On January 11, 2024, the Canadian Securities Administrators (“CSA”) announced final amendments and changes to implement an "access equals delivery" model for prospectuses of non-investment fund reporting issuers (the “Access Model”). The Access Model will allow reporting issuers and dealers to satisfy their delivery obligations by providing public electronic access to prospectuses, thereby modernizing the way in which documents are made available to investors and reducing costs associated with printing and mailing. The final amendments will come into force on April 16, 2024, provided that all regulatory and ministerial approvals are obtained.

Background

As we discussed in a previous post, the CSA published for comment proposed amendments and changes to implement an “access equals delivery” model for prospectuses, annual financial statements, interim financial reports and related management’s discussion and analysis (“MD&A”) for non-investment fund reporting issuers (the “Proposed Access Model”) in April 2022. After reviewing the feedback received, which was generally supportive in respect of prospectuses, the CSA adopted the Access Model in respect of prospectuses, with some non-material changes to reflect certain comments and improve or clarify procedures, as discussed below.

Access Model

In a welcome development for many market participants, under the Access Model, prospectus delivery requirements will be met by providing public electronic access to a prospectus and alerting investors that the document is accessible through the System for Electronic Data Analysis and Retrieval + (“SEDAR+”).

For a preliminary prospectus (including a preliminary base shelf prospectus or a preliminary base post-receipt pricing (“PREP”) prospectus), the prospectus delivery requirements will be met when the prospectus is filed, and a receipt is issued and posted, on SEDAR+.

For a final prospectus, the prospectus delivery requirements will be met when: (i) the prospectus is filed, and a receipt is issued and posted, on SEDAR+; and (ii) a news release is issued and filed on SEDAR+ indicating that the prospectus is accessible through SEDAR+ and that an electronic or paper copy can be obtained, without charge, upon request.

For a shelf prospectus supplement or supplemented PREP prospectus, the prospectus delivery requirements will be met when: (i) the prospectus is filed on SEDAR+; and (ii) after the prospectus is filed, or within two business days before the date the document is filed, a news release is issued and filed on SEDAR+ indicating that the shelf prospectus supplement and corresponding base shelf prospectus or supplemented PREP prospectus is, or will be within two business days, accessible through SEDAR+ and that an electronic or paper copy of the documents can be obtained, without charge, upon request.

The Access Model will also allow for the use of marketing materials and conduct of road shows without the provision of the prospectus relating to the applicable offering, so long as such prospectus is accessible and its availability is referenced in accordance with the Access Model procedures.

The Access Model does not apply in respect of prospectuses to distribute: (i) rights; (ii) securities by way of a medium-term note (“MTN”) program or other continuous distribution; or (iii) securities of an investment fund.

In order to implement the Access Model, the CSA have published final amendments to National Instrument 41-101 General Prospectus Requirements, National Instrument 44-101 Short Form Prospectus Distributions, National Instrument 44-102 Shelf Distributions and National Instrument 44-103 Post-Receipt Pricing and consequential changes to the related companion policies.

The access procedures will be substantially similar across jurisdictions; however, where most jurisdictions have structured the Access Model to satisfy the delivery requirement under securities legislation, in British Columbia, Québec and New Brunswick, the Access Model is structured as an exemption from the delivery requirement.

Withdrawal rights

Under the Access Model, a purchaser’s right to withdraw from an agreement to purchase a security may be exercised within two business days after the later of the date that: (i) access to the final prospectus is provided in accordance with the procedures outlined above; and (ii) the purchaser entered into the agreement to purchase the security.

Changes to Proposed Access Model

The CSA made the following changes to the Proposed Access Model in light of the comments received:

• language was added to clarify that while the Access Model provides alternative procedures for an issuer to provide electronic access to a prospectus, it is not mandatory;
• guidance was added to the relevant companion policies to provide that a dealer may rely on the Access Model to satisfy, or be exempt from, the requirement under securities legislation to deliver or send a prospectus;
• the companion policies were updated to provide that a request for an electronic or paper copy of the final prospectus will not affect the calculation of the period of time during which a purchaser’s withdrawal rights must be exercised;
• guidance was added to clarify that a news release containing information relevant to the applicable offering may also include information required under the Access Model (so that an additional news release is not required solely for such purpose);
• the news release requirements for shelf prospectuses and PREP prospectuses were revised to allow a forward-looking notice that the document will be accessible through SEDAR+ within two business days; and
• the two-day time limit within which an issuer or dealer must send a copy of the preliminary prospectus to a prospective purchaser has been removed.

Proposed Access Model for Financial Statements and MD&A

While the feedback for the Proposed Access Model for prospectuses was generally positive, certain stakeholders expressed concerns about the implementation of the Proposed Access Model for annual financial statements, interim financial reports and related MD&A. The CSA are considering further amendments to the Proposed Access Model to address investor protection concerns, including potential negative effects on retail investors. The CSA have indicated that they expect to publish such further amendments for a second comment period.

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