Canada: Changes To Rules For Marketing Activities During A Public Offering

The Canadian Securities Administrators (CSA) have adopted amendments to the rules governing permissible marketing activities in the context of a public offering. The amendments, which will come into force on August 13, 2013, involve significant changes to the existing marketing rules.

Marketing Prior to Filing a Preliminary Prospectus

Testing the Waters for an IPO

Under the new rules, private issuers, through registered dealers, may approach accredited investors on a confidential basis (or test the waters) prior to filing a preliminary prospectus, in order to gauge interest in a proposed IPO, provided the issuer allows for a 15-day cooling off period after solicitations are completed. All materials used by a dealer to solicit expressions of interest must be approved by the issuer in writing. Dealers are required to keep a record of all investors they have solicited, a copy of the written materials provided to the investors and a copy of a confirmation from the investor agreeing to keep the information received confidential.

Because of concerns with selective disclosure and insider trading, the test-the-waters exemption is not available to an issuer whose securities are held by a control person that is a public issuer if the IPO would constitute a material change for the public issuer.

Marketing Bought Deal Offerings

The new rules significantly expand the scope of permissible marketing activities by allowing dealers to distribute standard term sheets and marketing materials after the announcement of a bought deal and prior to obtaining a receipt for a preliminary prospectus. A standard term sheet contains a brief description of the business of the issuer, the securities offered, the total number or dollar amount of the securities, underwriter fees payable and use of proceeds, all of which should be derived from the bought deal letter. Standard term sheets are not required to be filed on SEDAR and carry no civil liability for issuers or dealers.

Marketing materials may contain much more detailed information than a standard term sheet, including comparisons to other issuers provided there is disclosure regarding the basis on which the other issuers and compared attributes were selected as well as cautionary language and risk factors relating to the comparables. Marketing materials must be approved by the issuer and the lead underwriter and filed on SEDAR on the same day they are first used, provided that the comparables may be redacted. Marketing materials must be included in, or incorporated by reference into, the preliminary prospectus and, as a result, they carry statutory liability for any misrepresentations.

Guidance on Bought Deal Agreements

The new rules maintain the requirement that a preliminary prospectus for a bought deal must be filed within four business days after the date a bought deal is entered into. However, the new rules do not require the issuer to obtain a receipt for the preliminary prospectus dated the fourth business day. In addition, the new rules expressly prohibit market out clauses and provide guidance on the use of regulatory or due diligence outs (indicating they must not be used in a way that would defeat the policy rationale of the bought deal exemption).

The new rules permit bought deals to be upsized by up to 100 percent of the size of the original deal, provided the initial bought deal agreement does not permit the dealer to unilaterally upsize the offering. Bought deal agreements are generally not permitted to be conditional upon syndication, but may include confirmation clauses which require the dealer to confirm on the next business day that the bought deal is either confirmed or terminated.

Bought deal agreements may be amended to provide for the issuance of new or additional classes of securities and may be amended to provide for a lower price per share or a smaller offering if such withdrawal or reduction to the offering price or size does not occur prior to the fourth business day after the original bought deal agreement.

Non-Deal Road Shows

Non-deal road shows involve an issuer and dealers meeting with institutional investors to discuss the business and affairs of the issuer. The new rules expressly provide that a non-deal road show undertaken in anticipation of a prospectus offering would be prohibited under securities legislation by virtue of the prospectus requirement.

Marketing after Filing a Preliminary Prospectus

The current rules provide that only a preliminary prospectus and/or a brief notice may be used for marketing purposes once the preliminary prospectus is filed. The new rules allow the issuer to use standard term sheets and other marketing materials during the waiting period and after the filing of the final prospectus on substantially the same terms described above in the context of marketing a bought deal offering. All information included in standard term sheets and other marketing materials is required to be derived from the preliminary prospectus (excluding contact information for the dealers and comparables to other issuers) and as a result carries statutory liability for any misrepresentations.

Road Shows

Marketing materials provided in connection with a road show are subject to the same conditions that apply to other marketing materials, including the requirement that they be filed on SEDAR and as a result, result in civil liability for any misrepresentations. The new rules contain exceptions from the requirement to file road show materials and incorporate such materials by reference into a prospectus for a U.S. cross-border offering with respect to marketing materials provided in connection with a road show. In order to rely on this exception, the dealers must have a reasonable expectation that the securities offered will be sold primarily in the U.S., provide a contractual right of rescission to investors in the event the materials contain a misrepresentation and deliver the template version of the marketing materials to the appropriate securities regulatory authority.

Dealers will be required to implement procedures to ensure that they obtain the name and contact information of any investor attending a road show, keep a record of any information provided by the investor and provide the investor with a copy of the prospectus and any amendment. If a road show includes investors that are not accredited investors, then a cautionary statement must be read at the commencement of the meeting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

William S. Osler
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.