CSA implements “access equals delivery” model for prospectuses

On January 11, 2024, the Canadian Securities Administrators (CSA) published the final amendments to several national instruments and policies to adopt an “access equals delivery” model (the AED Model), which would allow reporting issuers (other than investment funds) to satisfy the requirement to deliver certain prospectuses by (i) publicly filing the document on SEDAR+, and (ii) issuing and filing a news release announcing that the document is publicly available on SEDAR+ and that a paper or electronic copy can be obtained upon request.

What you need to know

• The amendments apply to all non-investment fund reporting issuers, including venture issuers.
• The amendments apply to all types of prospectuses (long-form, short-form, shelf, post-receipt pricing), except prospectuses for rights offerings, medium-term note offerings and other continuous distributions under a shelf prospectus.
• The amendments are largely in line with those initially proposed by the CSA in 2022 and described in our April 2022 bulletin, with minor changes and clarifications.
• The amendments do not apply to the Canadian continuous disclosure regime, including annual and interim financial statements and related MD&A as originally proposed by the CSA.
• Provided all necessary regulatory and ministerial approvals are obtained, the amendments will come into force on April 16, 2024.

Summary of changes to the 2022 proposed AED Model

In addition to several clarifications, the amendments make the following changes to the initial AED Model for prospectuses proposed by the CSA in 2022:

• News release for shelf and post-receipt pricing (PREP) prospectuses. In most cases, the AED Model requires that on the same date that a final prospectus is filed, a news release is issued and filed on SEDAR+ indicating that the prospectus is available through SEDAR+ and specifying that an electronic or paper copy of the final prospectus may be obtained without charge from the issuer by providing an email address or address, as applicable. The final amendments revise the news release requirement for shelf and PREP prospectuses to allow a forward-looking notice in the news release that the prospectus will be accessible through SEDAR+ within two business days. The CSA recognizes that a news release is commonly issued immediately after pricing is determined for shelf and PREP prospectus offerings, with filing of the applicable final prospectus to follow. This change will allow an issuer to issue a single news release on pricing, with filing of the final prospectus to follow within two business days, in satisfaction of the requirements under the AED Model, rather than having to file an additional press release upon filing the final prospectus.
• Copy of preliminary prospectus. The CSA has removed the two-day time limit within which an issuer or dealer must send a copy of a preliminary prospectus if requested by a prospective purchaser. The CSA’s view is that a time limit is not necessary in the case of a preliminary prospectus as, unlike the right of withdrawal, revocation or cancellation in connection with securities sold under a final prospectus, there is no time-sensitive action tied to the receipt of a preliminary prospectus.

AED model for continuous disclosure regime

The final amendments apply to prospectuses only and do not contain an AED Model applicable to the delivery of annual and interim financial statements and related MD&A as originally proposed by the CSA in 2022. We understand that in response to stakeholder feedback, the CSA is considering ways to enhance the proposed AED Model for continuous disclosure documents to address investor protection concerns, including potential negative effects on retail investors. According to the draft OSC Statement of Priorities for Fiscal Year 2024-25, published in November 2023, the CSA anticipates publishing for comment an AED Model for continuous disclosure shortly.

Other types of documents

The CSA has indicated that the AED Models proposed to date may be a first step to the wider adoption of “access equals delivery” or similar methods of electronic delivery for other documents. At this time, no proposal has been made to address delivery of proxy-related materials, take-over bids and issuer bid circulars, and rights offering prospectuses, as such documents require immediate securityholder action and participation. The CSA also indicated that it excluded MTN programs and other continuous distributions under a shelf prospectus from the proposed AED Model as such prospectus distributions are dealt with in a different manner under existing rules and are not suited for the proposed AED Model.