Securities

Canadian securities regulators adopt streamlined capital-raising option for Canadian-listed issuers

Sep 08, 2022

On September 8, 2022, the Canadian Securities Administrators (CSA) adopted a new prospectus exemption for issuers listed on a Canadian stock exchange, aimed at providing a more efficient way for them to raise capital.

The Listed Issuer Financing Exemption will reduce costs for issuers raising smaller amounts of capital through the public markets. It will also allow smaller issuers greater access to retail investors and provide retail investors with a broader choice of investments.

The prospectus exemption will be available to issuers that have been a reporting issuer in a Canadian jurisdiction for at least 12 months and have filed all continuous disclosure documents required under Canadian securities legislation. Eligible issuers will need to file a short offering document.

Issuers using this exemption may annually raise up to the greater of $5 million or 10 per cent of the issuer’s market capitalization, to a maximum of $10 million. Securities issued under the exemption will be freely tradeable.

Provided all necessary Ministerial approvals are obtained, the amendments will come into force on November 21, 2022.

Review the press release and prospectus exemption on the CSA's website.

AMF publishes capital adequacy requirements guidelines for insurers

Jul 21, 2022

On July 21, 2022, the Autorité des marchés financiers (AMF) published its capital adequacy requirements for insurers, which have been adapted in anticipation of the coming into effect of IFRS 17 Insurance Contracts (IFRS 17) on January 1, 2023.

The four guidelines, which, like IFRS 17, will come into effect on January 1, 2023, are as follows:

IFRS 17 represents a major accounting change for the insurance industry in Québec and elsewhere in Canada and the world. Its implementation will have an impact on insurers’ accounting, actuarial valuation and disclosure practices and on their systems supporting those practices. The guidelines published today reflect the improvements introduced by new standard IFRS 17 in terms of transparency and comparability of risks . The Québec insurance industry, in general, is well-capitalized under the current accounting rules and guidelines and will remain so upon the transition to IFRS 17.

The guidelines are the result of a process carried out with the Office of the Superintendent of Financial Institutions, as well as with insurers and other stakeholders whose input was obtained through numerous consultations, discussions and quantitative impact studies.

As IFRS 17 is a new standard, its impact will only be fully known once its implementation is completed in 2023. Given this, and the current context of higher interest rates and strong stock market volatility, the AMF expects insurers, in accordance with its risk management framework, to act prudently when making decisions that affect their level of capital.

Review the press release and guidelines on the AMF's website.

Canadian securities regulators extend comment period on mineral disclosure consultation

Jun 30, 2022

On June 30, 2022, the Canadian Securities Administrators (CSA) announced that it is extending the comment period for its consultation paper on national standards for disclosing scientific and technical information about mineral projects.

The comment period for CSA Consultation Paper 43-401 Consultation on National Instrument 43-101, Standards of Disclosure for Mineral Projects, originally scheduled to end July 13, 2022, will now continue to September 13, 2022.

Re­view the fol­low­ing ad­di­tional in­for­ma­tion:

Remarks by Superintendent Peter Routledge at the Responsible Investment Association Virtual Conference

Jun 23, 2022

On June 7, 2022, Superintendent Peter Routledge spoke at the 2022 Responsible Investment Association annual virtual conference. He discussed OSFI’s role in mitigating climate change risks as they relate to the financial industry, and the release of OSFI’s draft Guideline B-15 on Climate Risk Management.

In his speech, he encourages investors to provide input on the draft guidelines in an effort to ensure we get smart and effective regulations relating to climate risk management.

The Office of the Superintendent of Financial Institutions (OSFI) issued a draft version of Guideline B-15: Climate Risk Management. This guideline proposes a prudential framework that is more climate sensitive and recognizes the impact of climate change on managing risk. The draft Guideline sets the stage for OSFI’s expectations of federally regulated financial institutions.

Climate-related risks, including physical and transition risks, could have significant impacts on the safety and soundness of financial institutions, and the broader Canadian financial system. Building financial resilience against intensifying climate-related risks requires institutions to address vulnerabilities in their business model, their overall operations, and ultimately on their balance sheet.

OSFI is also introducing mandatory climate-related financial disclosures aligned with the international Task Force on Climate-related Financial Disclosures (TCFD) framework. These disclosures will incentivize improvements in the quality of the institutions’ governance and risk management practices related to climate. In doing so, this contributes to public confidence in the Canadian financial system by increasing transparency. This also aligns with a commitment made by the federal government to require financial institutions to publish climate disclosures starting in 2024.

Review the press release on the OSFI's website.

OSFI releases first Annual Risk Outlook

May 19, 2022

The Office of the Superintendent of Financial Institutions (OSFI) released its first Annual Risk Outlook. This new document provides details of the risks facing Canada’s financial system and our plans to address them in the coming year.

The 2022-2023 Annual Risk Outlook describes risks to the financial system ranging from cyber attacks and digital innovation to housing-related considerations, climate change and more. This is not an exhaustive list but rather the risks that OSFI considers most critical. Each risk is viewed through our prudential mandate and is accompanied by the supervisory and regulatory actions that we are taking. A table providing the timing and topics of consultations and guidance is included to help institutions and Canadians know how to best engage with us.

Review the press release on the OSFI's website.

Canadian securities regulators authorize discontinuation of the Canadian Dollar Offered Rate

May 16, 2022

On May 16, 2022, the Ontario Securities Commission (OSC) and the Autorité des marchés financiers (AMF) published notices authorizing the discontinuation of the Canadian Dollar Offered Rate (CDOR), a designated critical benchmark.

Refinitiv Benchmark Services (UK) Limited (RBSL) is the administrator of CDOR, a domestically important interest rate benchmark. The OSC and the AMF, as co-lead authorities for RBSL and CDOR, previously designated CDOR as a designated benchmark and RBSL as its designated benchmark administrator.

The authorization notices issued by the OSC and the AMF authorize the request by RBSL to cease publication of CDOR after June 28, 2024

On December 16, 2021, the Canadian Alternative Reference Rate Working Group (CARR) published a white paper recommending the discontinuation of CDOR over a two-stage transition period. The findings and recommendation reflect global efforts to reform major interest rate benchmarks, including plans to replace key interbank offered rates with risk-free reference rates.

Following CARR’s recommendation, RBSL issued a public consultation on January 31, 2022, seeking stakeholder feedback on the impact of the discontinuation of CDOR. RBSL published today an outcome statement on the results of its consultation and a notice announcing it will cease publication of CDOR after June 28, 2024.

Review the press release on the OSC's website.

Canadian securities regulators reduce regulatory burden related to the interpretation of the primary business requirements

Apr 14, 2022

On April 14, 2022, the Canadian Securities Administrators (CSA) published changes to harmonize the interpretation of the financial statement requirements for a long form prospectus, such as in an issuer’s initial public offering (IPO). Specifically, the changes apply in situations where an issuer has acquired a business, or proposes to acquire a business, that a reasonable investor would regard as being the primary business of the issuer. The changes were informed by stakeholder feedback that certain inconsistent interpretations of the primary business requirements add time, cost and uncertainty for issuers.

The changes provide additional guidance on the interpretation of primary business including in what situations, and for which time periods, financial statements would be required. They provide guidance on the circumstances when additional information may be necessary for the prospectus to meet the requirement to contain full, true and plain disclosure of all material facts relating to the securities being distributed. The changes also clarify when an issuer can use the optional tests to calculate the significance of an acquisition, and when an acquisition of a mining asset would not be considered an acquisition of a business for securities legislation purposes.

Review the press release on the CSA's website and the changes on the OSC's website.

Canadian securities regulators seek input on disclosure standards for mineral projects

Apr 14, 2022

On April 14, 2022, the Staff of the Canadian Securities Administrators (CSA) published CSA Consultation Paper 43-401 "Consultation on National Instrument 43-101 Standards of Disclosure for Mineral Projects" seeking comments on Canada’s standards for disclosing scientific and technical information about mineral projects, as they consider ways to update and enhance those requirements. Comments are requested by July 13, 2022.

The CSA continually monitors the mineral disclosure requirements in NI 43-101, and has gathered data showing deficiencies in technical report disclosure identified through continuous disclosure reviews, prospectus reviews, and targeted issue-oriented reviews. These deficiencies include:

  • improper self-assessment by report authors of their independence, competence, expertise or relevant experience;
  • poor quality of scientific and technical disclosure for early stage exploration properties related to new stock exchange listings;
  • inadequate mineral resource estimation disclosure, including disclosure related to reasonable prospects for eventual economic extraction;
  • misuse of preliminary economic assessments; and inadequate disclosure of all business risks.

The consultation paper is seeking general comments and asking specific questions touching on a wide range of issues, including:

  • the application of innovative technologies to the requirement that a technical report author conduct a current personal inspection of a mineral project,
  • verification of data from previous property owners,
  • the broad, undefined range of precision of a preliminary economic assessment,
  • the independence of and qualifications for technical report authors,
  • disclosure requirements related to environmental matters, and
  • disclosure of the risks and uncertainties that arise as a result of the rights of Indigenous Peoples.

Review the following additional information:

Assessing Materiality: Focusing on the Reasonable Investor When Evaluating Errors

Mar 09, 2022

Under US federal securities laws, public companies are required to disclose certain financial and other information to investors. The basic premise of this disclosure-based regulatory regime is that if investors have timely, accurate, and complete financial and other information, they can make informed, rational investment decisions.

Accordingly, providing investors with high quality financial information, including financial statements prepared in compliance with generally accepted accounting principles (“GAAP”), should be the focus of all those involved in financial reporting. Management is responsible for providing investors with GAAP-compliant financial statements, so whenever a material error is identified in previously-issued financial statements, investors must be notified promptly and the error must be corrected. The determination of whether an error is material is an objective assessment focused on whether there is a substantial likelihood it is important to the reasonable investor.

Review the statement on the SEC's website.

SEC Proposes Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies

Mar 09, 2022

On March 9, 2022, the Securities and Exchange Commission (SEC) proposed amendments to its rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies.

The proposed amendments would require, among other things, current reporting about material cybersecurity incidents and periodic reporting to provide updates about previously reported cybersecurity incidents. The proposal also would require periodic reporting about a registrant’s policies and procedures to identify and manage cybersecurity risks; the registrant’s board of directors' oversight of cybersecurity risk; and management’s role and expertise in assessing and managing cybersecurity risk and implementing cybersecurity policies and procedures. The proposal further would require annual reporting or certain proxy disclosure about the board of directors’ cybersecurity expertise, if any.

The proposed amendments are intended to better inform investors about a registrant's risk management, strategy, and governance and to provide timely notification to investors of material cybersecurity incidents.

Review the press release and proposed rule on the SEC's website.

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