On April 12, the Canadian Securities Administrators (CSA) published final changes to harmonize the interpretation of the financial statement requirements for a long form prospectus, such as in an issuer’s initial public offering. The changes come in the form of amendments to Companion Policy 41-101CP to National Instrument 41-101 General Prospectus Requirements (41-101CP) along with consequential amendments to Companion Policy 51-102CP to National Instrument 51-102 Continuous Disclosure Obligations (51-102CP) (the Changes).

Form 41-101F1 Information Required in a Prospectus (Form 41-101F1) requires an issuer that is not an investment fund to include certain financial statements in its long form prospectus. The required financial statements include the financial statements of the issuer and any business or businesses acquired, or proposed to be acquired, if a reasonable investor reading the prospectus would regard the primary business of the issuer to be the business or business acquired or proposed to be acquired (the Primary Business Requirements). The purpose of the Primary Business Requirements is to provide investors with financial history of the business of the issuer even if the financial history spanned several legal entities over the relevant time period.

The Changes attempt to reduce the regulatory burden on issuers by removing the uncertainty about the interpretation of the Primary Business Requirements.

The CSA previously consulted the industry on this topic and in April 2017 published CSA Consultation Paper 51-404 Consideration for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers. Comment letters received on that consultation were summarized in CSA Staff Notice 51-353. Then on August 12, 2021, the CSA published a Notice and Request for Comment proposing changes to 41-101CP, as we previously wrote about in our August 2021 bulletin. The CSA has not made any material amendments to the changes proposed in 2021.

If you have any questions regarding the Changes or the amendments to 41-101CP or 51-102CP please contact a member of our team.

April 29, 2022