Canadian Securities Administrators Propose Significant Changes to Rights Offering Regime

The Canadian Securities Administrators (CSA) have published for comment proposed changes to the rights offering regime in Canada.  The changes are designed to streamline the prospectus-exempt rights offering for reporting issuers, revise some of the requirements for rights offerings by way of prospectus and repeal the prospectus exemption for rights offerings conducted by non-reporting issuers.

The CSA’s proposed changes to the requirements for prospectus-exempt rights offerings include the following:

  • Circular filed on SEDAR.  Issuers will no longer have to send an information circular to security holders. The proposed form (Proposed Form 45-106F15 or the Circular) will be filed on SEDAR.
  • No Review of Circular.  CSA staff will no longer review the Circular prior to its use.
  • Increase in dilution limit.  The dilution limit for a prospectus-exempt rights offering will be increased from 25% to 100%.  As a result, issuers will be able to conduct a prospectus-exempt rights offering resulting in up to a 100% increase in the number of outstanding securities of the class to be issued upon exercise of rights, assuming the exercise of all rights issued under the rights offering prospectus exemption by the issuer during the preceding 12 months.
  • No Technical Report.  Proposed Form 45-106F15 contains no required technical or business disclosure. As a result, an issuer would not trigger the technical report requirement unless it chooses to include technical disclosure in its Circular.

To access the CSA Notice, including the text of the new requirements, click here.