The Canadian Securities Administrators (CSA) has released an amendment notice on the introduction of an expedited shelf prospectus regime for well-known seasoned issuers (WKSIs) in Canada, seeking to remove requirements that do not ensure meaningful disclosures to investors.
In a news release, the CSA said the amendments to “National Instrument 44-102 Shelf Distributions” will allow eligible reporting issuers that have met the qualification criteria and relevant conditions and filed a final base shelf prospectus to:
- Be considered to have accepted a receipt for that prospectus without filing a preliminary base shelf prospectus or going through a regulatory review beforehand
- Omit some disclosures, such as the aggregate dollar amount of securities that the prospectus can raise, from the base shelf prospectus
- Benefit from receipt effectiveness for 37 months from the date of the deemed issuance, subject to the issuer’s annual eligibility reassessment
The CSA’s advanced notice on shelf distributions for WKSIs stated that the amendments aim to:
- Lessen unnecessary regulatory burden for WKSIs or issuers with a strong market following, a complete public disclosure record, and enough public equity or debt
- Support WKSIs’ capital formation in Canada’s public markets
- Promote competition within the country’s markets
- Offer more flexibility in structuring a base shelf prospectus offering
- Better align the timing of Canada’s prospectus filings with those applicable in the US
- Improve certainty for transaction timing
- Help facilitate cross-border offerings
“These amendments foster capital raising and support the competitiveness of Canadian markets by reducing the regulatory burden for eligible issuers,” said Stan Magidson, CSA chair and the Alberta Securities Commission’s chair and CEO, in the news release.
According to the advanced notice, for offerings by newer reporting issuers, the regulatory costs and other restrictions on market participants’ business and investment activities should generally be necessary and proportionate to the significance of the regulatory objectives of the prospectus requirement and securities legislation.
However, the advanced notice explained that the benefits of conducting a full regulatory review of base shelf prospectuses might not merit the costs for mature, well-established, and closely followed reporting issuers.
In its advanced notice, the CSA noted that the regulatory review of a prospectus filed for a public offering of securities could require significant costs.
Development
In its news release, the CSA said it accepted 11 commenter submissions in response to the amendments, which it published for a 90-day comment period beginning Sept. 21, 2023.
“Incorporating feedback received from market participants, the WKSI regime makes it more efficient for well-known issuers with a strong market following and complete continuous disclosure record to access capital in Canada,” Magidson said in the CSA’s news release.
Subject to obtaining all the required regulatory approvals, the CSA explained that the amendments would take effect in all its jurisdictions on Nov. 28.