The Canadian Securities Administrators (“CSA”) have republished for comment proposed rule amendments and policy changes to implement an “access equals delivery” model for certain continuous disclosure documents of non-investment fund reporting issuers (the “Proposed Amendments”). The Proposed Amendments address certain concerns that were raised following the publication of the Initial Proposals (as defined below). The comment period will end on February 17, 2025.
Background
As we discussed previously, the CSA published for comment proposed rule amendments and policy changes to implement an “access equals delivery” model for prospectuses and certain continuous disclosure documents in April 2022 (the “Initial Proposals”). The Initial Proposals relating to prospectuses were generally supported and the CSA published final amendments to implement the prospectus access model in January 2024.
During the comment process, some stakeholders raised concerns about delivering continuous disclosure documents using an electronic access model, including that the Initial Proposals did not provide meaningful notice of the documents’ availability. After considering the comments received, the CSA made certain material changes to the Initial Proposals and have republished proposed amendments to National Instrument 51-102 Continuous Disclosure Obligations and National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer as well as related changes to the respective companion policies.
Proposed Amendments
The Proposed Amendments would allow non-investment fund reporting issuers to provide electronic access to annual financial statements, interim financial reports and related management’s discussion and analysis (“MD&A”) instead of following the current delivery requirements. The proposal does not extend the access model to proxy-related materials or take-over bid or issuer bid circulars on the basis that such documents may require immediate shareholder action.
Electronic access would be considered to have been provided if:
- the issuer has filed the document on SEDAR+;
- on the same day, the issuer has issued and filed a news release on SEDAR+ stating that:
(i) the document is accessible electronically;
(ii) the SEDAR+ notification functionality (which is a relatively new system feature described below) is available;
(iii) an electronic or paper copy of the document may be obtained upon request; and
(iv) any standing instructions to receive the document in electronic or paper form will continue to be followed; and
- on the same day, the document is posted on the issuer’s website (if it has one).
If implemented, the same day news release requirement contained in the Proposed Amendments could require issuers that release financial statements and MD&A on a date subsequent to their earnings news release to issue multiple news releases in order to avail themselves of the access model. We expect this concern may be raised during the comment period.
Changes to Initial Proposals
The following changes were made to the Initial Proposals to address stakeholder concerns:
- SEDAR+ notification functionality: In December 2023, the CSA implemented a SEDAR+ notification functionality, which allows a person to subscribe for email notifications that will alert them when continuous disclosure documents are filed by an issuer and include a direct link to such documents. The CSA believe that this new functionality would address the primary concern raised with the Initial Proposals, being the need for meaningful notice to investors;
- Initial news release: There is a new requirement to issue and file a news release on SEDAR+ at least 25 days before using the access model if, during the previous financial period, the issuer complied with the existing delivery requirements in respect of financial statements and MD&A, to provide advance notice that documents will be made accessible electronically;
- Annual reminder: An issuer will be required to include a separate document with proxy-related materials (or, if the issuer uses the notice-and-access model (“N&A”), with the notice sent to investors) as a reminder of how to access documents electronically. This document must indicate that the SEDAR+ notification functionality is available, describe how to obtain a copy of the documents and state that standing instructions may be provided;
- Website disclosure: An issuer must post documents to its website (if it has one, which in most cases it will due to stock exchange requirements) on the same day that they are filed on SEDAR+. Websites must also include the same information that is required to be provided with proxy-related materials or the notice if using N&A in proximity to where the financial statements and MD&A are posted;
- Ceasing to provide electronic access: An issuer will be required to issue and file a news release announcing the change on SEDAR+ at least 25 days prior to ceasing to use the access model;
- Interaction with current delivery requirements: Guidance clarifies that issuers may provide electronic access to annual financial statements and related MD&A, interim financial reports and related MD&A, or both. If an issuer provides electronic access only to its annual financial statements or interim financial reports, the current delivery requirements apply to the other documents;
- Contact information: An issuer should include a physical address, email address and telephone number in its contact information to assist investors in contacting the issuer;
- Standing instructions: The proposed access model does not impact an investor’s ability to request documents in electronic or paper form. Guidance has been added to clarify that any standing instructions will not be overridden; and
- Foreign issuers: The Proposed Amendments will not apply to SEC foreign issuers and designated foreign issuers as the CSA consider that existing regulation already provides such issuers with adequate relief from continuous disclosure rules.
For more information, please see CSA Notice of Republication and Request for Comment – Proposed Amendments and Proposed Changes to Implement an Access Model for Certain Continuous Disclosure Documents of Non-Investment Fund Reporting Issuers.
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