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Published: September 29, 2022
Authors: Mahdi Shams, Taylor Dignan, Dax Moir
Categories: Corporate / Commercial
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In response to stakeholder feedback, the Canadian Securities Administrators (“CSA”) announced on September 8, 2022, a new prospectus exemption that allows reporting issuers listed on a Canadian stock exchange a more efficient way to access the public markets and raise capital. The Listed Issuer Financing Exemption will rely on an issuer’s continuous disclosure record and a short offering document to allow issuers to distribute freely tradeable listed equity securities to the public.
In order to qualify for the Listed Issuer Financing Exemption, a reporting issuer must meet the following conditions:
Provided that the reporting issuer satisfies the conditions above, the Listed Issuer Financing Exemption can be used to distribute freely trading securities to investors provided that the distribution satisfies the following requirements:
Provided the above conditions are met, issuers can issue free-trading prospectus-exempt securities under the Listed Issuer Financing Exemption by issuing and filing a news release announcing the planned offering with applicable securities regulators and on SEDAR. In addition to a press release, issuers must prepare and file an offering document in Form 45-106F19 Listed Issuer Financing Document (the “Offering Document”) with applicable securities regulators containing certain information, including:
Notably, if there is a misrepresentation in the Offering Document, then the purchasers of any securities issued under the misrepresented Offering Document will have the right to:
The Offering Document will not be reviewed by the CSA or its staff prior to the distribution of any securities under the Listed Issuer Financing Exemption.
The Listed Issuer Financing Exemption introduced by the CSA seeks to improve capital market efficiency in Canada by eliminating the need for short-form prospectuses, while still maintaining safeguards to uphold investor protection. Most notably, smaller reporting issuers will benefit from greater access to capital through reduced compliance costs.
The addition of the Listed Issuer Financing Exemption is reflective of capital-raising requirements in other countries and the CSA’s ongoing efforts to reduce the regulatory burden for reporting issuers. For further information on the Listed Issuer Financing Exemption and other financing options, please do not hesitate to reach out to a member of our Corporate Finance & Securities Group.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
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