Canadian securities regulators announce consultation on access equals delivery model for public companies

On January 9, the Canadian Securities Administrators (CSA) announced that it is seeking comments on the appropriateness of introducing an “access equals delivery” model in the Canadian market.

What you need to know

• The objective of “access equals delivery” is to modernize the way some documents, including prospectuses, financial statements and related management’s discussion and analysis (MD&A) and proxy-related materials, are made available to investors, who are increasingly accessing these documents electronically.
• The CSA believes that, in addition to being more cost-effective and environmentally friendly than conventional paper delivery, an access equals delivery model would benefit issuers and investors by facilitating faster communication.
• If implemented, an access equals delivery model would not eliminate paper copies entirely, and issuers will continue to be bound by applicable corporate law requirements.
• Market participants are encouraged to submit comments on the CSA consultation paper by March 9.

Background

Canadian securities legislation requires issuers to deliver various documents to investors, including prospectuses, financial statements and related management’s discussion and analysis (MD&A) and proxy-related materials. Although electronic delivery is already permitted in some respects, and despite the introduction of a notice-and-access regime for proxy-related materials relating to shareholders’ meetings, many issuers continue to incur significant costs printing and mailing documents required to be delivered under securities laws.

In April 2017, the CSA published for comment a consultation paper on reducing regulatory burden for public companies. Enhancing electronic delivery of documents was identified as one area for review. In March 2018, the CSA indicated a policy initiative would be undertaken in this area and on January 9, 2020, the CSA consultation process was announced.

Access equals delivery model

Under the CSA proposed access equals delivery model, delivery of a document would be effected by the issuer alerting investors that the document is publicly available. Specifically, an issuer would be considered to have effected delivery once:

• the document has been filed on SEDAR;
• the document has been posted on the issuer’s website; and
• the issuer has issued a news release (filed on SEDAR and posted on its website) indicating that the document is available electronically on SEDAR and the issuer’s website and that a paper copy can be obtained from the issuer on request.

The objective of “access equals delivery” is to both modernize the way documents are made available to investors (who are increasingly accessing these documents electronically in any event), and reduce costs associated with printing and mailing of documents. In addition to being more cost-effective and environmentally friendly, the CSA believes that an access equals delivery model would benefit issuers and investors by facilitating faster communication.

The CSA has indicated that, as a first step, it is considering whether to prioritize the adoption of an access equals delivery model for prospectuses and certain continuous disclosure documents, such as financial statements and MD&A, which it has indicated it believes is achievable. Similar models have been implemented for prospectus delivery in other jurisdictions, such as the United States, the European Union and Australia. However, the CSA has expressed more caution in introducing this model for other types of documents such as rights offering materials, proxy-related materials and take-over bid and issuer bid circulars. Since these types of documents typically require immediate shareholder attention and participation, an access equals delivery model could have a negative impact on shareholder engagement and raise investor protection concerns. In addition, the CSA has expressed concerns that the adoption of such a model may necessitate significant changes to the operational processes around proxy solicitation and submission of voting instructions.

If implemented, an access equals delivery model would not eliminate paper copies entirely, as many issuers may continue to deliver documents in paper or electronic form depending on the needs and preferences of their investors. And importantly, even if “access equals delivery” is adopted under securities laws, issuers will continue to be bound by applicable corporate law requirements that contain specific delivery requirements (until the corporate laws are similarly modernized).

Market participants are encouraged to submit comments on the CSA consultation paper by March 9.

To discuss these issues, please contact the author(s).

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