On January 11, 2024, the Canadian Securities Administrators (the "CSA") published the final form of amendments to modernize the way non-investment fund reporting issuers and dealers may deliver prospectuses. The changes will be implemented through the CSA's "access equals delivery" model that provides issuers and dealers alternative options for delivering final and preliminary prospectuses to investors (the "Access Model")1. Subject to regulatory and ministerial approval, the amendments will come into force on April 16, 2024.
The Access Model
Building on prior models of access versus delivery of paper copies,2 the CSA has developed the Access Model related to prospectuses. Under the Access Model, issuers and dealers can fulfill final prospectus and any amendment delivery requirements by filing the final prospectus and amendment on SEDAR+, as well as issuing and filing a news release. The news release must include certain enumerated information, including that investors can access the prospectus on SEDAR+, as well as the fact that investors can request an electronic or paper copy without charge. Further, the title of the news release must state that the document is accessible through SEDAR+.
The Access Model is voluntary, and issuers continue to have the option to print their prospectuses. It is our expectation that many issuers will elect to utilize the Access Model as opposed to traditional delivery. The benefits include cost savings related to printing of prospectuses and delivery across the country, as well as allowing for more efficient completion of prospectus offerings.
For shelf distributions and post-receipt pricing ("PREP") prospectuses, the Access Model allows issuers to file a single news release. The requirement to file a second news release following the filing of shelf prospectus supplements and supplemented PREP prospectuses is satisfied if the issuer states in the title of the initial news release that the prospectus will be accessible on SEDAR+ within two business days.3
It is important for issuers and dealers to note that the Access Model also brings changes to withdrawal rights. The amendments allow a purchaser to exercise their withdrawal rights within two business days after the later of (i) the date that the final prospectus or any amendment is accessible; and (ii) the date that the purchaser has entered into the agreement to purchase the securities.4 However, the CSA has clarified that a purchaser's request for an electronic or paper copy of the prospectus or any amendment will not affect the calculation of the period of time regarding the exercise of a subscriber's or purchaser's rights.5
The amendments regarding withdrawal rights differ across the provinces. For example, in British Columbia, receipt of notice regarding withdrawal rights by a dealer acting as agent for the issuer will be deemed to be receipt of notice by the issuer.6
Looking Ahead
The Access Model is a welcome development for many issuers, dealers and investors. Notably, the Access Model significantly reduces expenses associated with prospectuses and reflects the reality that investors frequently consume information electronically. The Access Model also brings Canadian capital markets in line with other major jurisdictions, such as the United States, where access equals delivery for prospectuses has already been available for many years.7 The Access Model will not be available for rights offerings, medium-term note programs, and other continuous distributions made under a shelf prospectus. However, it is anticipated that the CSA will continue modernizing document disclosure by publishing a revised access model for continuous disclosure documents.8
Footnotes
2. Notably, the notice and access model introduced the delivery of information circulars for shareholder meetings, and SEDAR+ filing of offering documents related to financings pursuant to the listed issuer financing exemption.
3. See Amendments to National Instrument 44-102 Shelf Distributions, ss. 6A.5(2)(c) and 6A.6(1)(c); Amendments to National Instrument 44-103 Post-Receipt Pricing, ss. 2A.5(2)(c) and 2A.6(1)(c).
4. See Amendments to National Instrument 41-101 General Prospectus Requirements, ss. 2A.4 and 2A.6(4)-(5).
5. Supra note 1 at page 4.
6. Ibid, s 2A.6(8).
7. See 70 FR 44722 Securities Offering Reform; see also 17 CFR 230.172 Delivery of prospectuses and 17 CFR 230.173 Notice of Registration.
8. Supra note 1 at page 3.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2024
