Short-Form Prospectus Distribution System (SFPDS)

What Is the Short-Form Prospectus Distribution System (SFPDS)?

The Short-Form Prospectus Distribution System (SFPDS) is a standardized system that Canadian regulators use to distribute changes to the prospectus for each issue of security. The short-form prospectus must contain any material changes not previously reported.

Understanding the Short-Form Prospectus Distribution System (SFPDS)

A short-form prospectus must contain any changes in the material that were not reported previously. Some issuers continuously disclose information. These issuers have an opportunity to use the short-form prospectus distribution system so as to account for the changes. This system is quicker and more cost-effective compared with the conventional means of prospectus distribution.

This is a standard system used by Canadian regulators for distributing the changes to the prospectus for every issue of security. Firms can use the short-form prospectus distribution system if they continuously distribute the information to their investors and therefore do not want to go through the trouble of issuing a new prospectus for every new issue and change to an old issue. The short-form prospectus distribution system needs less information than a full prospectus.

What Is a Prospectus?

A prospectus is a formal legal document that provides details about an investment offering for sale to the public. The preliminary prospectus is the first offering document provided by a security issuer and includes most of the details of the business and transaction in question; the final prospectus, containing finalized background information including such details as the exact number of shares/certificates issued and the precise offering price, is printed after the deal has been made effective.

In the case of mutual funds, a fund prospectus contains details on its objectives, investment strategies, risks, performance, distribution policy, fees and expenses, and fund management. A prospectus includes the name of the company issuing the stock or the mutual fund manager, the amount and type of securities being sold, and, for stock offerings, the number of available shares.

The prospectus also details whether an offering is public or private, how much the underwriters are earning per sale, and the names of the company’s principals. A summary of the company’s financial information, whether the prospectus was approved and other pertinent information is included as well.

Canadian Securities Administrators

Unlike any other major federation, Canada does not have a securities regulatory authority at the federal government level. Canadian securities regulation is managed through laws and agencies established by Canada's 13 provincial and territorial governments. Each province and territory has a securities commission or equivalent authority and its piece of provincial or territorial legislation.

The Canadian Securities Administrators (CSA) is an umbrella organization of Canada’s provincial and territorial securities regulators with the aim to improve, coordinate and harmonize regulation of the Canadian capital markets.