When is the Best Time for a Company to File a Shelf Prospectus?
- By Pilot Law LLP
“A company planning to file a shelf prospectus should consider doing so shortly after filing it’s Annual Information Form and accompanying audited financial statements and related MD&A.”
After reading our February 28th post about the advantages of shelf prospectuses, a number of our clients have asked if there is a best time to put one in place. See our February 28th post here.
There are a number of considerations, and timing will vary from company to company. The following are a few of the factors that should be considered:
- When will the company need or want to raise capital? One of the significant advantages of a shelf prospectus is quick access to markets. In order to go to market quickly, a company needs a base prospectus in place before it intends to go to market. The base shelf prospectus is reviewed and commented on by Canadian securities regulators, and that process can take some time. Therefore, companies generally file the base several weeks in advance of their target dates for going to market. Remember that a shelf prospectus will be valid for 25 months after clearance.
- Would the company’s technical reports be considered current? A company filing a prospectus must have current technical reports on their material mining and oil & gas properties at the time of filing. If a company’s technical reports are not current or otherwise do not comply with applicable requirements for technical reports, this will likely increase the amount of time necessary to clear the base shelf through the review and comment process.
- Is the company otherwise current in its continuous disclosure obligations? A company filing a shelf prospectus must have filed in all Canadian jurisdictions in which it is a reporting issuer all periodic and timely disclosure documents that it is required to have filed in those jurisdictions.
Subject to company-specific facts that may influence its analysis of when it may be advantageous to file a shelf prospectus, for a company that plans to file a shelf prospectus in the near term, it can be convenient to do so shortly after filing its AIF, audited financial statements and related MD&A.