All access passes for prospectuses! The CSA introduces “Access-Equals-Delivery” model
Reporting issuers and dealers will soon be able to save costs and avoid the administrative burden associated with printing and mailing prospectuses to investors.
On January 11, 2024, the Canadian Securities Administrators (the “CSA”) posted final amendments to the “Access-Equals-Delivery” model (the “Access Model”) for the delivery of prospectuses of non-investment fund reporting issuers. The Access Model will take effect on April 16, 2024, subject to the CSA obtaining the requisite approvals. The Access Model will not be available for investment funds.
Under the new Access Model, reporting issuers will now be able to deliver their prospectuses to investors by filing the document on SEDAR+ and issuing an associated news release. This approach is intended to modernize the way investors access public documents, while upholding investor protection and aligning with the shift towards electronic document consumption.
As the CSA stated: “The Access Model for prospectuses offers benefits for both issuers and investors by providing a more cost-efficient, timely and environmentally friendly manner of communicating information to investors than paper delivery.”
Background
The Access Model follows the CSA’s January 9, 2020 and April 7, 2022 consultation papers and proposals, respectively, and associated comment periods that sought feedback on permitting reporting issuers to deliver prospectuses and certain continuous disclosure documents, electronically. Access-Equals-Delivery has been a feature in U.S. prospectus offerings for many years.
Application of the Access Model
While the proposed amendments that were introduced in April 2022 applied to prospectuses as well as certain continuous disclosure documents including annual financial statements, interim financial reports and management discussion and analyses (collectively, “CD Documents”), the Access Model only applies to prospectuses.
The Access Model does not extend to (i) rights offerings by way of prospectus (ii) medium term note programs and (iii) other continuous distributions made under a shelf prospectus. The CSA noted that these distributions are dealt with in a different manner under the CSA’s rules. As mentioned, the Access Model is not available for investment funds.
Moreover, the Access Model is not mandatory, but provides reporting issuers with another means of delivering a preliminary or final prospectus electronically. Investors are still entitled to request electronic or physical delivery of documents without charge, even in instances where a reporting issuer is relying on the Access Model for delivery. In the case of the final prospectus or any amendment, the document must be sent within two business days of the date of the request.
Satisfying prospectus delivery requirements
In all jurisdictions except for British Columbia, Québec, and New Brunswick, reporting issuers or dealers may satisfy their prospectus delivery requirements by:
Preliminary prospectus
- Filing a copy of the preliminary prospectus on SEDAR+. No news release is required.
Final prospectus
- Filing a copy of the final prospectus on SEDAR+; and
- Issuing a news release and filing it on SEDAR+, stating:
- in the title of the news release that the document is accessible through SEDAR+;
- access to the document is provided in accordance with securities legislation relating to procedures for providing access to a prospectus and any amendment;
- the document is accessible at www.sedarplus.com;
- the securities that are offered under the document, and
- the following:
- “An electronic or paper copy of the final prospectus and any amendment may be obtained, without charge, from [insert contact information for the issuer or dealer, as applicable] by providing the contact with an email address or address, as applicable.”
In British Columbia, Québec, and New Brunswick, the Access Model will be introduced as an exemption from the delivery obligation due to the legislative authority in these jurisdictions. Despite these jurisdictional differences, the Access Model achieves the same outcome by providing investors with electronic access to a preliminary or final prospectus, as applicable, without the requirement of paper delivery of prospectuses.
Shelf and PREP prospectuses
Generally, news releases under the Access Model may only be issued after a receipt for the final prospectus has been issued. However, the Access Model establishes different requirements for news releases relating to shelf distributions and post-receipt pricing (PREP) prospectuses.
For these types of prospectuses, a supplement or supplemented PREP prospectus only needs to be filed within a set period after the pricing of the offering. Under the Access Model, the prescribed news release for these types of offerings may be issued within two business days before the date the document is filed. The Access Model also permits the reporting issuer to satisfy the news release requirements by filing only a single news release.
Further, the prescribed news release does not need to be a stand-alone news release, and the necessary information can be incorporated into news release that discusses other elements of the offering.
Withdrawal rights
The Access Model also alters the withdrawal rights that were previously available to investors under certain provincial securities laws.
Previously, in certain jurisdictions such as Ontario, the withdrawal rights expired at midnight on the second day after the investor received the prospectus. This meant that in some situations, like if an investor agrees to purchase additional securities in the offering after the two day period has passed, they would not have a withdrawal right for those additional securities.
Under the Access Model, investors may now exercise their withdrawal rights on the later of the date on which:
- the prospectus was filed on SEDAR+ and the associated news release was issued; and
- the investor entered into an agreement to purchase the security.
This means that if an investor agrees to purchase additional securities, the withdrawal period may commence when the additional purchase agreement was entered into.
The CSA has clarified that an investor’s request for a physical or electronic copy of the final prospectus or amendment will not impact the calculation of the period within which investors must exercise their withdrawal rights.
Marketing and road shows
The Access Model requires that all marketing communications, including road shows, refer to the final prospectus or amendment as being available on SEDAR+ for any offering that relies on the Access Model for delivery.
Looking forward
While the CSA is only moving forward with the Access Model applicable to prospectuses, the CSA advised that it anticipates publishing a revised access model for CD Documents at a later date. The access model for CD Documents will respond to comments received by the CSA regarding the potential negative impacts that electronical delivery may have on retail investors.
If you have any questions regarding the proposed Access Model, please contact a member of the Capital Markets group.
