The Canadian Securities Administrators (CSA) are proposing rule changes that would provide issuers with easier access to capital through “at-the-market” (ATM) offerings. The proposal comes as securities regulators seek ways to curb unnecessary regulatory demands in the financial services insustry.
The CSA proposes amendments that aim to provide the exemptive relief that issuers require in order to carry out ATM offerings, which are secondary distributions of equity securities made under a base shelf prospectus.
The CSA is proposing to adopt an exemption from the prospectus delivery requirement for underwriters and an exemption from certain prospectus requirements for the issuer and the underwriter — as an alternative to requiring the firms to seek exemptions.
Issuers also would be required to disclose that their securities may qualify for an ATM distribution on the cover page of their base shelf prospectus.
“The proposed amendments are aimed at reducing the regulatory burden for issuers who wish to conduct ATM distributions without compromising investor protection,” the CSA states in a notice outlining the proposals.
The CSA notes that these kinds of distributions are less common in the Canadian market than they are in the U.S. Industry players have pointed to regulatory requirements as a possible explanation for this difference, the regulator adds, given that U.S. regulators have relaxed, or abandoned their requirements in this area.
The CSA’s proposed changes would bring the Canadian regime in line with the U.S.
“The proposed changes, which codify existing CSA exemptions, will result in faster and easier access to capital for reporting issuers,” Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers (AMF) said in the CSA’s statement. “No longer having to apply for exemptive relief for ATM distributions will ultimately reduce reporting issuers’ regulatory burden,” added.
Comments on the proposals are due August 7.