Canadian securities regulators note that issuing securities through prospectus-exempt rights offerings is on the rise in Canada
Jun 30, 2017
A recent CSA Staff Notice advises that the use of rights offerings has increased significantly since the repeal of the old rights offering rules found in National Instrument 45-101, Rights Offerings, and the adoption of the new rules found in Section 2.1 of National Instrument 45-106, Prospectus Exemptions, which came into effect on December 8, 2015.
The April 20, 2017 CSA Staff Notice 45-323 (the “Staff Notice”), Update on Use of the Rights Offering Exemption in National Instrument 45-106 – Prospectus Exemptions, indicates that during the first year following adoption of the new rules, reporting issuers’ use of prospectus-exempt rights offerings had more than doubled.
The Staff Notice also notes key disclosure issues related to rights offerings under the new rules which need to be addressed. These issues relate to inadequate disclosures in certain filings in respect of: (i) stand-by commitments; (ii) use of available funds; and (iii) closing news release.
For further details refer to the Staff Notice on the CSA’s website.