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TEMPORARY EXEMPTIONS FROM CERTAIN BASE SHELF REQUIREMENTS

Certain large issuers may soon be able to file a final base shelf prospectus without first filing a preliminary one. On December 6, 2021 the Canadian Securities Administrators (“CSA“) published temporary exemptions from certain base shelf prospectus requirements for qualifying issuers. The exemptions, which go into effect on January 4, 2022, only capture large reporting issuers, termed “well-known seasoned issuers” (“WKSIs“).

Key Highlights

  • New exemptions to base shelf prospectus requirements go into effect on January 4, 2022 for “well-known seasoned issuers”.
  • WKSI is an issuer that has either: i) listed equity securities that have a public float of $500,000,000; or ii) at least $1,000,000,000 aggregate amount of non-convertible securities, other than equity securities, distributed under a prospectus in primary offerings for cash, not exchange, in the last three years.
  • Among other things, WKSIs that qualify for the exemptions will no longer be required to file a preliminary base shelf prospectus, but can go straight to filing a final one on an accelerated basis.

Description

As part of its efforts to reduce the regulatory burden, the CSA received comments that current base shelf requirements create unnecessary burdens for large, established reporting issuers. In response, the CSA is implementing a WKSI regime based on the one in the United States.

The temporary exemptions allow WKSIs that meet certain conditions to file a final base shelf prospectus without first filing a preliminary one. For final base shelf prospectuses filed before noon on a business day, accelerated provisions will allow a receipt to be obtained the same day.

The exemptions also include relief from the following requirements in both the base shelf prospectus and any supplement:

  • the requirement to limit distributions under the base shelf prospectus to the dollar value the issuer reasonably expects to distribute within 25 months after the date of the receipt for the base shelf prospectus;
  • the requirement to state the aggregate dollar amount of securities that may be raised under the base shelf prospectus; and
  • the requirement to include the number of securities qualified for distribution under the base shelf prospectus.

The exemptions further include relief from the following requirements in the base shelf prospectus, but not in any supplement:

  • the requirements to include a plan of distribution;
  • the requirements to describe the securities being distributed, other than as necessary to identify the types of securities; and
  • the requirements to describe any selling securityholders.

While the exemptions are temporary, they may be extended by the provincial regulators, and otherwise may be included in upcoming amendments to the regulations. Qualifying issuers should find that these new exemptions greatly simplify the filing of a base shelf prospectus.