OSC Participation Fees Were Not Reflective of Current Market Cap

On April 1, 2013 a revision to OSC Rule 13-502 came into effect which changed how OSC participation fees for reporting issuers were calculated. These changes included a concept called a “reference fiscal year” which was, in certain cases, deemed to be the participant’s last fiscal year ending before May 1, 2012. This was an impactful change because market capitalization, and therefore the participation fee, was based upon this “reference fiscal year” capitalization. A reporting issuer had to utilize their reference fiscal year market capitalization to determine their participation fee for 2013, 2014 and 2015. For a lot of issuers this was the fiscal year end of December 31, 2011.  This posed a big issue for reporting issuers whose market cap had declined. These issuers were required to pay a higher participation fee than would be required with their current market capitalization for the year.

The following is an example of how this change affected some issuers whose market cap decreased:

	Participation Fee 2015 (using reference fiscal year)	Participation Fee 2015 (using real market cap)
Issuer 1	$29,365	$13,340
Issuer 2	$2,590	$1,070

Recent Amendments Reflect Real Market Conditions

As of April 16, 2015, OSC Rule 13-502 was revised again to remove this concept of “reference fiscal year” so that an issuer’s participation fee would more closely align to their actual market capitalization for the previous year. Now an issuer needs to conduct a market capital assessment for each “specified trading period” (being the last trading day of each interim period – i.e. each fiscal quarter) multiplied by the number of securities outstanding. Once this has been done for each “specified trading period” the issuer takes the sum of all specified trading period market caps and divides it by the number of specified trading periods. This gives you the average market cap for the purposes of the OSC participation fee. Now you can get your OSC participation fee by finding the market cap band that you fall within:

Market Cap	Participation Fee
Under $10 million	$890
$10 million to under $25 million	$1,070
$25 million to under $50 million	$2,590
$50 million to under $100 million	$6,390
$100 million to under $250 million	$13,340
$250 million to under $500 million	$29,365
$500 million to under $1 billion	$40,950
$1 billion to under $5 billion	$59,350
$5 billion to under $10 billion	$76,425
$10 billion to under $25 billion	$89,270
$25 billion and over	$100,500

This revision will undoubtedly save reporting issuers a larger chunk of fees this year to the extent that their market cap has diminished since 2011. The good new is your OSC participation fee could be significantly lower this year.

For the full notice on OSC Rule 13-502 click here. For the new Form 13-502F1 click here.

If you have any questions, would like a MS Word copy of Form 13-502F1 or need help to complete your 13-502F1 please contact us at 416.519.6886 or at [email protected].