is used if a Canadian entity:

1. Is incorporated or organized under the laws of Canada or any Canadian province or territory
2. Is a foreign private issuer
3. Has had a class of its securities listed on the Montreal Exchange, the Toronto Stock Exchange, or the Senior Board of the Vancouver Stock Exchange for the 12 calendar months immediately preceding the filing of the form

In addition, the entity must be subject to the continuous disclosure requirements of any securities commission or equivalent regulatory authority in Canada for the previous 36 calendar months and is in compliance with the obligations arising from such listing. The entity must grant the rights to security holders that are U.S. holders upon terms and conditions that are no less favorable than those extended to any other holder of the same class of securities. According to SEC guidelines, the entity must currently be in compliance with obligations arising from such listing and reporting

No Change Needed With Amendments in Canada

In December 2015, the Canadian Securities Administrators (CSA), the functional equivalent of the SEC in Canada, made certain amendments to filing requirements for rights offerings. The purpose of the amendments was to lighten the regulatory burden for companies that wished to raise fresh capital in a way that provided investors an opportunity to protect themselves from equity dilution.

It was important that the SEC in the United States did not object to the amendments because U.S.-based investors can be a significant source of investment capital for Canadian companies. In February 2017, the SEC did, in fact, publish a no-action letter, confirming its continued consent for the use of Form F-7 with the basic condition that "an issuer would need to assure that the registration statement and the prospectus satisfied the antifraud and liability provisions under the U.S. Securities Act."