CSA’s proposed amendments to prospectus exemptions
The proposed amendments could make it easier for public companies, particularly smaller and mid-sized issuers, to raise capital while maintaining investor protections and appropriate disclosure requirements.
Submission – CSA’s Proposed Amendments to National Instrument 45-106 – Prospectus Exemptions
Recipients
- Canadian Securities Administrators (CSA)
- British Columbia Securities Commission
- Alberta Securities Commission
- Financial and Consumer Affairs Authority of Saskatchewan
- Manitoba Securities Commission
- Ontario Securities Commission
- Autorité des marchés financiers
- Financial and Consumer Services Commission (New Brunswick)
- Superintendent of Securities, Department of Justice and Public Safety, Prince Edward Island
- Nova Scotia Securities Commission
- Office of the Superintendent of Securities, Service NL
- Northwest Territories Office of the Superintendent of Securities
- Office of the Yukon Superintendent of Securities
- Superintendent of Securities, Nunavut
Industry segments this resource supports
- Capital markets
Summary
The Securities and Investment Management Association (SIMA) supports the CSA’s proposed amendments to National Instrument 45-106 – Prospectus Exemptions, which are intended to provide greater flexibility under the Listed Issuer Financing Exemption (LIFE). The amendments would increase fundraising flexibility, revise dilution calculations, clarify issuer funding requirements, allow successor issuers to use the exemption, and streamline certain disclosure requirements. SIMA’s submission also includes recommendations related to pre-marketing restrictions, dealer hold periods, filing requirements for offering documents, financing limits, and eligibility requirements for newly listed issuers.
Why this matters: The proposed amendments could make it easier for public companies, particularly smaller and mid-sized issuers, to raise capital while maintaining investor protections and appropriate disclosure requirements.
Key takeaways
- SIMA supports the overall direction of the proposed amendments and the goal of providing issuers with greater capital-raising flexibility.
- SIMA recommends removing current pre-marketing restrictions to align LIFE offerings more closely with private placements and improve capital-raising efficiency
- SIMA suggests eliminating dealer hold-period restrictions that may discourage dealers from participating in LIFE transactions.
- SIMA recommends allowing offerings to launch before the LIFE offering document is filed, with the document filed as soon as practical afterward, to improve transaction timing and execution.
- SIMA supports increasing financing capacity and suggests a $50 million annual financing limit while retaining a 50% dilution cap.
- SIMA recommends removing or shortening the 12-month seasoning requirement for issuers that become public through certain listing structures, arguing that investors have access to similar disclosure regardless of listing method.
- SIMA supports giving issuers more flexibility regarding the sufficiency-of-funds requirement, including reducing the assessment period from 12 months to six months while retaining appropriate investor safeguards.
- SIMA does not support expanding the exemption to include convertible debentures, citing concerns about complexity and limited benefits for LIFE offerings.
- SIMA supports retaining the proposed 50% dilution limit and requiring disclosure of an expected offering price range in a news release announcing an offering.
