CSA – Proposal to harmonize the interpretation of the Primary Business Requirements [Completed]
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Effective date:
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Provided all necessary ministerial approvals are obtained, the Changes and Consequential Change are effective on April 14, 2022 |
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Last updated: |
April 2022 |
Overview
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.
Review the press release on the CSA's website and a copy of the Notice.
On April 14, 2022, the Canadian Securities Administrators (CSA) published changes to harmonize the interpretation of the financial statement requirements for a long form prospectus, such as in an issuer’s initial public offering (IPO). Specifically, the changes 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. The changes were informed by stakeholder feedback that certain inconsistent interpretations of the primary business requirements add time, cost and uncertainty for issuers.
The changes provide additional guidance on the interpretation of primary business including in what situations, and for which time periods, financial statements would be required. They provide 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 changes also clarify when an issuer can use the optional tests to calculate the significance of an acquisition, and when an acquisition of a mining asset would not be considered an acquisition of a business for securities legislation purposes.
Review the press release on the CSA's website and a copy of the changes.
Other developments
April 2022
On April 14, 2022, the CSA published changes to harmonize the interpretation of the financial statement requirements for a long form prospectus, such as in an issuer’s initial public offering (IPO).
August 2021
On August 12, 2021, the CSA have proposed clarifications to harmonize the interpretation of the financial statement requirements for a long form prospectus. Comments are requested by October 11, 2021. Subject to the comment process and required approvals, the final amendments are expected to become effective on July 15, 2022.
