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Canadian securities regulators seek comments on proposal to harmonize the interpretation of the Primary Business Requirements

  • Securities - CSA Image

Aug 12, 2021

On August 12, 2021, the Canadian Securities Administrators (CSA) proposed clarifications to harmonize the interpretation of the financial statement requirements for a long form prospectus. Specifically, the clarifications apply in situations where an issuer has acquired a business, or proposes to acquire a business, that a reasonable investor would regard as being the primary business of the issuer. Comments are requested by October 11, 2021.

The proposal provides additional guidance on the interpretation of primary business and predecessor entity including in what situations, and for which time periods, financial statements would be required. It provides guidance on the circumstances when additional information may be necessary for the prospectus to meet the requirement to contain full, true and plain disclosure of all material facts relating to the securities being distributed. The proposal also clarifies when an issuer can use the optional tests to calculate the significance of an acquisition, and when an acquisition of mining assets would not be considered an acquisition of a business for securities legislation purposes.

Subject to the comment process and required approvals, the final amendments are expected to become effective on July 15, 2022.

Review the press release on the CSA's website.

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