Take Two: The Canadian Securities Administrators Seek Comments on New Version of Access Model for Continuous Disclosure Documents

Overview and Key Takeaways

Following the adoption in April 2024 by the Canadian Securities Administrators (“CSA”) of an “access equals delivery” model allowing issuers to file prospectuses without printing and mailing, the CSA published for comment its revised “access equals delivery” model for certain continuous disclosure documents (the “Proposed Access Model”). With this new draft published on November 19, the CSA introduces important changes to its previous proposal to address concerns raised by stakeholders during the 2022 comment period regarding potential adverse effects on retail investors. The comment period for this new iteration closes on February 17, 2025.

Our key takeaways include:

• The Proposed Access Model applies to:
  • (1) Annual financial statements, (2) interim financial statements, and (3) related management’s discussion and analysis (MD&A) (the “CD Documents”).
  • All non-investment fund reporting issuers, including venture issuers.^[1]

• The Proposed Access Model is based on electronic access through SEDAR+ and includes an automatic notification function that will include a direct link to the documents filed and that allows customization by investors to ensure receipt of desired continuous disclosure documents in their preferred manner.
• The CSA is particularly interested in comments regarding any practical issues anticipated by issuers arising from the requirement of having to complete the following steps on the same day: (1) filing a CD Document on SEDAR+, (2) issuing and filing a related news release on SEDAR+, and (3) if the issuer has a website, posting the CD Document on the website.
• The Proposed Access Model does not cover certain documents requiring a shareholder response, such as management information circulars sent in connection with shareholder meetings. This may lead issuers that work well with the notice-and-access regime to continue to use this model to manage the mailing of all their annual meeting materials.

Our more detailed comments and analysis follow. For more of Fasken’s capital markets thought leadership, visit our Capital Markets and M&A Knowledge Centre.

The Proposed Access Model in Detail

Following the comments received by stakeholders on its initial 2022 model, the updated Proposed Access Model stipulates that electronic access to CD Documents will be provided if:

• the issuer has filed the document on SEDAR+;
• on the same day, the issuer has issued and filed a news release on SEDAR+ announcing that:
  • the document is accessible electronically;
  • the SEDAR+ customizable notification function is available;
  • an electronic or paper copy of the document can be obtained upon request; and
  • any standing instructions to receive the document in electronic or paper form will continue to be followed; and
• on the same day, if the issuer has a website, the issuer has posted the document on its website.

Additional Mandatory Investor Disclosure

As the updated Proposed Access Model aims to provide full accessibility and transparency to investors, it also requires the issuer to disclose (1) how to access CD Documents electronically, (2) that the customizable SEDAR+ notification function is available, (3) how to obtain a paper copy of a CD Document, and (4) that standing delivery instructions can be provided. This mandatory disclosure must be made:

• in a news release before the issuer uses the Proposed Access Model if, during the previous financial period, the issuer complied with the current delivery requirements under National Instrument 51-102;
• in a separate document sent to investors with the applicable proxy-related materials or, if the issuer is using the notice-and-access model in connection with a meeting of shareholders, with the applicable notice; and
• on the issuer’s website in the same location where the issuer posts its CD Documents, if applicable.^[2]

What’s Changed from the CSA’s Initial 2022 Model?

The CSA explains it made several material changes to its initial 2022 model to address comments received during the 2022 comment period. These include:

1. The SEDAR+ notification feature enables subscribers to receive email alerts when a CD Document is filed by an issuer they are tracking, with the email containing a direct link to the document. Subscribers can tailor their subscriptions at any time.
2. Issuers must issue a news release on SEDAR+ at least 25 days before adopting the Proposed Access Model if they previously distributed CD Documents or request forms to investors. The news release serves as advance notice for investors, similar to the existing notice-and-access model, and highlights the availability of the SEDAR+ notification system.
3. Issuers must now include a separate document with their annual proxy materials, or with the notice for those issuers using the notice-and-access model, reminding investors annually about electronic access to CD Documents, the availability of SEDAR+ notifications, and the options to obtain electronic or paper copies or set standing delivery instructions.
4. Issuers with websites must post any CD Documents on their site the same day as filing on SEDAR+ and include information related to what is provided with proxy materials or the notice-and-access model notification.
5. The CSA decided not to propose to implement the Proposed Access AED Model for SEC foreign issuers and designated foreign issuers as contemplated in the CSA’s initial 2022 model.
6. Should an issuer decide to cease using the Proposed Access Model for electronic CD Documents and revert to standard delivery requirements, the issuer must announce this on SEDAR+ at least 25 days in advance to ensure investors receive timely notice of the change.

Other Noteworthy Points

The “access equals delivery” model for prospectuses and CD Documents illustrates the CSA’s commitment to improving cost-efficiency, accessibility, and sustainability within Canadian capital markets. A notable benefit of the CSA’s “access equals delivery” model is the significant reduction in paper use the models will allow, e.g., far fewer printed prospectuses and printed continuous disclosure documents, thereby contributing to environmental preservation and sustainability and lowering the environmental footprint of Canada’s financial sector. This aligns with broader societal initiatives to implement eco-friendly practices across industries and where reasonably possible.

That said, the Proposed Access Model does not cover certain documents requiring a shareholder response, such as management information circulars sent in connection with shareholder meetings. In its response to comments, the CSA indicated that “it is not appropriate, at this time, to extend the Proposed Access Model to proxy-related materials, takeover bid and issuer bid circulars”. This may lead issuers that work well with the notice-and-access regime to continue to use this model to manage the mailing of all their annual meeting materials.

The Annual Information Form (AIF) is also excluded from the proposal, but the CSA confirmed its intention to apply the Proposed Access Model to the “annual disclosure statement, if and when it is introduced”. The yet to be implemented “annual disclosure statement” would combine financial statements, MD&A and the AIF into one reporting document.

Looking Forward

As the Proposed Access Model contains material changes, the CSAis soliciting comments for a second time on the draft. Industry and other stakeholders have until February 17, 2025 to do so. The CSA has also committed to ensuring applicable reporting issuers are afforded sufficient time to transition to the new system prior to its implementation.