Canada: Saving The Trees: CSA To Implement 'Access Equals Delivery Model' For Prospectuses Of Non-Investment Fund Reporting Issuers

On January 11, 2024, the Canadian Securities Administrators (the "CSA") announced the publication of final amendments to certain national instruments and their related companion policies that regulate prospectus filings (collectively, the "Amendments") to implement an "access equals delivery" model for prospectuses of non-investment fund reporting issuers (the "Access Model").

The Amendments have been welcomed by many market participants as the Access Model will modernize the way in which prospectuses are made available to investors by providing reporting issuers and dealers with the option to satisfy delivery requirements of prospectuses through public electronic access rather than physical paper delivery, as currently required. The Access Model will reduce the environmental impact and reporting issuers' costs associated with the printing and mailing of prospectuses and bring the Canadian securities regulatory regime more closely in line with the securities regulatory regimes in several other jurisdictions, including the United States.

The Amendments are expected to come into force on April 16, 2024, provided that all regulatory and ministerial approvals are obtained.

Delivery of documents

Under the Access Model, the prospectus delivery requirements will be met:

• for a preliminary prospectus (including a preliminary base shelf prospectus or a preliminary base post-receipt pricing ("PREP") prospectus), when the prospectus is filed, and the receipt is issued and posted on SEDAR+;

• for a final prospectus, 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; and

• for a shelf prospectus supplement or a supplemented PREP prospectus, when: (i) the prospectus is filed on SEDAR+, and (ii) following pricing, 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.

Although the Access Model is substantially similar across jurisdictions, in British Columbia, Quebec and New Brunswick, the Access Model is structed as an exemption from delivery requirements whereas in all other jurisdictions, it has been implemented as a way to satisfy delivery requirements.

Application of the Access Model

The Access Model is voluntary and is available to all reporting issuers, other than investment funds. Dealers may also rely on the Access Model to satisfy (or be exempt from) the requirement under applicable securities legislation to deliver a prospectus and any amendment.

The Access Model does not apply to rights offerings, medium-term note offerings and other continuous distributions under a shelf prospectus.

Where the Access Model is used, all marketing materials must include a statement, and dealers are required to announce orally at road shows, that that the final prospectus and any amendments are accessible through SEDAR+.

Right of Withdrawal

Under the Access Model, an investor may exercise the right to withdraw from an agreement to purchase a security within two business days after the later of the date that: (i) access to the final prospectus is provided in accordance with the Access Model (i.e., by filing on SEDAR+ and issuing the required news release); and (ii) the purchaser entered into the agreement to purchase the security. Note that a request for an electronic or paper copy of a final prospectus or any amendment will not affect the calculation of the period of time during which a purchaser's rights must be exercised. As well, note that under the existing regime, the right to withdraw would not be "reset" if, for example, an investor agreed to purchase additional securities after having received the final prospectus; however, under the Access Model, such an agreement may trigger another two-business day window for withdrawal of such agreement.

Looking Ahead

To implement the Access Model, amendments have been made to National Instrument 41-101 – General Prospectus Requirements, National Instrument 44-101 – Short Form Prospectus Distributions, National Instrument 44-102 – Shelf Distributions, National Instrument 44-103 – Post-Receipt Pricing and their related companion policies.

The CSA have indicated that an access model for continuous disclosure documents, such as annual and interim financial statements and related management's discussion and analysis (MD&A), is being considered.