Capital Markets: Incremental Reforms

A Practical At-The-Market (ATM) Regime for Canada

On May 9, 2019 The Canadian Securities Administrators (CSA) proposed amendments to National Instrument 44-102 Shelf Distributions (NI 44-102) and to Companion Policy 44-102CP Shelf Distributions (44-102CP), in order to enable ATM offering in Canada. The purpose of the proposed changes is to codify the requisite exemptive relief into the securities law so that active requests will no longer be required.

What is ATM offering?

  • Alternative way to raise capital whereby a company issues shares directly into the market at prevailing market prices on an incremental basis
  • Company determines maximum number of shares to be issued the beginning of an offering
  • Share issuances are based on minimum price, volume and timing parameters set by company
  • Allows issuer to maximize market liquidity and minimize shareholder dilution during fundraising

ATM offerings represent an attractive capital-raising option for issuers seeking to protect themselves from the many inefficiencies found in more traditional underwritten issuance model. An ATM offering may have many advantages for an issuer, including increased timing and liquidity-related flexibility, reduced costs, and less management resources (e.g. marketing, road show). The current ATM financing regime is impractical in Canada, mostly due to the requirement to actively obtain exemptive relief from prospectus-related requirements. 

PDAC Recommendations

We responded during CSA's public consultation process, recommending that ATM issuances should not be limited by a 25% Daily Cap (based on average volume traded) proposed by CSA, as it would result in excessively protracted timelines to raise capital for mineral industry companies, particularly for small-to-mid sized issuers. In addition, PDAC suggested CSA to consider the possibility of creating an ATM prospectus exemption. Read our response