Information on prospectus pre-file process and timelines

As part of our ongoing commitment to transparency, we are providing additional information about the prospectus pre-file process available to investment fund issuers.

The prospectus pre-file process provides issuers with greater flexibility and more certainty in planning their prospectus offerings. It also supports innovation in the capital markets by providing a mechanism for issuers to develop new products and seek staff’s feedback without publicly disclosing details of those new products before the products are ready for launch.

Process

The regulatory review process for investment fund prospectuses typically begins when an issuer publicly files its preliminary prospectus. However, investment fund managers in Ontario are permitted to use the pre-file process to submit prospectuses and exemptive relief applications on a confidential basis prior to publicly filing the preliminary prospectus or application. While the pre-file process may be used in connection with the filing of any prospectus or application, it is primarily used for prospectuses relating to complex or novel products, and applications involving complex or novel products and scenarios. The Ontario Securities Commission reviews pre-filings in coordination with other CSA jurisdictions.

Fees charged in connection with a prospectus pre-filing are applied to those due upon the filing of the preliminary prospectus.

Timelines

We understand that investment fund issuers are motivated to be the first to launch a novel type of product in the market and, as such, are interested in understanding pre-file process timelines.

Review timelines for pre-filings vary, depending on several factors. These include: the initial filing date, the completeness and quality of the materials submitted, the complexity or novelty of the issues raised in the filing, the responsiveness of the issuer to staff’s comments, and discussions with staff from other CSA jurisdictions. All else being equal, filings are reviewed on a first-in, first-out basis, and staff work to ensure that all concurrent filings are dealt with fairly based on these factors, whether filed by way of a pre-filing or preliminary prospectus. During the pre-file review process, staff provide regular touchpoints to advise the issuer of their progress.

Once all issues identified during staff’s review of an issuer’s pre-filing have been resolved and the preliminary prospectus has been publicly filed, staff may be in a position to issue a ‘no comment’ comment letter and clear the issuer to file its final prospectus after a review of the preliminary prospectus to ensure that there have been no substantive changes made to the prospectus between the conclusion of the pre-file review and the filing of the preliminary prospectus. The review of the preliminary prospectus in such a scenario will be streamlined if clear blacklines are provided to reflect that no substantive changes have been made, as there is no minimum time required between the issuance of the receipt for a preliminary prospectus and the issuance of the receipt for a final prospectus. We note that issuers have the option of filing the preliminary prospectus before the pre-file review is completed.

Recently, staff dealt with several concurrent prospectus pre-filings and filings in connection with the launch of exchange-traded mutual funds that hold substantially all of their assets in bitcoin. To provide additional transparency to that process, the following are the timelines associated with three of those filings:


Name of Fund

Name of Investment Fund Manager

Date of Pre-Filing

Date of Preliminary Prospectus Filing

Date of Issuance of Receipt for Final Prospectus

Purpose Bitcoin ETF

Purpose Investments Inc.

September 22, 2020

February 10, 2021

February 11, 2021

Bitcoin ETF

Evolve Funds Group Inc.

November 30, 2020

January 29, 2021

February 16, 2021

CI Galaxy Bitcoin ETF

CI Investments Inc.

N/A

February 18, 2021

March 5, 2021


In the future, staff may share the timelines of complex and novel prospectus pre-filings and filings after they have been completed in order to provide added transparency to market participants.

If there are any questions about this issue, please contact Nick Hawkins, Legal Counsel, Investment Funds and Structured Products Branch at [email protected].