A consultation paper seeking feedback on an “access equals delivery” model for prospectuses and continuous disclosure documents was published by the Canadian Securities Administrators (CSA) on January 9, 2020 as part of its ongoing burden reduction initiative.
- An “access equals delivery” model would aim to facilitate communication with investors and reduce costs associated with printing and mailing of documents to shareholders.
- Initial focus would be on the electronic delivery of prospectuses, financial statements and MD&A; however, the CSA is also interested in extending electronic delivery to other types of documents, including rights offering materials, proxy-related materials and take-over bid and issuer bid circulars.
- While electronic delivery is already permitted, issuers continue to incur significant costs associated with printing and mailing various documents required to be delivered under securities laws.
Access Equals Delivery
Canadian securities laws require that reporting issuers “deliver”, “send” or “provide” certain documents to their shareholders. The CSA are seeking feedback on a possible “access equals delivery” model under which public electronic access to a document would satisfy this delivery requirement. More specifically, the proposed model would consider the delivery requirement satisfied where:
- The document has been filed on the System for Electronic Document Analysis and Retrieval (SEDAR);
- The document has been posted to the issuer’s website; and
- The issuer has issued a news release (filed on SEDAR and posted on its website) indicating that the document is available electronically on SEDAR and the issuer’s website and that a paper copy can be obtained from the issuer upon request.
The CSA’s initial focus is on electronic delivery of prospectuses, financial statements and MD&A. Specific issues related to the electronic delivery of these types of documents include:
- How to address investors’ withdrawal rights in relation to a prospectus offering; and
- Whether a press release should be required upon the filing of a preliminary and a final prospectus or whether a single press release would suffice.
The CSA is also seeking comments on whether an electronic delivery model would be appropriate for other disclosure documents, including proxy-related materials, take-over bid and issuer bid circulars and rights offering materials; however, the CSA notes that there may be investor protection concerns raised by such a model as these types of documents require immediate attention of shareholders. Electronic delivery could also impact shareholder engagement and potentially require changes to the proxy-voting infrastructure.
The proposed model does not intend to remove an issuer’s option to deliver paper copies of disclosure documents. Further, the CSA acknowledge that corporate law may have specific delivery requirements that may not permit electronic delivery of certain documents.
Consultation and Comments
The Consultation Paper poses specific questions about and solicits general comments on the issues outlined. The CSA is seeking comments by March 9, 2020. For further information, please see CSA Consultation Paper 51-504 Consideration of an Access Equals Delivery Model for Non-Investment Fund Reporting Issuers (January 9, 2020).
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