The Ontario Securities Commission (OSC) and Alberta Securities Commission (ASC) have extended the exemptions temporarily in place regarding certain base shelf prospectus requirements for well-known seasoned issuers (WKSIs).

Since January 4, 2022, WKSIs have been able to rely on a set of harmonized blanket orders that provided exemptions from certain base shelf prospectus filing requirements, mainly the requirement to file a preliminary base shelf prospectus. This provided WKSIs a streamlined procedure to put a base shelf prospectus in place and quicker access to the capital markets. The securities commissions would be given a chance to evaluate the process with the aim to implement amendments to National Instrument 44-102 – Shelf Distributions (NI 44-102) to make these exemptions permanent. We note that a significant number of issuers have already relied on the WKSI exemptions since the initial blanket orders were put in place. A similar WKSI regime has been in existence in the United States for several years and is codified under the Securities Act of 1933.

As a quick recap, a WKSI must have either (i) outstanding listed equity securities with a public float of C$500 million, or (ii) at least C$1 billion aggregate amount of non-convertible securities, other than equity securities, distributed in primary offerings for cash under a prospectus (not issued as part of a securities exchange) in the last three years.

As well, a WKSI must be, among other things, current with its continuous disclosure obligations and within the last three years must not have been a shell company (with only assets being cash or its listing), the subject of any cease trade order, court penalties or sanctions relating to securities laws or bankruptcy or insolvency proceedings.

Mining companies relying on the WKSI exemptions must have gross revenue derived from mining operations of at least C$55 million for the most recently completed fiscal year and gross revenues of at least C$165 million in the aggregate for the three most recently completed fiscal years. Investment funds or issuers with outstanding asset backed securities cannot utilize the WKSI exemptions.

The major benefits of the WKSI exemption, among others, is quicker access to the capital markets for eligible issuers as they do not have to file and clear a preliminary base shelf prospectus, or disclose the aggregate dollar amount and number of securities being qualified under the base shelf prospectus.

The blanket orders issued in British Columbia, Quebec, New Brunswick, Nova Scotia, Saskatchewan, Prince Edward Island, Yukon, Northwest Territories and Nunavut will remain in effect until the effective date of an amendment to NI 44-102 that provides similar exemptions.

The OSC created OSC Rule 44-502 Extension to Ontario Instrument 44-501 Certain Prospectus Requirements for Well-known Seasoned Issuers (OSC Rule) on March 28, 2023 to extend the relief provided by Ontario Instrument 44-501 Certain Prospectus Requirements for Well-known Seasoned Issuers (Interim Class Order), the blanket relief issued on December 6, 2021 (OSC Blanket Order). The extension will allow WKSIs to utilize the OSC Blanket Order for an additional 18 months. The OSC Rule received approval from the Minister of Finance on June 20, 2023.

On May 31, 2023, the ASC issued a variation to ASC Blanket Order 44-501 Exemption from Certain Prospectus Requirements for Well-Known Seasoned Issuers (ASC Blanket Order), which was set to expire on July 4, 2023, to extend the relief provided by ASC Blanket Order until the date that amendments to NI 44-102 that provide similar exemptions for WKSIs become effective.

Unless extended, the following blanket orders will cease to be effective on July 4, 2023:

  • Manitoba Blanket Order 44-501 Exemption from Certain Prospectus Requirements for Well-known Seasoned Issuers
  • Newfoundland and Labrador Blanket Order # 121 Exemption from Certain Prospectus Requirements for Well-known Seasoned Issuers

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.