Multijurisdictional Disclosure System (MJDS)
A 1991 arrangement between US and Canadian securities regulators that lets eligible Canadian issuers register and report in the United States using documents prepared under Canadian rules. It cuts the cost and time of a US offering substantially. Registration runs on Form F-10 and its relatives, annual reporting on Form 40-F, and interim disclosure on Form 6-K.
The Multijurisdictional Disclosure System lets a qualifying Canadian company sell securities into the United States and stay current with the SEC using the disclosure documents it already prepares for Canadian regulators. No second set of documents written to US standards. No parallel prospectus drafted from scratch. The SEC and the Canadian Securities Administrators adopted it in 1991, and it remains the only arrangement of its kind the SEC maintains with any country.
The forms
Registration under the Securities Act runs through a small family of forms, each matched to a transaction type. Form F-10 is the general purpose form and the one most issuers use, covering equity and most other securities. Form F-7 covers rights offerings made to existing security holders. Forms F-8 and F-80 cover exchange offers and business combinations, and the choice between them turns on how much of the target US holders own: Form F-8 requires US ownership below 25 percent of the class, Form F-80 allows up to 40 percent. Form F-9, which once covered investment grade debt and preferred securities, was rescinded effective December 31, 2012. The SEC's own Financial Reporting Manual still describes it, so a practitioner working from that manual can reach the wrong answer.
On the Exchange Act side, Form 40-F does two jobs. It registers a class of securities, and it serves as the annual report. Its contents are the Canadian annual information form, audited financial statements and management's discussion and analysis, prepared to Canadian requirements. That is a real saving, and not only in drafting time. Canadian rules generally call for two years of audited financial statements, where Form 20-F would require three from most other foreign private issuers.
Form 6-K carries everything in between. An MJDS filer furnishes on Form 6-K the material information it makes public in Canada, files with a Canadian stock exchange, or distributes to its shareholders. Furnished, not filed, which matters for liability purposes unless the issuer expressly incorporates the material into a registration statement.
Getting in the door
Eligibility for Form F-10 comes down to four requirements. The issuer must be incorporated or organized in Canada. It must qualify as a foreign private issuer, or be a Canadian crown corporation. It must have been subject to and in compliance with the continuous disclosure requirements of a Canadian securities authority for the preceding 12 calendar months. And it must have a public float of at least US$75 million in equity securities held by non-affiliates.
The float test is what stops most smaller Canadian issuers. Note also that the reporting history requirement is measured against Canadian obligations, so a company that recently completed a Canadian listing has to wait out the period before F-10 is available. The other MJDS forms carry their own conditions, so an issuer that cannot reach F-10 is not necessarily shut out of the system altogether.
What MJDS does not get you
It is a disclosure accommodation, not an exemption from United States securities law. The antifraud provisions apply in full. Sarbanes-Oxley applies, and the Section 302 and Section 906 certifications are filed as exhibits to the Form 40-F, along with the internal control and auditor fee disclosures. Financial statements prepared under IFRS as issued by the IASB need no reconciliation to US GAAP, but that follows from the accounting standard used rather than from MJDS status itself.
For a Texas company this tends to surface in two situations. The first is a cross-border deal in which you are acquiring or being acquired by a Canadian public company and share consideration is on the table, which puts the transaction into the Form F-8 or Form F-80 analysis and makes the US holder percentage a live diligence question early. The second is a Canadian client that wants US capital and needs to know whether it can use its existing Canadian documents or has to build a full US disclosure package. That answer usually turns on the float test and the 12 month reporting history. Check both before anyone starts drafting.