rules and regulations written on folder

Amid a surge in prospectus filings, and with a growing number of issuers taking advantage of the opportunity to give regulators an early peek at forthcoming deals, the Ontario Securities Commission (OSC) is providing guidance to companies on the preview process.

Last year, the OSC began providing issuers with the option of pre-filing prospectuses as a way of easing the burden of securing prospectus approval.

With 40 issuers now having used the pre-filing opportunity, the OSC has published new guidance on best practices for issuers to help expedite the pre-filing review process.

Among other things, the regulator said that pre-filings should highlight any legal or accounting questions that require its feedback; that the these filings should include all the elements of disclosure that will be part of the actual prospectus; and that the proposed deal’s timeline should be part of the filing too.

The OSC noted that for the fourth quarter of 2020, the number of prospectus filings is up by 54% from the same period in 2019.

“Capital raising in Ontario continues to grow at a rapid pace,” the regulator said.

To deal with the large increase in prospectus volumes, the OSC said its staff “will be triaging all filings and prioritizing the most urgent and time-sensitive prospectus filings, such as bought deals and overnight marketed offerings.”

“Generally, a base shelf prospectus filing with no imminent drawdown would not be considered urgent and time sensitive,” the regulator noted.

Additionally, the regulator will not review pre-filings for non-offering prospectuses, unless it involves a cross-border financing or involves a specific legal or accounting issue that require regulatory attention.