CSA adopts expedited shelf prospectus regime for well-known seasoned issuers

On August 28, the Canadian Securities Administrators (CSA) published a Notice of Amendment regarding the adoption of an expedited shelf prospectus regime for well-known seasoned issuers (WKSIs). If all required regulatory approvals are obtained, the amendments to National Instrument 44-102 Shelf Distributions (the Amendments) will become effective in each province and territory of Canada on November 28, 2025.

What you need to know

The Amendments allow eligible issuers to:

• file a final base shelf prospectus and be deemed to have received a receipt for that prospectus without first filing a preliminary base shelf prospectus or undergoing any regulatory review;
• omit certain disclosure from the base shelf prospectus, including the aggregate dollar amount of securities to be raised under the prospectus; and
• enjoy receipt effectiveness for that prospectus for 37 months from the date of deemed issuance, provided that the issuer reassesses its eligibility to use the WKSI regime annually.

Background

In early 2018, the CSA undertook a research project on potential offering models, including research on the United States’ WKSI regime and received recommendations to adopt a Canadian WKSI regime. The rationale is that mature, well-established and closely followed reporting issuers should be able to quickly and efficiently access capital markets without the burden of full regulatory review.

On December 6, 2021, the CSA published temporary exemptions from certain of the base shelf prospectus requirements to enable issuers meeting the WKSI qualification criteria to file a final base shelf prospectus and obtain a receipt on an accelerated basis without first filing a preliminary base shelf prospectus. On September 21, 2023, the CSA published proposed amendments to implement a Canadian WKSI regime (the Proposed Amendments) and received input from a number of sources. The Amendments are the result of that feedback process.

In order to be eligible to use the new WKSI regime, an issuer must:

• have a qualifying public equity (i.e., listed equity excluding holdings of affiliates and reporting insiders) of at least $500 million or qualifying public debt (being non-convertible securities other than equity securities distributed under a prospectus in primary offerings for cash within the preceding three years) of at least $1 billion;
• be a reporting issuer in a Canadian jurisdiction and have been a reporting issuer for the immediately preceding 12 months or be a successor issuer in specified circumstances;
• be qualified to file a short form prospectus;
• if it has mineral project interests forming a material part of its business, have gross revenues derived from mining operations of at least $55 million for the most recently completed financial year and $165 million in the aggregate for the three most recently completed financial years;
• be an “eligible issuer” (meaning, generally, that the issuer has filed all required securities filings and has not, during a three-year lookback period, been bankrupt or insolvent, been convicted of certain offenses, been subject to certain securities-related proceedings or had a refusal to receipt a prospectus, along with certain other conditions); and
• not be an investment fund.

The new rules also enable a credit-support issuer to utilize the regime for offerings of non-convertible securities other than equity securities if the issuer is a majority-owned subsidiary of a parent issuer that meets the foregoing eligibility requirements and that has provided full and unconditional credit support for the securities being distributed. In this scenario, the majority-owned subsidiary must itself be qualified to file a short form prospectus, be an “eligible issuer” (as defined above) and not be an investment fund. The new WKSI regime is also available to qualified successor issuers and asset-backed issuers, subject to certain conditions.

Some of the key changes embodied in the latest Amendments that differ from the Proposed Amendments are:

• a reduction in the seasoning period from three years to 12 months;
• clarifying certain aspects of the “eligible issuer” definition regarding offenses and sanctions;
• adding new eligibility requirements regarding securities regulatory proceedings relating to a prospectus or a distribution, refusal of a receipt for a prospectus and abandonment of a preliminary or amended preliminary prospectus filing; and
• guidance set forth in a Companion Policy concerning exemptive relief from the WKSI requirements and issuers reporting in a foreign currency, among other things.