CSA Adopts “Access Equals Delivery Model” for Reporting Issuer Prospectuses

On January 11, 2024, the Canadian Securities Administrators (the “CSA”) published final amendments and changes to certain national instruments and companion policies (the “Amendments”). The Amendments provide for an optional alternative “access equals delivery” model (the “Access Model”) for the delivery of prospectuses in Canada for reporting issuers other than investment funds (“Issuers”). Assuming that all necessary approvals are obtained, the Access Model will come into effect on April 16, 2024.

Background

Canadian securities legislation requires that Issuers physically deliver certain documents to investors. This includes a prospectus, financial statements, MD&A, and proxy-related materials. While electronic delivery is currently permitted in some contexts (e.g., for proxy-related materials in connection with shareholder meetings), many Issuers incur significant costs to print and mail documents that must be physically delivered under current Canadian securities legislation.

In January 2020, the CSA published a consultation paper asking for input on the possible implementation of an “access equals delivery” model for Issuers in Canada. In April 2022, the CSA published draft amendments that proposed an “access equals delivery” model for prospectus delivery generally, as well as for the delivery of annual financial statements, interim financial reports, and related MD&A for Issuers. While generally positive feedback was received for the changes proposed for prospectus delivery, the feedback received with respect to changes to the delivery mechanics for annual financial statements, interim financial reports, and related MD&A was less favorable. As a result, the CSA decided to proceed with an “access equals delivery” model just for prospectus delivery.

The Access Model

The Amendments provide Issuers with an optional alternative procedure where they can provide access to a prospectus rather than requiring delivery. This is effected as follows:

• In all jurisdictions, other than British Columbia, Quebec, and New Brunswick, prospectus delivery will be deemed to have occurred once:
  • The prospectus is filed on SEDAR+; and
  • Where applicable, a news release is issued and filed on SEDAR+ indicating that:
    • The prospectus is accessible through SEDAR+; and
    • An electronic or paper copy may be obtained, without charge, by providing an email address or mailing address, as applicable.
• In British Columbia, Quebec, and New Brunswick, providing public electronic access to a prospectus and alerting investors that the document is accessible through SEDAR+ will satisfy the conditions of an exemption from the requirement to send a prospectus (the “Delivery Exemption”). The conditions of the Delivery Exemption will be deemed to have been met once:
  • the prospectus is filed on SEDAR+; and
  • where applicable, a news release is issued and filed on SEDAR+ indicating that:
    • The prospectus is accessible through SEDAR+; and
    • An electronic or paper copy may be obtained, without charge, by providing an email address or mailing address, as applicable.

Changes from the initial proposals to the Access Model

The CSA made further changes to the initial proposals to reflect feedback received from commenters to improve or clarify the procedures in the Amendments, which include:

• Optionality of Access Model:

  Clarification that the Access Model adds an optional alternative procedure to provide access to a prospectus and does not replace the existing procedure.

• Addition of Dealer Obligation Guidance:

  Confirmation that a dealer may rely on the Access Model to satisfy (or be exempt from) the requirement to deliver or send a prospectus, including any amendments.

• Calculation of Period:

  Confirmation that a request for an electronic or paper copy of a final prospectus (or any amendment) will not affect the calculation of the period during which a purchaser’s or subscriber’s rights must be exercised.

• News Releases Requirements for Shelf Distribution & PREP Prospectus:

  While news releases can generally only be issued after a final prospectus receipt has been issued, the Amendments alter the news release requirements for a shelf distribution and a post-receipt pricing prospectus (a “PREP Prospectus”). For these offering types, a supplement or a supplemented shelf or PREP Prospectus only needs to be filed within a required period after the pricing of the offering. To accommodate this, the Amendments permit a single news release to be issued following pricing to disclose pricing and that the supplement or supplemented shelf or PREP Prospectus will be filed on SEDAR+ within two business days. 

• Removal of Preliminary Prospectus Copy Delivery Time Limit:

Unlike the statutory rights of rescission or withdrawal in connection with a final prospectus, the CSA’s view is that there is no time-sensitive action required from prospective purchasers in connection with a preliminary prospectus. As such, the CSA has removed the two-day time limit within which a copy of the preliminary prospectus must be sent to a prospective purchaser if requested.

Access Model Expansion

As a result of feedback that highlighted retail investor protection concerns arising from an “access equals delivery” model for continuous disclosure documents, the CSA has indicated that it is still considering how an “access equals delivery” model can be implemented to address such investor protection concerns and will be publishing revised proposals later this year.