CSA proposes new “access equals delivery” model for financial statements and accompanying MD&A

Recognizing securityholders’ increased use of electronic means to access financial information of reporting issuers, the CSA is proposing the expansion of its “access equals delivery” model to allow reporting issuers to deliver such information by giving notice to securityholders that such information may be accessed electronically. On November 19, the CSA published for public comment a notice proposing amendments to its access equals delivery model (the Proposed AED Model), which if enacted will extend its application to the delivery of annual and interim financial statements and accompanying MD&A.

Background

An AED model for delivering continuous disclosure and other documents was first published by the CSA in April 2022 (the Initial AED Proposal) following the publication of a general consultation paper. A copy of our update describing the Initial AED Proposal is available here. 

Comments received by the CSA were generally in favour of allowing the use of the access equals delivery model to satisfy the delivery requirements for prospectuses, subject to certain exceptions. As a result, CSA members amended their rules in 2024 to allow delivering certain types of prospectuses using the access equals delivery model. At that time the CSA declined to extend the access and delivery model to annual and interim financial statements and accompanying MD&A. Concern was expressed as to whether the Initial AED Proposal, which provided only for a news release indicating a document had been filed on SEDAR, gave effective notice to securityholders, especially retail investors, that such documents were electronically accessible. The CSA indicated this issue required further consideration. 

Since the Initial AED Proposal was published, the System for Electronic Document Analysis and Retrieval (SEDAR+), a new depository for Canadian securities documents, was introduced. One feature of the new system was the SEDAR+ notification functionality that allows investors to subscribe for notification that advises them if a continuous disclosure document of a particular issuer has been filed. This important new notification function addresses whether effective notice has been given and is an important underpinning of the Proposed AED Model.  

The Proposed AED Model for delivery of annual and interim statements and accompanying MD&A

Currently issuers are required to mail or deliver such documents by other electronic means based upon the response of securityholders to an annual request. The Proposed AED Model will allow certain reporting issuers to satisfy delivery requirements of financial statements and accompanying MD&A by:

• filing the financial statements and accompanying MD&A on SEDAR+
• on the same day as the SEDAR+ filing, issuing and filing a news release on SEDAR+ announcing that: 
  • the document is accessible electronically on SEDAR+;
  • the SEDAR+ notification functionality is available;
  • an electronic or paper copy of the document can be obtained upon request; and
  • any standing instructions to receive the document in electronic or paper form will continue to be followed; and
• if the issuer has a website, the issuer has posted the document on its website on the day of filing on SEDAR+. 

The Proposed AED Model is not mandatory. It can be used as an optional method of delivery by both venture and non-venture issuers but is not available to investment funds. The Proposed AED Model is not available for SEC issuers and designated foreign issuers who have relief from Canadian requirements by virtue of compliance with the requirements of their home jurisdictions.

Enhancement of the Proposed AED Model from the Initial AED Model

To further address the concern that securityholders are aware that a reporting issuer is using the Proposed AED Model to deliver its financial statements and accompanying MD&A, certain changes were made to the Initial AED Proposal. These include:

Prior Notification: If, during the previous financial period, the issuer complied with current delivery requirements, the issuer must issue and file a news release on SEDAR+, at least 25 days before using the Proposed AED Model, which includes the following information:

• how to access CD documents electronically;
• that SEDAR+ notification functionality is available;
• how to obtain an electronic or paper copy of that document; and
• that standing instructions will not be overridden by the Proposed AED Model.

Separate Document: If the Proposed AED Model is being used to deliver financial statements and accompanying MD&A, the above disclosure must be made in a separate document sent to investors each year with the proxy-related materials. If the issuer is using notice-and-access for a shareholders’ meeting, the disclosure must be made in a separate document sent with the securityholder notice. 

Website Filing: The same disclosure must be made on its website in the same location where the issuer posts its continuous disclosure documents. 

Next steps

It remains to be seen if the Proposed AED Model may be expanded to other documents. Access equals delivery is not available for delivering documents that may require a response from shareholders within a specified time period such as proxy voting and other securityholder meeting-related materials and takeover and issuer bid circulars. Such documentation will require delivery by other means. The CSA indicated in its response to comments received on the Initial AED Proposal that it is still not appropriate to extend the Proposed AED Model to such documents.

A copy of the CSA notice introducing the Proposed AED Model is available here. Comments on the Proposed AED Model are due by February 17, 2025.