CSA Introduces Well-Known Seasoned Issuer Program

The Canadian Securities Administrators (CSA) announced changes to allow large, well-known Canadian reporting issuers, referred to as well-known seasoned issuers (WKSIs), to file a base shelf prospectus on an accelerated basis (the “WKSI Program”). The WKSI Program, reflected in blanket orders issued pursuant to CSA Staff Notice 44-306 – Blanket Orders Exempting Well-known Seasoned Issuers from Certain Prospectus Requirements, is modelled on the Well-Known Seasoned Issuer category of issuer adopted by the United States Securities and Exchange Commission in 2005.

The introduction of the WKSI Program is part of the CSA initiative to reduce the regulatory burden on Canadian reporting issuers and will make it more efficient for qualifying issuers to raise capital in Canada. The WKSI Program comes into effect on January 4, 2022, and expires on July 4, 2023, subject to extension or permanent adoption.

The WKSI Program

 A WKSI is an issuer that has either:

• outstanding listed equity securities with a public float of C$500,000,000 or more; or
• distributed at least C$1,000,000,000 of non-convertible non-equity securities under prospectus offerings for cash in the last three years.

To utilize the expedited filing process, a WKSI must, among other requirements:

• be current with its continuous disclosure filings and not in default of any requirement of Canadian securities laws;
• satisfy the definition of a WKSI as of a date within 60 days before the filing date;
• have been a reporting issuer in at least one Canadian jurisdiction for 12 months before the filing date;
• not, within the three years before the filing, have been subject to bankruptcy proceedings or certain regulatory sanctions;
• not, at the time of the filing or within the three years before the filing, be either

a.    an issuer whose operations have ceased; or
b.    an issuer whose principal asset is cash, cash equivalents, or its exchange listing, including, without limitation, a capital pool company, a special purpose acquisition company or a growth acquisition corporation or any similar entity, as defined in the applicable stock exchange rules or policies; and

• have no outstanding asset-backed securities and not be qualifying any asset-backed security under the base shelf prospectus.

In addition, issuers with mining operations wishing to utilize the WKSI Program must have gross revenue derived from mining operations of at least C$55,000,000 for the issuer’s most recently completed financial year, and gross revenue derived from mining operations of at least C$165,000,000 in the aggregate for the issuer’s three most recently completed financial years.

Issuers utilizing the WKSI Program will not have to file a preliminary base shelf prospectus or undergo a regulatory review for a base shelf prospectus filing and are exempt from certain of the disclosure requirements of a base shelf prospectus, including the requirement to disclose:

• the aggregate dollar amount, and number of, securities qualified under the base shelf prospectus;
• a plan of distribution;
• details of the terms of the securities being distributed; and
• any selling securityholders.

Under the WKSI Program, issuers will be permitted to issue an unlimited dollar amount of securities under the base shelf prospectus.

The WKSI Program is a pilot project  intended to assist the CSA in evaluating the appropriateness of the eligibility criteria and conditions and identifying potential public interest concerns that should be addressed in any future rule amendments to implement a Canadian WKSI Program.

The WKSI Program is a welcome addition to the Canadian capital markets and will enhance efficiencies for large reporting issuers raising capital in Canada.  

For further information on the WKSI Program, please contact any member of our Capital Markets Group.

The authors would like to thank Zhiyao Chen, Student-At-Law, for his assistance in writing this Update.