CSA adopts electronic access model for company prospectuses

Public companies will soon be able to save the costs of printing and mailing prospectuses to investors, as the Canadian Securities Administrators (CSA) adopt rule changes that enable firms to provide electronic access to these filings.

The CSA finalized revisions to rules and guidance that will enable issuers to use an “access model” for preliminary and final prospectuses. The changes do not apply to investment funds.

Under the new approach, issuers will be able to satisfy their disclosure delivery obligations in most provinces by providing investors with access to prospectus filings through the CSA’s SEDAR+ database, and alerting them to the availability of these filings.

In British Columbia, Quebec and New Brunswick, providing investors with electronic access will qualify for an exemption from the prospectus delivery requirements — a slightly different approach that, the CSA noted, works better with the legislative authority in these provinces.

“The access model aims to modernize the way prospectuses are made accessible to investors and reduce costs associated with the printing and mailing of prospectuses, which are ultimately covered by issuers,” said Stan Magidson, chair of the CSA and chair and CEO of the Alberta Securities Commission (ASC), in a release.

“It offers benefits for both issuers and investors by providing a more cost-efficient, timely and environmentally-friendly manner of communicating information to investors than paper delivery.”

According to a notice outlining the rule changes, issuers won’t be required to use the access model. Investors will also still be able to request prospectuses in electronic and paper form.

However, the CSA noted that investors generally don’t wait to receive paper prospectuses to inform their investment decisions.

“The access model is consistent with the general evolution of our capital markets, including how investors are increasingly accessing and consuming information electronically,” it said.

Back in 2020, the CSA published proposals to adopt an “access equals delivery” model for a variety of filings, including financial statements and quarterly reports along with prospectuses.

However, amid concerns about investor protection, particularly when it comes to continuous disclosure filings (such as financial reports), the CSA opted to pause the full adoption of the electronic delivery model for these kinds of filings.

In its notice, the CSA said that it is “further considering ways to enhance the access model for these documents to address investor protection concerns, including potential negative effects on retail investors.”

The regulator indicated that it expects to publish proposals for continuous disclosure filings for further public comment “in due course.”

In the final amendments on prospectuses, the CSA added guidance to clarify that investment dealers will be able to rely on the access model to satisfy their prospectus delivery obligations.

It also added guidance on investors’ rights under the model, and detailed how news releases can properly alert investors to the availability of prospectuses.

The rule changes will take effect April 16.