On November 19, 2024, the Canadian Securities Administrators (the "CSA") announced that they are seeking feedback on proposed amendments to certain national instruments and their related companion policies (collectively, the "Proposed Amendments") to implement an "access model" for annual and interim financial statements and related management's discussion and analysis ("MD&A") of non-investment fund reporting issuers (the "Access Model").
The Proposed Amendments follow the CSA's previous attempt at modernizing investor communications earlier this year when the CSA introduced an "access equals delivery" model for prospectuses of non-investment fund reporting issuers, which provides reporting issuers and dealers with the option to satisfy delivery requirements of prospectuses through public electronic access rather than physical paper delivery. More information on the "access equals delivery" amendments can be found here.
Delivery of Documents
Currently, reporting issuers must send a form to investors through which investors can request copies of the reporting issuer's financial statements and related MD&A in either electronic or paper form on an annual basis. Under the proposed Access Model, a reporting issuer will be able to satisfy electronic delivery of their financial statements and MD&A if, on the same day, the reporting issuer:
- files the document on SEDAR+;
- issues and files a news release on SEDAR+ announcing that (i) the document is accessible electronically, (ii) the SEDAR+ notification functionality is available, (iii) an electronic or paper copy of the document can be obtained upon request, (iv) any standing instructions to receive the document in electronic or paper form will continue to be followed; and
- posts the document on its website, if the reporting issuer has one.
Additional Disclosure
In addition, under the proposed Access Model, the reporting issuer will be required to disclose certain information on its delivery practices, including that:
- the reporting issuer files its financial statements and related MD&A on SEDAR+;
- SEDAR+ enables a person or company to sign up for email notifications when a document has been filed;
- an electronic or paper copy of the document(s) is available upon request;
- standing instructions can be provided by investors to receive the document(s) in either electronic or paper form; and
- the Access Model will not impact an investor's existing standing instructions to receive the document(s) in electronic or paper form.
The required disclosure will be required to be made available:
- in a news release at least 25 days prior to using the Access Model, if the reporting issuer complied with the current continuous disclosure obligations during the previous financial period;
- in a separate document sent with the proxy-related materials or with a notice, if the notice-and-access model is being used; and
- on the reporting issuer's website in the same location as the financial statement and related MD&A, if the reporting issuer has a website.
Practical Implications
Reporting issuers are currently required to provide their investors with the option to request the reporting issuer's financial statements and related MD&A through either an electronic or paper format. If the Proposed Amendments are implemented, reporting issuers will still be required to provide these options to their investors and the Access Model will have no effect on investors that continue to elect to receive physical copies of financial statements and related MD&A. However, reporting issuers will be able to satisfy electronic delivery through the Access Model.
The proposed Access Model will not be available to SEC foreign issuers or designated foreign issuers.
Looking Ahead
The CSA are accepting written comments on the Proposed Amendments until February 17, 2025. The CSA have specifically asked reporting issuers to comment on whether they anticipate any practical issues with having to issue and file a news release and, on the same day, post the document on the reporting issuer's website.
As the CSA continue to modernize document delivery methods, the CSA have noted that they do not support the availability of an access model for other types of continuous disclosure documents, such as proxy-related materials and takeover and issuer bid circulars, which are considered more time sensitive.
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