OSC issues best practice guidance for prospectus filings

TORONTO – The Ontario Securities Commission (OSC) has seen a significant number of confidential prospectus pre-files submitted in recent months and is providing best practice guidance to issuers to assist in their capital raising efforts.

The option of confidentially pre-filing a prospectus was put in place in March 2020, as part of the OSC’s burden reduction initiative. Since then, 40 issuers have received staff input on their confidential pre-file, providing issuers with greater flexibility and more certainty in planning their prospectus offerings. 

The OSC reminds issuers of the following best practices when filing a confidential pre-file prospectus to streamline the review process:

• Pre-filed prospectuses should contain all financial and non-financial disclosure that would be included in the actual prospectus filing, and missing disclosure can result in review timelines being extended.
• A deal timeline should be included in the filed cover letter to assist staff in understanding when the review should ideally be completed. The OSC expects that the issuer will file a preliminary prospectus shortly after the completion of the review of the pre-filed prospectus.
• Any legal or accounting questions where OSC staff input is required should be highlighted.

The OSC will not review pre-files of non-offering prospectuses, other than non-offering prospectuses pre-filed in connection with cross-border financings or where there is a specific legal or accounting matter requiring staff input. Pre-files of prospectuses that solely qualify the issuance of securities on conversion of convertible securities, such as special warrants, will also not be reviewed.

Capital raising in Ontario continues to grow at a rapid pace, with prospectus volumes 54 per cent higher for the period October to December 2020, than prospectuses received in the comparable quarter in 2019, for which the OSC was principal regulator. To continue to support capital raising and efficiently manage these large increases in prospectus volumes, OSC 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. 

OSC staff continue to make every effort to meet service standards for all filings. For filings that have a deal timing that is less pressing, review timelines may be extended. OSC Staff will promptly notify the filer and their counsel where this is the case.

For questions about any information contained above, please contact Winnie Sanjoto, Manager, Corporate Finance at [email protected].

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in the capital markets, and to contribute to the stability of the financial system and the reduction of systemic risk.  Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at http://www.osc.gov.on.ca.

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