CSA outline concerns regarding issuers' financial condition during prospectus offering

March 2, 2012

The CSA today published a staff notice outlining its approach to situations where it has concerns with the financial condition of an issuer and/or the sufficiency of proceeds from the offering during a prospectus review. According to the CSA, there are limited circumstances where such concerns may lead to a refusal to issue a prospectus receipt.

The notice specifically identifies five areas of concern, namely with respect to: (i) missing information regarding offering amount and pricing; (ii) offering structure; (iii) use of proceeds disclosure; (iv) risk factor disclosure; and (v) representations to support ability to continue operations. Of particular interest, guidance is also provided to assist issuers in addressing each concern.

According to the notice, the list is not exhaustive and the CSA state that they will continue to assess and review each prospectus on its own merits. For more information, see Staff Notice 41-307.

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