Looking To Raise Capital? Doing A Rights Offering In Canada May Get Easier

On November 27, 2014, the Canadian Securities Administrators (CSA) published for comment proposed amendments to the regulation of rights offerings in Canada, including amendments to the existing prospectus exemption for the distribution of rights to existing security holders (Proposed Exemption). If adopted, the Proposed Exemption would allow reporting issuers—other than investment funds subject to National Instrument 81-102 – Investment Funds—to raise up to 100 per cent of the number of outstanding securities without the use of a prospectus and without prior regulatory review of the rights offering document by the CSA.

The CSA has acknowledged that rights offerings can be "one of the fairer ways for issuers to raise capital" but, to date, these types of offerings have not been viewed as a preferred method of financing in Canada. The Proposed Exemption is designed to expand and streamline the use of rights offerings as a means for reporting issuers to raise capital