Upon the Nio-Star prospectus being accepted by the OCS it will make them a reporting issuer in Ontario.
In Canada, unless otherwise exempt, a distribution of securities cannot be completed without the filing of a prospectus. This requirement is intended to protect investors.
1. Prospectus
A prospectus is a comprehensive disclosure document providing detailed information on the issuer’s business and the securities being offered. Furthermore, if the distribution of securities is made by an entity that is engaged in the business (or holding itself out as engaging in the business) of trading in securities, the entity must be registered as a dealer. This helps to ensure that securities are sold by qualified people who have a duty to know their clients and assess the suitability of their clients’ investments.
2. Listing in Canada
The Toronto Stock Exchange (TSX) and the TSX Venture Exchange (TSX-V) are the two major Canadian public stock exchanges. There are a number of junior issuers listing on the Canadian Securities Exchange (CSE) which is where Nio Star is hoping to List.
In Canada, opportunities exist for corporations to go public and access the capital markets at a much earlier stage than in other markets, such as the U.S. In some circumstances, the CSE and the TSX-V (through a two-tiered system with different levels of listing requirements) facilitate listing at a pre-revenue stage. Many non-Canadian corporations list in Canada as a first step toward listing in the U.S.
3. Initial public offerings
The process for completing an initial public offering (IPO) in Canada generally TAKES THREE TO FOUR MONTHS (from the application date).
An issuer must first file a preliminary prospectus with securities regulators for their review and comment, followed by a final prospectus. A prospectus must contain “full, true and plain disclosure of all material facts” related to the issuer’s business and the securities being offered. It must also include three years of audited financial statements prepared in accordance with International Financial Reporting Standards (IFRS) or U.S. Generally Accepted Accounting Principles (GAAP) with a reconciliation to IFRS. Securities regulators are required to provide their comments within 10 business days of the date the preliminary prospectus is filed. An issuer is not permitted to file a final prospectus until all comments from regulators are settled. Recent amendments to the prospectus rules provide significantly greater clarification on the rules governing the pre-marketing and marketing of the public distribution of securities, including with respect to marketing materials and road shows.
An issuer planning a public offering in multiple Canadian jurisdictions will generally rely on the “passport” system. Under the passport system, a preliminary prospectus filed and cleared with the issuer’s principal regulator is automatically accepted by the other provincial regulatory systems.
An issuer that becomes listed in Canada upon completion of an IPO will be required to comply with Canadian requirements on timely and periodic disclosure, financial reporting, and corporate governance, as well as the policies of the exchange on which its securities are listed.
