Overview and Key Takeaways
The Canadian Securities Administrators (CSA) have finalized the amendments to National Instrument 44-102 Shelf Distributions (NI 44-102)[1] to establish a permanent expedited shelf prospectus regime for eligible well-known seasoned issuers (WKSIs).[2] Subject to ministerial approvals in certain jurisdictions, the new WKSI regime will enter effect across all CSA jurisdictions on November 28, 2025 (the WKSI Regime).
A temporary WKSI regime has been in effect since January 2022 (the Temporary Regime).[3] In September 2023, the CSA issued proposed amendments to NI 44-102 to create a permanent WKSI regime based on its consultations with industry stakeholders (the Proposed Amendments).[4] The finalized WKSI Regime differs from both the Temporary Regime and the Proposed Amendments in certain respects and should therefore be closely reviewed by issuers looking to rely on the WKSI Regime. We briefly compare and contrast the three.
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Expedited Filing
As under the Temporary Regime, the WKSI Regime expedites a shelf prospectus filing for issuers who can satisfy the applicable qualification criteria and other conditions by allowing issuers to file a base shelf prospectus without first filing a preliminary base shelf prospectus or undergoing any regulatory review.
Omission of Information
Also consistent with the Temporary Regime, the WKSI Regime permits issuers to omit certain information from their base shelf prospectus, including (1) the aggregate number and dollar amount of securities qualified for distribution, (2) the plan of distribution, (3) a description of the securities qualified for distribution (other than the type of securities), and (4) selling securityholder information.
Applicable Seasoning Period
The Proposed Amendments initially increased the length of time an issuer must be a reporting issuer in a Canadian jurisdiction before filing a base shelf prospectus as a WKSI from the 12 months required under the Temporary Regime to 3 years. The WKSI Regime follows the Temporary Regime in fixing the seasoning period at 12 months.[5]
Deemed Issuance of Receipt
The WKSI Regime provides that a receipt is deemed to be issued upon filing the base shelf prospectus. Under the Temporary Regime, the issuer’s principal regulator is required to issue a receipt before a base shelf prospectus can be used. The approach of the WKSI Regime places full responsibility on the issuer to ensure it satisfies the regime’s eligibility requirements, provided that the issuer can request a notification of clearance from its principal regulator.
Extended Base Shelf Prospectus Term
A base shelf prospectus filed under the Temporary Regime is effective for 25 months, consistent with a standard base shelf prospectus. The WKSI Regime extends the effectiveness period of the base shelf prospectus from 25 months to 37 months.[6]
Issuer Eligibility Amendments
The WKSI Regime differs from the Proposed Amendments in that the regime has been expanded to permit successor issuers, credit support issuers, and issuers with outstanding asset-backed securities to file a base shelf prospectus, subject to certain conditions.
New eligibility criteria under the WKSI Regime not imposed by the Proposed Amendments include that an issuer will be ineligible if a Canadian securities regulator has refused to issue a receipt for any of its prospectus filings within the past three years.
The WKSI Regime narrows the penalties and sanctions eligibility requirements under the Proposed Amendments by raising the threshold to convictions in Canada or a foreign jurisdiction for certain offences.[7] That said, the offences listed in the WKSI Regime are broader in certain respects than those listed under the Temporary Regime.[8]
Issuers that are disqualified under the WKSI Regime’s eligibility criteria should consult the CSA’s guidance on applications for exemptive relief.[9]
Calculation of Public Equity Threshold
The WKSI Regime follows the Temporary Regime in making eligibility conditional on the issuer having either (1) listed equity securities with a public float of at least $500 million, excluding the holdings of affiliates and reporting insiders, or (2) public debt of at least $1 billion.[10]
Under the Temporary Regime, the aggregate market value of the listed equity securities held by non-affiliates is calculated using “the price at which the securities were last sold in the [issuer’s] principal market as of a date within 60 days preceding the filing of a base shelf prospectus.”
However, the WKSI Regime contemplates calculating these thresholds differently. The threshold for listed equity securities (now defined as “qualifying public equity”) is calculated instead as the aggregate market value of the issuer’s listed equity securities[11] calculated using the simple average of the daily closing price of the securities on a short form eligible exchange for each of the preceding 20 trading days on which there was a daily closing price. The WKSI Regime also clarifies that, when calculating “qualifying public equity”, an issuer may rely on information reported on SEDI, or a report or news release filed in accordance with applicable regulatory requirements. In addition, the WKSI Regime instructs issuers reporting in a foreign currency to use the exchange rate on the day they are performing the relevant calculation.
Personal Information Forms (PIFs)
Unlike under the Temporary Regime (as well as for a typical base shelf prospectus), personal information forms (PIFs) are not required to be filed in connection with a base shelf prospectus under the WKSI Regime. However, PIFs will be required to be delivered to the applicable regulator(s) as soon as practicable upon their request.
Annual Confirmation Required
An issuer that files a base shelf prospectus under the WKSI Regime will be required to confirm on an annual basis that it remains eligible under the regime. This confirmation must be included in the issuer’s AIF or in an amendment to the base shelf prospectus.[12]
Concluding Comments
The WKSI Regime aims to reduce regulatory burden and facilitate capital formation for large, established issuers. The CSA’s goals include: (1) providing greater flexibility in structuring a base shelf prospectus; (2) improving certainty regarding transaction timing; (3) removing requirements that do not provide meaningful disclosure to investors; (4) reducing regulatory costs, and (5) more closely aligning the timing of Canadian prospectus filings with those applicable in the U.S., including to facilitate cross-border financings. The finalization of the WKSI Regime is a welcome development for Canada’s capital markets.
