Multijurisdictional Disclosure System (MJDS)
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Demystifying the Multijurisdictional Disclosure System (MJDS)
The Multijurisdictional Disclosure System (MJDS) is a regulatory framework established jointly by the U.S. Securities and Exchange Commission (SEC) and the Canadian Securities Administrators in July 1991. Designed to facilitate cross-border securities offerings between the United States and Canada, the MJDS simplifies the registration process for eligible companies on both sides of the border.
Understanding the Multijurisdictional Disclosure System (MJDS)
Under the MJDS, eligible Canadian issuers can register securities under the U.S. Securities Act and report under the Exchange Act using documents prepared in accordance with Canadian requirements. This streamlined process reduces the administrative burden and costs associated with filing securities offerings in both countries.
The MJDS allows Canadian companies to offer securities in the U.S. by using a prospectus largely prepared to meet Canadian disclosure standards. Additionally, Canadian issuers can comply with U.S. continuous reporting requirements by filing their Canadian disclosure documents with the SEC, subject to certain additional U.S. requirements.
Effect of the Multijurisdictional Disclosure System
The MJDS significantly eases the process for Canadian companies to raise capital through securities offerings in the U.S. and Canada. By harmonizing regulatory requirements and reducing duplication of filings, the MJDS facilitates efficient access to capital markets for eligible issuers.
Canadian companies can utilize the MJDS to raise funds either concurrently with offerings in Canada or exclusively in the U.S. While there is a reciprocal agreement for U.S. firms to raise funds in Canada, it is less commonly utilized.
Eligibility Rules for Multijurisdictional Disclosure System
To be eligible for the MJDS, Canadian companies must already be publicly listed in Canada and meet certain public float size requirements. However, the MJDS is not available to smaller Canadian companies or startups seeking to raise funds through initial public offerings.
In conclusion, the Multijurisdictional Disclosure System streamlines the regulatory process for cross-border securities offerings between the U.S. and Canada, benefiting eligible issuers on both sides of the border.