In the face of increasingly tumultuous global markets, Canadian securities regulators are taking action to support capital markets activity by easing certain filing requirements and restrictions — to make it cheaper for companies to go public in the first place and easier to raise additional capital.
Citing the heightened uncertainty in global markets and its negative effect on Canadian markets, the Canadian Securities Administrators (CSA) issued a series of blanket orders — effective immediately — intended to support companies going public and raising capital.
To start, the CSA said that it’s adopting “a multi-faceted prospectus and disclosure blanket order [that] will reduce regulatory burden and provide greater flexibility for companies that are currently reporting or that choose to pursue an initial public offering (IPO) in Canada.”
Specifically, regulators are extending an exemption from the requirement to provide three years of audited financial statements in IPO prospectuses, takeover bid circulars and other filings; they also eased some of the requirements around term sheets, marketing materials and promoter certificates.
In its version of the order, the Ontario Securities Commission (OSC) said that it decided to streamline certain prospectus and financial statement requirements “to reduce the time and costs of raising capital under a prospectus and in preparing other required disclosure, without compromising investor protection.”
Additionally, the regulators are introducing a time-limited prospectus exemption for new reporting issuers, which provides greater flexibility to raise additional capital within the 12 months following their IPO.
Finally, they have also revised the investment limit requirements under the offering memorandum exemption for certain investors — allowing investors to re-invest the proceeds when they sell an OM investment without counting against annual investor limits, provided that they get regulated advice on the suitability of the reinvestment. That order was adopted in jurisdictions that currently impose OM limits (Alberta, New Brunswick, Nova Scotia, Ontario, Quebec and Saskatchewan).
“Canada is a great place to do business, and companies going public here support investors and the vitality of our capital markets,” said Stan Magidson, chair of the CSA and chair of the Alberta Securities Commission (ASC), in a release.
“The actions announced today represent the start of incremental measures to support the competitiveness of Canada’s capital markets. We are making it easier and more cost-effective for businesses to raise capital and grow in Canada, without sacrificing investor protection,” he added.
Indeed, the CSA noted that it’s looking for other ways to support issuers and investors in the capital markets, and invited feedback on the measures announced Thursday from market participants, investor advocates and others.