Canada's New Streamlined Rights Offering Regime

The Canadian Securities Administrators (CSA) announced the implementation of the new more flexible, streamlined process for a reporting issuer to conduct a rights offering. The amendments are largely consistent with the proposals previously published for comment on Nov. 27, 2014. See our article from December 2014 for a summary of the proposals.

Overview

In a rights offering, an issuer raises capital by offering rights to purchase securities to its existing securityholders. Rights offerings are recognized as the most equitable method to existing securityholders for a company to raise funds as it allows existing shareholders the opportunity to avoid being diluted. Despite its merits, we have seen very few rights offerings in Canada in recent years. The new regime addresses concerns that conducting a rights offering has been too time-consuming and expensive in Canada. It will make prospectus-exempt rights offerings more attractive to reporting issuers while