Under the current legislation, an issuer planning to conduct a prospectus-exempt rights offering in Canada may use the rights offering prospectus exemption in section 2.1 of NI 45-106, which in turn requires compliance with National Instrument 45-101 Rights Offerings. The CSA have finalized significant changes to the rights offering regime in an effort to address the fact that issuers rarely use prospectus-exempt rights offerings to raise capital due to the associated time and cost. The CSA announced that the amendments and policy changes will come into force on December 8, 2015.
The amendments create a streamlined prospectus exemption available only to reporting issuers (excluding investment funds subject to National Instrument 81-102 Mutual Funds). The main features of this new rights offering exemption include the following:
- NI 45-101 rights offerings will be repealed
- Securities regulatory authorities will no longer review rights offering circulars
- A new form of notice (Form 45-106F14) will have to be filed and sent to security holders, containing information about accessing the rights offering circular electronically
- A new form of simplified rights offering circular (Form 45-106F15) will be introduced and presented in a question and answer format
- Reporting issuers will no longer be restricted to issuing more than 25% of their securities under the exemption in any 12-month period; the new dilution limit will be 100%