On January 9, 2020, the Canadian Securities Administrators (CSA) published CSA Consultation Paper 51-405 Consideration of an Access Equals Delivery Model for Non-Investment Fund Reporting Issuers (the Consultation Paper), to solicit views on the appropriateness of introducing an “access equals delivery” model in the Canadian capital markets. Under this model, delivery of a document would be effected by the issuer alerting investors that the document is publicly available on the System for Electronic Document Analysis and Retrieval (SEDAR) and the issuer’s website.
Current Delivery Methods
The Consultation Paper notes that securities legislation requires issuers to deliver various documents to investors, including prospectuses, rights offering circulars, annual and interim financial statements and related management's discussion and analysis, proxy-related materials and take-over bid and issuer bid circulars that are delivered by issuers or those acting on their behalf.
Currently, securities legislation does not generally prescribe the medium to be used by issuers for providing information to investors. In most instances, an issuer must "deliver", "send" or "provide" the document. Accordingly, issuers will generally deliver documents to investors in paper or electronic format. Despite recent advances - which are summarized in the Consultation Paper - permitting and encouraging certain more limited forms of electronic delivery, some issuers continue to incur significant costs associated with printing and mailing various documents required to be delivered under securities legislation.
“Access Equals Delivery” Model
Given widespread access to, and use of, the Internet, the Consultation Paper notes that the CSA members are evaluating whether to adopt an “access equals delivery” model to satisfy delivery requirements under securities legislation. The stated objective is to modernize the way documents are made available to investors and significantly reduce costs associated with the printing and mailing of documents.
According to the Consultation Paper, a possible regulatory framework to achieve this objective could be an “access equals delivery” model under which, for documents that issuers are required to deliver to investors, providing public electronic access would constitute delivery. Specifically, under this model an issuer would be considered to have effected delivery once:
The document has been filed on SEDAR;
The document has been posted on 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 “access equals delivery” model being contemplated could be implemented for various types of documents. As an initial step, the CSA members are considering whether to prioritize a policy initiative to implement this model for prospectuses and certain continuous disclosure documents.
*****
We agree with the CSA that electronic access to documents facilitates more efficient communication with investors and reduces regulatory burden for issuers. We encourage market participants to submit comments in writing by the March 9, 2020 deadline.
The Consultation Paper can be found here.
DISCLAIMER: This post is intended to convey general information about legal issues and developments as of the date above. It does not constitute legal advice and must not be treated or relied on as such.