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Letter Summary:
The CSA has proposed amendments and changes to various national instruments in order to implement an access equals delivery model for most types of prospectuses, annual & interim financial statements and related MD&A for non-investment fund reporting issuers. Delivery will generally be deemed to have occurred (or in BC, an exemption will be available) when an issuer provides access to the document through SEDAR and notifies investors that the document is available there through a press release. The press release would need to indicate that the document is available electronically and that a paper copy can be obtained on request. No press release would be required in connection with the delivery of a preliminary prospectus. The model is intended to be more cost-effective for issuers and dealers, particularly with respect to the requirement to deliver paper copies of prospectuses. The proposals would not apply to rights offerings by way of prospectus or MTN programs (or investment funds). The two day right to withdraw from an agreement to purchase securities would be amended to reference the later of the date that access to the final prospectus (or amendment) has been provided and the date the purchaser has agreed to purchase the securities. With respect to delivery of financial statements and MD&A, the proposals include references to the current process of obtaining standing instructions from beneficial owners and the interaction of those instructions with an access equals delivery model.
Overview of the Council’s Comments:
The council is generally supportive of an electronically enabled access equals delivery (AED) model that can benefit investors and issuers by providing more timely disclosure over paper delivery and reducing costs related to printing and mailing documents. However, we remained strongly concerned as the proposed model relies heavily on SEDAR, whose current interface poses challenges for many investors to access documents. We believe the functionality enhancements of SEDAR are necessary for the implementation of the Proposed Amendments.
Our key comments are summarized below:
- We support an AED model as it would modernize the method by which documents are made available to investors and is a cost-efficient, timely, and environment friendly communication manner if appropriately implemented.
- We are concerned that given the Proposed Amendments relies heavily on SEDAR, its current interface makes it difficult for many investors to locate and access the documents.
- We believe that in order for the Proposed Amendments to have the intended effect, SEDAR must function as an accessible, intuitive and modern resource for disclosure documents. The implementation of the AED model should be delayed until SEDAR+ is fully implemented.
- We think that SEDAR+ should roll out enhancements that enable investors to subscribe electronic alerts for new filings on issuers of interest and to use “open data”.
- We also believe issuers should be encouraged to maintain a website as a secondary point of reference for their disclosures.
- As for the consultation questions, we do not think the requirement to issue and file a news release after filing financial statements and related MD&A is unduly costly or onerous, or it is necessary to consider alternative ways to alert investors. The cost to issue and file a news release should not be a material expense to any reporting issuer.