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Filing a prospectus in Canada


Companies that go public on a stockmarket in Canada become a reporting issuer  with one or more of the Provincial Securities Commissions (CSA). The ten provinces and three territories have teamed up to form Canadian Securities Administration and they are responsible  for securities regulation and developing harmonized approach to securities regulation across the country .

Reporting issuer is a person or a company who has outstanding securities, has issued securities or proposes to issue security and has filed a prospectus for which receipt has been issued under Securities Act. He is also a subject to the continuous disclosure reporting requirements of Applicable Securities laws in Canada. Companies can become reporting issuers by filing and clearing prospectus. A typical Canadian prospectus  offering is a formal process with extensive documentation. prospectus must contain full, true and plain disclosure to investors and the public about the company. Only the issuer can qualify the issuance of securities by prospectus. The prospectus process requires an issuer to file preliminary prospectus covering the securities to be sold and receive a receipt from applicable CSA before any offerings are made. There are two types of prospectus: offering prospectus (prospectus with distribution) which is issued when a company offers to sell its shares to the public in an IPO and non-offering prospectus (prospectus without distribution) when there is no intention to sell shares to the public. The primary purpose of filing non-reporting prospectus is to become a reporting issuer.

There are three periods during the prospectus process. Pre-filing period usually begins with an issuer reaching an agreement with firm that will perform the duty of underwriter.The period ends with issuer filing preliminary prospectus with applicable CSA on SEDAR. During this period no offers can be made and prospective purchases can't be contacted. Waiting period begins when issuer files a preliminary prospectus with CSA and ends when the receipt for the final prospectus is obtained. During this period sales are not permitted but indication of interest is when made orally or by using preliminary prospectus. Post final receipt period begins when receipt for prospectus is received and ends when dealers are no longer in distribution with securities qualified by the prospectus. During this period sale is permitted.
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