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CSA Publishes Final Amendments to Proposed Access Model for Prospectuses of Non-Investment Fund Reporting Issuers

On January 11, 2024, the Canadian Securities Administrators (the “CSA”) published in final form amendments (collectively, the “Final Amendments”) to several national instruments and companion policies concerning the implementation of an access model (the “Access Model”) for prospectuses of non-investment fund reporting issuers[1]. Subject to receiving all necessary regulatory and Ministerial approvals, the Final Amendments are expected to come into force on April 16, 2024.

The goal of the Access Model is to provide alternative procedures for issuers that are not investment funds to provide electronic access to prospectuses and reduce costs associated with the printing and mailing of prospectuses, which are ultimately covered by issuers.

In particular, the Access Model will allow investors to have public electronic access to a prospectus and will require an issuer relying on the Access Model to alert investors that the document is accessible through SEDAR+. This will satisfy the conditions of either (i) an exemption in British Columbia, Québec and New Brunswick from the requirement under securities legislation to send a prospectus (the “Delivery Exemption”) or (ii) the prospectus delivery requirement under securities legislation in all other Canadian jurisdictions. Delivery of a prospectus will occur, or the conditions of the Delivery Exemption will be met, when (a) the prospectus is filed on SEDAR+, and (b) where applicable, a news release is issued and filed on SEDAR+ indicating that the prospectus is accessible through SEDAR+, and that an electronic or paper copy can be obtained upon request.

Following the CSA’s consultation paper published on January 9, 2020[2] which provided a forum for discussion on the appropriateness of implementing an access model in the Canadian market, the CSA considered it appropriate to prioritize implementing an access model for prospectuses generally, annual financial statements, interim financial reports and related management’s discussion and analysis for non-investment fund reporting issuers. As an initial step, the CSA published the Final Amendments which set out, among other things, amendments to National Instrument 41-101 General Prospectus Requirements (“NI 41-101”), National Instrument 44-101 Short Form Prospectus Distributions, National Instrument 44-102 Shelf Distributions (“NI 44-102”) and National Instrument 44-103 Post-Receipt Pricing (“NI 44-103”). The CSA is in the process of considering a revised access model for annual financial statements, interim financial reports and related management’s discussion and analysis.

Some of the key changes and clarifications in the Final Amendments are set out below:

  • The Access Model is not mandatory for issuers. The requirement under applicable securities legislation to deliver or send a prospectus or any amendment may be satisfied, or the conditions of the Delivery Exemption are met, by providing electronic access to the document in accordance with the alternative procedures under the Access Model.
  • Dealers may rely on the Access Model to satisfy, or be exempt from, the requirement under applicable securities legislation to deliver or send a prospectus and any amendment.[3]
  • A request for an electronic or paper copy of the final prospectus or any amendment will not affect the calculation of the period of time during which an investor or subscriber’s rights must be exercised.[4]
  • A news release containing information relevant to the applicable offering may also include the information required under the Access Model.[5]
  • The news release requirement for shelf prospectuses and post-receipt pricing (“PREP”) prospectuses may include a forward-looking notice that the document will be accessible through SEDAR+ within 2 business days. NI 44-102 and NI 44-103 impose prescribed time limits for filing a shelf prospectus supplement and supplemented PREP prospectus, respectively, once the offering price of the securities to which the document pertains is determined and given these specified time limits, the CSA considered it appropriate to allow the prescribed news release under the Access Model to be issued within 2 business days before the date the document is filed. The Final Amendments will allow an issuer to issue a single news release that satisfies the objective of the news release requirement under the Access Model.
  • If relying on the Access Model, the 2-day time limit for an issuer or dealer to send a copy of the preliminary prospectus to prospective investors (if requested) has been removed. As there is no time sensitive action required from, or investment decision by, prospective investors in connection with a preliminary prospectus, the CSA does not consider the time limit to send a copy of the preliminary prospectus to prospective investors (if requested) necessary.

For further information on how the adoption of the Final Amendments and the implementation of the Access Model may affect your business, we invite you to contact a member of our Capital Markets Group.

 

[1] See CSA Notice of Publication of Amendments and Changes to Implement an Access Model for Prospectuses of Non-Investment Fund Reporting Issuers dated January 11, 2024.

[2] See CSA Consultation Paper 51-405 Consideration of an Access Equals Delivery Model for Non-Investment Fund Reporting Issuers dated January 9, 2020.

[3] The Final Amendments will add guidance in Companion Policy 41-101CP to NI 41-101, Companion Policy 44-102CP to NI 44-102 and Companion Policy 44-103CP to NI 44-103.

[4] Ibid. Provided that issuers have complied with the prospectus delivery requirements set out in NI 41-101 (including under the Access Model), investors and subscribers will still have the right to withdraw from, cancel or provide written notice not to be bound by, an agreement to purchase or a subscription of a security under applicable securities legislation, as the case may be, within 2 business days after the later of (i) the date that the prospectus is received in accordance with NI 41-101 (including under the Access Model), and (ii) the date that the investor enters into an agreement to purchase the security or the date that the subscriber subscribes for the security. See 41-101 - General Prospectus Requirements [NI Amendment Advance Notice] dated January 11, 2024.

[5] Ibid.

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