Prospectus Filing & Process Considerations

This section sets out the regulatory framework for filing and processing prospectuses and provides helpful guidance in a Q&A format.

Prospectus Filings

The following is an overview of the prospectus filing and review process:

Prospectus Filing and Review Process

Activity


Timeline*

*Additional procedures involved if securities are offered both inside and outside Ontario but only OSC reviews if OSC is the principal regulator.
Additional procedures for shelf and PREP prospectuses.

Q&As regarding certain prospectus filing & process considerations

  1. How does an issuer determine the principal regulator if it has filed its prospectus in more than one Canadian jurisdiction?
  2. What documents are required to be filed/delivered in connection with a preliminary prospectus?
  3. What documents are required to be filed/delivered in connection with a final prospectus?
  4. What are some basic requirements that a filing clerk should consider prior to filing a preliminary prospectus and a final prospectus with the OSC on behalf of an issuer?
  5. What are some common deficiencies associated with Personal Information Form (PIF) filings and what procedural matters should be considered when filing a preliminary prospectus?
  6. What are some matters that could delay timing on short form prospectus distributions?
  7. Under what circumstances could an issuer pre-file a preliminary prospectus on a confidential basis?
  8. What procedural steps should an issuer follow, and what deficiencies can cause delays, when making an application for an exemption from certain requirements where the exemption will be evidenced by the issuance of a receipt for a final prospectus?
  9. What are some common issues that may warrant an issuer obtaining a pre-filing interpretation or waiver? How does an issuer file a pre-file?
  10. How can an issuer withdraw a preliminary prospectus that has already been filed through SEDAR?
  11. What are some common deficiencies relating to filing on SEDAR?
  12. How can issuers and filing counsel help us improve our service?

How does an issuer determine the principal regulator if it has filed its prospectus in more than one Canadian jurisdiction?

In accordance with section 3.4 of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions,the principal regulator for a prospectus filing under this policy is the regulator of the jurisdiction in which the issuer’s head office is located.

If the regulator identified is not in a “specified jurisdiction”, the principal regulator is the regulator in the “specified jurisdiction” with which the issuer has the most significant connection. A “specified jurisdiction” is one of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick or Nova Scotia.

The factors an issuer should consider in identifying the principal regulator based on its most significant connection are, in order of influential weight:

  1. location of management;
  2. location of assets and operations;
  3. location of trading market or quotation system in Canada;
  4. location of securities holders, if the securities are not traded or quoted on a trading market or quotation system in Canada;
  5. location of underwriter;
  6. location of legal counsel; and
  7. location of transfer agent.

The connecting factors in (e) to (g) are not relevant for a Canadian issuer because it will have a significant connection to a “specified jurisdiction” based on the connecting factors in (a) to (d). Regulators will generally object to a Canadian issuer identifying a principal regulator based on the factors in (e) to (g).


What documents are required to be filed/delivered in connection with a preliminary prospectus?

In addition to the issuer confirmation letter required to be delivered pursuant to section 7.2(2) of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions, the documents required to be filed/delivered for:

What documents are required to be filed/delivered in connection with a final prospectus?

In addition to the issuer confirmation letter required to be delivered pursuant to section 7.3(4) of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions, the documents required to be filed/delivered for:

What are some basic requirements that a filing clerk should consider prior to filing a preliminary prospectus and a final prospectus with the OSC on behalf of an issuer?


General Information

Below are a few points that anp issuer should consider prior to filing a preliminary or final prospectus with the OSC.

  • The issuer’s name and all dates must be correct on all documents submitted with the filing.
  • Confidential or personal information should not be used within the documents filed.
  • Documents filed should adhere to the requirements (i.e. standard language, correct full issuer’s name, appropriate signatures, etc.)
  • All documents filed must be filed on SEDAR under the correct document type, sub-type and filing category, where applicable. Please refer to the SEDAR Filer Manual which is incorporated by reference in National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR).
  • If the head office is not in a specified jurisdiction, the specified jurisdiction with which the issuer has the most significant connection should be deemed the principal regulator (please refer to subsection 3.4(7) of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions for the factors and the order of influential weight that an issuer should consider).
  • If filing in Quebec, the prospectus and all documents incorporated by reference must be filed in all applicable jurisdictions in French and English, unless an exemption applies.

Please note that any errors detected may require the filer to refile the document(s) and may delay the process of issuing the receipt for the prospectus.

Timing

  • If all materials are filed in an acceptable form before 12:00 noon, best efforts will be made to receipt the prospectus on the same day.
  • If all the materials are filed in an acceptable form after 12:00 noon, the receipt will normally be issued before 12:00 noon on the next business day.

Please refer to OSC Staff Notice 41-702 Prospectus Practice Directive # 1 Personal information forms and other procedural matters regarding preliminary prospectus filings for additional information on timing.

Jurisdictions

  • The list of jurisdictions where the documents are filed on SEDAR and the list of jurisdictions in the red herring(s) and legends on certificate pages must be the same and must be listed in the same manner.

Qualification Certificate

Certificates

  • The issuer’s certificate page should be signed by both the CEO and CFO (or equivalent) of the issuer, plus two directors, who are not the CEO or CFO (see section 58 of the Securities Act (Ontario)). Full names should be included in the signature lines.

Personal Information Forms (PIFs)

  • The cover letter must list the current directors and officers of the issuer. The full name of an individual (not just initial) must be present in the covering letter.
  • The PIFs should be submitted with the filing or alternatively the SEDAR project numbers and submission numbers (where their respective PIFs are found) should be clearly indicated in the cover letter.
  • PIFs should contain the most up-to-date correct information and no questions should be omitted.
  • If there are any positive responses to question 6 to 10 of the PIF, the PIF must be accompanied by an attachment providing complete details. Any attachment must be initialed by the person named in the PIF.
  • The certificates and consents attached to PIFs must be properly dated and signed.
  • Previously filed PIFs should not be older than three years or include or attach certificates and consents older than three years (please refer to section 9.2 of National Instrument 41-101 General Prospectus Requirements and OSC Staff Notice 41-702 Prospectus Practice Directive # 1 Personal information forms and other procedural matters regarding preliminary prospectus filings).

Notice of Intention

Filing in Multiple Jurisdictions

Materials Filed or Incorporated by Reference

Material Contracts and Documents Affecting the Rights of Securityholders

Final Prospectus

Submission to Jurisdiction

  • Submission to jurisdiction form and appointment of agent for service form must be submitted by (i) issuer, (ii) selling securityholder, (iii) director, or (iv) other person or company that provides or signs a certificate under Part 5 of National Instrument 41-101 General Prospectus Requirements or other securities legislation, if they are incorporated or organized in a foreign jurisdiction and do not have an office in Canada, or they are an individual who resides outside of Canada.

Issuer

Non-Issuer

Undertakings

Fees

  • Confirm that fees are paid with the preliminary prospectus and that the correct fee code is selected.
  • If the fees are paid under the wrong fee code, a letter must be filed on SEDAR under the same project number stating that the fee code was incorrect and indicating the correct fee code.
  • Ensure that any fees for technical reports required under National Instrument 43-101 Standards of Disclosure for Mineral Projects (incorporated directly or indirectly in the prospectus) are paid; please note that each technical report is subject to a separate fee. Please refer to Appendix C of OSC Rule 13-502 Fees.

What are some common deficiencies associated with Personal Information Form (PIF) filings and what procedural matters should be considered when filing a preliminary prospectus?

Prospectus Practice Directive # 1 Personal information forms and other procedural matters regarding preliminary prospectus filings which is set out in OSC Staff Notice 41-702 provides information and guidance in the areas identified below, and points out common deficiencies that can cause delays in the prospectus review process:

  • Procedures for personal information forms including common deficiencies
  • Other procedural matters when filing a preliminary prospectus
  • Timing for filing preliminary prospectus materials and the issuance of preliminary receipts

See OSC Staff Notice 41-702 Prospectus Practice Directive # 1 Personal information forms and other procedural matters regarding preliminary prospectus filings

What are some matters that could delay timing on short form prospectus distributions?

As set out in OSC Staff Notice 51-706 Corporate Finance Report 2006, short form eligibility under National Instrument 44-101 Short Form Prospectus Distributions is premised on the issuer having filed all periodic and timely disclosure documents that it is required to have filed.

In situations where this has not been the case, there have been delays in the prospectus review process. Examples of these situations include, among others:

In a number of situations, an issuer has filed a short form prospectus to finance a material acquisition or significant transaction that would constitute a material departure from its business or operations as of the date of the issuer’s current annual financial statements and current annual information form. In these cases, the issuer’s short form prospectus often includes or incorporates by reference a significant amount of new disclosure not previously filed, including new technical reports and acquired company information.

While staff use their best efforts to review prospectus materials relating to a preliminary short form prospectus and issue a comment letter within the three-day review period contemplated by National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions, in some cases this may not be possible.

Corporate Finance staff would like to remind issuers that short form eligibility is premised on the issuer having filed all requisite periodic and timely disclosure documents.

Corporate Finance staff remind issuers that, in accordance with subsections 5.5(3) and 5.6 of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions, staff may apply long form timing where a proposed distribution by way of a short form prospectus is too complex to be reviewed adequately within the short form prospectus time periods or where the prospectus is filed for an offering that involves a novel and substantive issue or raises a novel policy concern and the issues were not resolved in a pre-filing. This may occur in the following situations, among others:

  • The issuer is proposing or has recently completed a significant acquisition of an issuer or business or property and the issuer is filing a significant amount of new material at the time of filing. The acquired company in this case is often the main operating business of the issuer.
  • The issuer is proposing, or has recently completed, a significant restructuring, amalgamation or takeover.
  • The offering is otherwise novel or complex.

While we anticipate that long form timing will only be applied in limited circumstances, issuers are encouraged to consider the above guidance when structuring their transactions and may wish to consider the pre-file procedures in Part 8 (Pre-filings and Waiver Applications) of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions.

Under what circumstances could an issuer pre-file a preliminary prospectus on a confidential basis?

Foreign private issuers may be permitted to initially submit their U.S. registration statement (including the embedded prospectus) to the U.S. Securities and Exchange Commission (SEC) on a confidential “quiet filing” basis. We have observed that where a foreign private issuer satisfies the U.S. requirements, it may request approval to concurrently pre-file a preliminary prospectus with us on a confidential basis.

As set out in OSC Staff Notice 51-706 Corporate Finance Report 2006, in the limited circumstances set out below, issuers may concurrently pre-file preliminary prospectuses on a confidential basis with us if:

  • The preliminary prospectus filed with the SEC and with us is substantially the same, with some minor differences resulting from different form requirements.
  • The preliminary prospectus is pre-filed in all Canadian jurisdictions where the issuer is proposing to do the offering.
  • The principal regulator and the non-principal regulators have at least 10 working days to review the pre-filed preliminary prospectus and issue a comment letter.
  • There is no specified date by which we must resolve our comments on the pre-filed preliminary prospectus or the related publicly filed preliminary prospectus.
  • Any waiting period, which would begin when the preliminary prospectus is publicly filed, is preserved.
  • The pre-filed preliminary prospectus is not used for marketing purposes and is not provided to anyone other than those directly involved with preparing it.
  • The filing fees associated with a preliminary prospectus are paid when the preliminary prospectus is pre-filed.
  • When the preliminary prospectus is publicly filed on SEDAR, all comment letters and the corresponding responses on the pre-filed preliminary prospectus are filed, but are not made public.

What procedural steps should an issuer follow, and what deficiencies can cause delays, when making an application for an exemption from certain requirements where the exemption will be evidenced by the issuance of a receipt for a final prospectus?

If an issuer is unable to comply with a requirement in securities legislation, it can apply for discretionary relief. Applications for relief are reviewed on a case-by-case basis. Whether or not relief is granted depends on the relevant facts and circumstances of the application. Issuers have applied for relief from the prospectus requirements of the Securities Act (Ontario) or from requirements relating to preparing and filing continuous disclosure documents.

Issuers should make an application before they need the relief to ensure there is sufficient time for the application to be considered.

Corporate Finance Prospectus Practice Directive # 2 Exemption from certain prospectus requirements to be evidenced by a receipt which is set out in OSC Staff Notice 41-703 outlines procedural steps an issuer should follow, and certain deficiencies that can cause delays, when making an application for an exemption from certain requirements where the exemption will be evidenced by the issuance of a receipt for a final prospectus (or an amendment to a final prospectus).

We remind issuers that, under OSC Staff Notice 41-703, staff will generally place on the public file a copy of the application.  To facilitate this, issuers should consider filing the application as a stand-alone document, rather than including the request in other correspondence.

See OSC Staff Notice 41-703 Corporate Finance Prospectus Practice Directive # 2 Exemption from certain prospectus requirements to be evidenced by a receipt

What are some common issues that may warrant an issuer obtaining a pre-filing interpretation or waiver? How does an issuer file a pre-file?

Before filing a preliminary prospectus, an issuer may want to obtain a pre-filing interpretation or a waiver. This allows an issuer to consult with Corporate Finance staff regarding the interpretation of securities legislation as it relates to a specific issue in the context of the proposed offering.

For guidance on seeking a pre-filing interpretation or a waiver before filing a preliminary prospectus in multiple jurisdictions, please refer to Part 8 (Pre-filings and Waiver Applications) of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions.

As set out in OSC Staff Notice 51-725 Corporate Finance Branch 2014 – 2015 Annual Report and OSC Staff Notice 51-727 Corporate Finance Branch 2015 – 2016 Annual Report, common issues that may warrant a pre-filing include:

  • Financial statement disclosure for certain significant acquisitions: Where an issuer is raising proceeds to fund an acquisition that makes up a material portion of its business, or is larger than the issuer’s existing business, the issuer should consider whether the prescribed disclosure that is normally required for a significant acquisition (as that term is used in securities legislation) is sufficient for the prospectus to contain full, true and plain disclosure.
  • Primary business in an IPO: An issuer doing an IPO must include in its prospectus a three- year financial history (two years for an IPO venture issuer) of the business an investor is investing in, even if this financial history spans multiple legal entities over the three-year period. This includes the financial history for those businesses acquired or that will likely be acquired if those businesses are in the same primary business of the issuer. In instances where there are multiple acquisitions in the same primary business of the issuer, smaller acquisitions are also likely to form part of the primary business of the issuer.
  • Asset vs. business acquisitions: When an issuer makes an acquisition, there are instances where judgement is involved to determine whether the acquisition is an asset acquisition or a business acquisition. Part 8 of Companion Policy 51-102CP provides guidance in determining whether an acquisition constitutes the acquisition of a business. There may still be uncertainty, however, as to whether the acquisition is an asset acquisition or a business acquisition for securities law purposes.
  • Sufficiency of proceeds and financial condition of an issuer: A critical part of every prospectus review is considering an issuer’s financial condition and intended use of proceeds. Disclosure on its own may not be sufficient to satisfy receipt refusal concerns in certain circumstances. Issuers, including those filing a base shelf or non-offering prospectus, should review CSA Staff Notice 41-307 Corporate Finance Prospectus Guidance - Concerns regarding an issuer’s financial condition and the sufficiency of proceeds from a prospectus offering.
  • Promoter: Where a promoter exists at the time of an issuer’s IPO, we remind issuers to consider whether promoter status continues for subsequent offerings irrespective of whether it has been two years since the IPO. This assessment should consider whether the promoter’s relationship with the issuer has changed since the IPO in terms of the promoter’s continued involvement in the governance and management of the issuer, including the promoter’s ownership and de facto control of the issuer, among other factors. How and when a promoter ceases to be a promoter is determined on a case by case basis. The analysis should consider how the facts and circumstances upon which the issuer determined that a promoter is a promoter of the issuer have changed.

Application and prospectus pre-filings must be transmitted to the Ontario Securities Commission electronically. Refer to the OSC's electronic filing portal for more instructions.

For more information:

National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions
OSC Rule 11-501 Electronic Delivery of Documents to the Ontario Securities Commission

How can an issuer withdraw a preliminary prospectus that has already been filed through SEDAR?

An issuer who wishes to withdraw a preliminary prospectus should file (through SEDAR, under the same project number as the preliminary prospectus) in all jurisdictions in which it filed the preliminary prospectus, a signed and dated letter formally requesting that its preliminary prospectus be withdrawn. The issuer should also set out in the letter the reasons why it wishes to withdraw the preliminary prospectus.

Upon receipt of the withdrawal letter from the issuer, staff of the principal regulator will post a public notice on SEDAR confirming that the preliminary prospectus has been withdrawn. Once the public notice is posted, no further filings should be made under that project number.

What are some common deficiencies relating to filing on SEDAR?

As set out in OSC Staff Notice 51-706 Corporate Finance Report 2006, there are a number of issues that arise in the review of prospectus filings on SEDAR. The following technical deficiencies may delay the issuance of a prospectus receipt:

  • Blacklined documents incorrectly filed on SEDAR as “Amendments”. Other than the blackline of the final prospectus, blacklined documents should be filed under the category “Other Correspondence” on SEDAR (see SEDAR Filer Manual section 9.7).
  • Multiple subtypes incorrectly filed under one submission on SEDAR. Only one filing subtype should be filed under each submission (see SEDAR Filer Manual section 8.3(e)).
  • Confidential or personal information incorrectly filed under the “CD” filing category on SEDAR. This is an auto public filing category. Any documents filed under this category will automatically be available on www.SEDAR.com.
  • The SEDAR profile should be kept up to date. For example, when an issuer ceases reporting, the “Reporting Jurisdictions” field in the issuer’s SEDAR profile should be updated to “Cease Reporting”.
  • All applicable information on SEDAR cover pages should be completed. When filing a prospectus, all appropriate filing procedures should be checked off before submitting the project.
  • The applicable SEDAR fee codes should be used. The SEDAR fee code should correspond with the filing type and description.

How can issuers and filing counsel help us improve our service?

As set out in OSC Staff Notice 51-706 Corporate Finance Report 2007, you can help us improve our service by:

  • Giving us complete and accurate information
  • Responding to our requests in a timely manner
  • Understanding and complying with our deadlines
  • Appreciating that complex or unusual matters require more time
  • Recognizing that we cannot provide legal advice
  • Understanding you may not always get the result you want