Prospectus marketing rules
Companies wishing to sell securities under a prospectus in Ontario must comply with the prospectus marketing rules. There are different rules for each phase of a prospectus offering and the rules vary depending on the type of prospectus. In general, there are different marketing rules for these phases of a prospectus offering:
- Before the filing of, and issuance of a receipt for, a preliminary prospectus:
- “Testing of the waters” exemption for IPO issuers is a limited exemption that permits non-reporting issuers, though an investment dealer, to determine interest in a potential IPO through limited confidential communication with accredited investors (see “Long form prospectuses and general rules” below).
- Marketing after a bought deal agreement is signed and announced by news release in accordance with the “bought deal” exemption in Part 7 of National Instrument 44-101 Short Form Prospectus Distributions, but before the issuer files, and obtains a receipt for, a preliminary short form prospectus (see “Short form prospectuses” below).
- During the “waiting period” between (i) the filing of, and issuance of a receipt for, a preliminary prospectus and (ii) the filing of, and issuance of a receipt for, a final prospectus:
- Information disclosed in marketing materials must also be disclosed in the preliminary prospectus (see “Long form prospectuses and general rules” below).
- After the filing of, and issuance of a receipt for, a final prospectus:
- Information disclosed in marketing materials must be based on the final prospectus and are also deemed to be incorporated by reference into the final prospectus (see “Long form prospectuses and general rules” below).
- Marketing materials can be used after a receipt for a final base shelf prospectus and before a shelf prospectus supplement is filed, provided that all information in the materials are in the final base shelf prospectus or subsequent supplement. There are similar provisions for a supplemented PREP prospectus (see “Shelf distributions” and “Post-receipt pricing (PREP) prospectuses” below).
Related legislation and documents
The key rules and companion policies for issuers in Ontario are listed below. Investment funds are subject to different regulation.
Part 13 of National Instrument 41-101 General Prospectus Requirements has requirements for:
- testing of the waters exemption for IPO issuers
- marketing during the waiting period
- marketing after the receipt for a final prospectus
Part 6 of Companion Policy 41-101CP General Prospectus Requirements has guidance on numerous matters relating to the prospectus marketing rules (not just long form prospectuses).
Short form prospectuses
Guidance on marketing matters for a short form prospectus is also set out in sections 1.8 and 1.9 of Companion Policy 44-101CP Short Form Prospectus Distributions.
Part 7 of National Instrument 44-101 Short Form Prospectus Distributions provides rules for marketing after the signing and announcement of a bought deal agreement in accordance with the “bought deal” exemption in Part 7, but before the receipt for a preliminary short form prospectus. Part 6 of Companion Policy 41-101CP General Prospectus Requirements provides guidance on various matters relating to the bought deal exemption.
Marketing activities after the receipt for a final base shelf prospectus are covered in Part 9A of National Instrument 44-102 Shelf Distributions and in section 1.3 of Companion Policy 44-102CP Shelf Distributions.
Marketing after the receipt for a final base PREP prospectus is covered in Part 4A of National Instrument 44-103 Post-Receipt Pricing. Additional information can be found in section 3.5 of Companion Policy 44-103CP Post-Receipt Pricing.