The Canadian Securities Administrators ("CSA") expect to implement the "Passport System" for prospectus review by March 2008. The good news is that the Passport System will likely feel to users much like the current Mutual Reliance Review System ("MRRS"), albeit slightly improved. The bad news is that for prospectus filings, fees will still have to be paid in all the jurisdictions where securities will be offered.
ocuments and fees will be filed in all the offering jurisdictions and with the principal regulator as before. With respect to review:
- If the Ontario Securities Commission ("OSC") is the principal regulator, only the OSC will review and comment on the prospectus in the time frame we are accustomed to already, that is 10 working days for a long form prospectus and three working days for a short form prospectus (subject to any extensions for novel or complex issues) and will issue the final receipt.
- If an offering includes Ontario but the OSC is not the principal regulator, then two regulators will be involved ("dual review"), namely the principal regulator and the OSC. The time frame for the first comment letter will still be 10 working days and 3 working days, for a long form prospectus and short form prospectus, respectively. Except where the OSC opts out of dual review, only the principal regulator will issue a final receipt.
- If the offering does not include Ontario and Ontario is not the principal regulator, then only the principal regulator will review and comment on the prospectus in the given time frame and issue the final receipt.
The principal regulator will issue one final receipt for all jurisdictions included in the offering. The sole exception, as noted above, will be where the OSC, as a non-principal regulator, has opted out of a dual review, in which case a separate receipt from the OSC will be required.
The Passport System should eliminate or reduce the delays that occasionally occur under our present MRRS due to the involvement of securities regulators in all the jurisdictions included in the offering. Currently all jurisdictions must sign off. Under the Passport System, at most two regulators will be involved in reviewing routine prospectus filings and at most two final receipts will be issued. (However, if there is a novel issue, the principal regulator may decide to consult with other jurisdictions. As mentioned above, the usual review timeframes may be extended for complex or novel issues.) Whether or not costs will decrease will likely depend on whether the various jurisdictions decrease prospectus filing fees. Also, while we have a nationally harmonized instrument for the preparation of short form and shelf prospectuses, the national instrument for long form prospectuses (NI 41-101 General Prospectus Requirements) has not yet been adopted. The Passport System will not be implemented until NI 41-101 is adopted.
The CSA also expects to implement the Passport System for exemptive relief applications in March 2008. For these applications, filings will be made only with the principal regulator or, for a dual application, with the principal regulator and the OSC, as described above for a dual review prospectus. Fees will be payable only to the principal regulator and, if applicable, the OSC, so for exemptive relief applications, in contrast to prospectus filings, there should be an immediate reduction in costs for applicant companies.
The Passport System is not yet in place but check back soon and we will provide you with an update