Prospectus Offerings

In most cases, a company must prepare a prospectus when it offers securities to the public.

Companies that plan to offer securities in Ontario typically begin by filing a preliminary prospectus with the OSC. The OSC will issue a receipt for the preliminary prospectus if all filing requirements are met. The OSC reviews the preliminary prospectus and  may provide comments to the company. Once all comments are resolved to the satisfaction of the OSC, the company typically files a final prospectus with the OSC.

If a receipt is issued for a final prospectus, the prospectus can then be used to offer and sell securities.

A prospectus includes specific, detailed disclosure about a company, its business and the securities being offered. It must provide “full, true and plain disclosure of all material facts relating to the securities issued or proposed to be distributed” as required by subsection 56(1) of the Securities Act (Ontario). For more information, see National Instrument 41-101 General Prospectus Requirements.

If the securities are going to be sold both inside and outside of Ontario, the company may also need to consider the laws of another province or territory in Canada. For information on the filing and review process for prospectuses in multiple jurisdictions, see National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions. For more information on issuance of receipts see OSC Staff Notice 41-701 Issuance of Receipts for Preliminary Prospectus and Prospectuses.

Types of Prospectuses

There are different types of prospectuses that a company may prepare, depending on whether the company is already a reporting issuer and the structure of the offering.

Long-form prospectus (IPO)

If a company is undertaking an initial offering of its securities (commonly referred to as an Initial Public Offering, or IPO), or is not eligible to use a short-form prospectus, it must use a long-form prospectus.

A long-form prospectus must contain general business and financial information about the company; details on the terms of securities being offered and how the company intends to use the proceeds; and risk factors associated with a purchase of the securities. Form 41-101F1 Information Required in a Prospectus sets out in detail the information required.

The initial review period for a preliminary long-form prospectus is generally 10 working days. Staff generally issue a comment letter at the end of the 10-day period. For more information on the review procedures for prospectuses, see National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions.

A company undertaking an IPO should look to National Policy 46-201 Escrow for Initial Public Offerings to determine if escrow will apply to the securities being issued. Placing securities in escrow restricts the ability of a company’s management and its principal securityholders to sell their securities for a period of time following the offering. This gives them an incentive to devote their time and attention to the company’s business while they are securityholders.

Upon obtaining a receipt for the filing of its first final long-form prospectus, a company becomes a reporting issuer in Ontario and is subject to ongoing disclosure requirements, many of which are set out in National Instrument 51-102 Continuous Disclosure Obligations.

For more information:

Short-form prospectus

If a company is already a reporting issuer in a Canadian jurisdiction, it may be eligible to use a short-form prospectus. This document allows existing reporting issuers to incorporate certain information into a prospectus by reference.

A reporting issuer’s continuous disclosure record, for example its financial statements and annual information form, forms the basis for the disclosure incorporated by reference into the prospectus.

National Instrument 44-101 Short-form Prospectus Distributions sets out the eligibility criteria and disclosure requirements for this type of prospectus.

The review period for a short-form prospectus is generally three working days. For more information on the review procedures for prospectuses, see National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions.

For more information:

Shelf prospectus

The required disclosure for a base shelf prospectus is essentially the same as for a short-form prospectus, modified in accordance with National Instrument 44-102 Shelf Distributions.

Certain information relating to the details of a particular offering may be omitted from a base shelf prospectus, provided it is included in a supplementary document (referred to as a shelf supplement) that is filed and delivered when the actual distribution of securities occurs.

Once approved, the base shelf prospectus allows companies to access the capital markets quickly. They do so by filing a shelf supplement for a specific offering of securities, which is typically not reviewed by regulators.

For more information:

Post-receipt pricing prospectus

The post-receipt pricing (PREP) procedures allow companies to file a final prospectus that omits pricing and related information. Once pricing is determined, a supplemented PREP prospectus that contains all of the omitted information is filed with the OSC and provided to purchasers.

This gives companies greater flexibility in timing an offering to take advantage of market opportunities. For more information see National Instrument 44-103 Post-Receipt Pricing (NI 44-103).

A PREP prospectus can be based on a long-form or short-form prospectus, as modified by the PREP procedures. For more information, see NI 44-103. Note that PREP procedures cannot be used for a rights offering.

For more information:

Specific Disclosure Requirements for Mining or Oil & Gas Companies

Where a company discloses technical information about a mineral project on a property material to the company, it may be required to file a technical report to support that information. For more information, see Form 43-101F1.

Disclosure included in a prospectus about a mineral project must also be supported by a technical report where required by National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Similarly, companies engaged in oil and gas activities must comply with the disclosure requirements in National Instrument 51-101 Standards of Disclosure for Oil & Gas Activities.

For more information:

Multijurisdictional Disclosure System (MJDS)

National Instrument 71-101 The Multijurisdictional Disclosure System permits eligible U.S. issuers to offer securities in Canada on the basis of disclosure prepared in accordance with U.S. federal securities laws, with certain additional Canadian disclosure.

A public offering of securities of a U.S. issuer may be made under MJDS in either Canada and the United States, or in Canada alone.

Eligibility criteria for U.S. issuers vary depending on the type of security being offered.

To use MJDS a company must:
  • be incorporated or organized under the laws of the U.S. or any state,
  • have a continuous disclosure record with the U.S. Securities and Exchange Commission (SEC),
  • have securities registered under the Securities Exchange Act of 1934, and
  • in some instances have securities listed on a specified U.S. stock exchange and/or a minimum public float.
The SEC has a reciprocal system whereby eligible Canadian companies can offer their securities in the U.S. using a Canadian prospectus, with certain additional disclosure requirements.

The OSC may rely on the SEC’s review of the prospectus, resulting in a less extensive review by the OSC. However, the OSC will continue to review the prospectus for novel or substantive issues.

For more information: