On January 9, 2020, the Canadian Securities Administrators (CSA) published CSA Consultation Paper 51-405 Consideration of an Access Equals Delivery Model for Non-Investment Fund Reporting Issuers (CP 51-405). In connection with CP 51-405, the CSA is seeking commentary on the appropriateness of an access equals delivery model in the Canadian market, with the intent of reducing regulatory burdens for issuers and enhancing the accessibility of information for investors. Generally, the CSA is requesting commentary on whether such a model should be introduced, the types of documents to which this model should apply and its mechanics.
Under the contemplated model, delivery of a document by an issuer is effected by: (i) filing the document on the System for Electronic Analysis and Retrieval (SEDAR); (ii) posting the document on its website; and (iii) alerting investors, by news release, that the document is publicly available on SEDAR and the issuer's website.
The CSA states that this model could benefit both issuers and investors by modernizing and improving communication with investors in a cost-effective, environmentally friendly and efficient manner.
Application of access equals delivery model
As an initial step, the CSA is considering prioritizing a policy initiative to implement this model for prospectuses and certain continuous disclosure documents, including financial statements and MD&A. Access equals delivery models for prospectuses are already in use in the United States, the European Union and Australia.
Within Canada, there are stakeholders who support this model for prospectuses, as investors are already accessing these documents electronically. Implementing an access equals delivery model for financial statement and MD&A delivery requirements could significantly reduce regulatory burdens on issuers who are otherwise required to either: (i) annually send a request form to investors that investors may use to request a paper copy of the issuer's annual financial statements and MD&A, interim financial reports and MD&A, or both; or (ii) send the issuer's annual financial statements to all investors.
While the CSA recognizes the merits of this model for prospectuses, they still need to determine the appropriate regulatory framework, including: (i) how to address investors' withdrawal rights; and (b) whether a news release should be required for both the preliminary prospectus and final prospectus.
The CSA is also seeking comment on whether to extend the access equals delivery model to other types of documents, including rights offering materials, proxy-related materials and take-over bid and issuer bid circulars. They recognize, however, that this could raise concerns as to investor protection, and could have a negative impact on shareholder engagement for documents requiring immediate shareholder attention and participation.
The CSA is requesting comments on CP 51-405 generally, and on several specific questions relating to access equals delivery. Those interested in providing comments must do so by March 9, 2020, in accordance with the instructions set out in CP 51-405, which is accessible here.
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