On March 5, 2020, the Canadian Securities Administrators (CSA) introduced a harmonized process for full reviews of prospectuses on a confidential pre-filing basis (the Pre-Filing Process) for non-investment fund issuers.
The Pre-Filing Process allows for the earlier identification of material issues that might delay receipting the prospectus and closing an offering. The process expands the availability of pre-filing reviews that some CSA jurisdictions are already conducting.
The CSA have issued the following guidance to supplement the rules laid out in securities laws:
Eligible Issuers
Any non-investment fund issuer that intends to file a prospectus in a Canadian jurisdiction can use the Pre-Filing Process.
Eligible Offerings
An issuer can use the Pre-Filing Process to pre-file a long form prospectus, a short form prospectus, or a base shelf prospectus (excluding structured notes distributed under the shelf prospectus system).
Notably, the Pre-Filing Process does not apply to (a) non-offering prospectuses, other than non-offering prospectuses filed in connection with cross-border financings, and (b) prospectuses filed solely to qualify the issuance of securities on conversion of convertible securities.
Eligible Jurisdictions
An issuer should pre-file the prospectus with their principal regulator only. In certain circumstances outlined in securities laws, non-principal regulators may become involved in the review.
Readiness for Pre-Filing
To use the Pre-Filing Process, the CSA expect the terms and conditions of the offering, and any related transactions, to be clearly determined. The CSA also expect that the underwriters would have substantially completed their review of the pre-filed prospectus.
The pre-filed prospectus should generally be of the same form and quality as if it was the publicly filed preliminary prospectus, and contain the disclosure prescribed under securities legislation.
If the price of the offering and other information derived from the price are omitted from the preliminary prospectus, issuers are asked to include an estimate of any such amounts in the pre-filed prospectus where practical.
Accompanying Documents
Generally, a pre-filing should include all documents required to be filed with the publicly filed prospectus. CSA staff will contact the issuer if they require more documents, including personal information forms, to complete their review.
Expected Timeline
A filer should submit the pre-filing sufficiently in advance of filing the public preliminary prospectus. CSA staff have indicated that they will use their best efforts to provide initial comments within ten working days of receiving the pre-filing. However, CSA staff warn that they may not be able to meet this suggested timing if the pre-filing is complex or involves a novel and substantive issue, or raises a novel policy concern, or the issuer’s disclosure is incomplete.
Level of Review
CSA staff will generally conduct the same level of review that they would for the publicly filed preliminary prospectus.
Additional Comments
CSA staff may still raise comments at the time of the public filing including if new issues arise or if there are changes to the prospectus or any documents incorporated by reference.
Method of Communication
Communications will normally take place by email, however the filer may request in its cover letter an alternative means of communication.
Process and Fees
The current filing process and fees payable for the Pre-Filing Process are set out in the CSA notice which is available here. Currently there are no fees payable in connection with the Pre-Filing Process, except where the Ontario Securities Commission is the principal regulator.
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.