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Securities

OSC makes doing business easier for Ontario market participants

Nov 19, 2019

On November 19, 2019, the Ontario Securities Commission (OSC) moved forward with more than 100 specific actions to reduce burden for market participants doing business in Ontario’s capital markets. As these changes are made, individuals and businesses regulated by the OSC can expect to see enhanced service levels, less duplication and a more tailored regulatory approach.

The changes will make it easier to start, fund and grow a business in Ontario, and make Ontario’s markets more competitive. While these initiatives will benefit businesses of all sizes, the OSC has carefully considered opportunities to benefit small and medium-sized companies, which make up nearly 70 per cent of those regulated by the OSC, and smaller registrant firms, which make up nearly a third of Ontario registrants.

Highlights include:

  • Small and medium-sized businesses that are registrants will see clear service standards for compliance reviews, and, in appropriate cases, be able to hire a Chief Compliance Officer (CCO) who acts in that role for other, unaffiliated firms. Companies will see more support for raising capital in the public markets, through a confidential prospectus review process prior to announcing an IPO or other financing.
  • Innovative businesses and startups will receive more flexibility in the OSC’s approach to registration, resales in the secondary market, and other regulatory requirements. Individuals applying to be CCO of fintech firms will be assessed based on their qualifications and on their broader business experience, and how the experience aligns with the firm’s business model. Startups seeking financing will see crowdfunding rules harmonized across the country.
  • Large businesses will see duplicative filing requirements eliminated in investment funds and registration rules; delivery of documents, like prospectuses, electronically; and measures to facilitate the registration of multiple CCOs for large registrants with multiple lines of business. Public companies will have the ability to conduct at-the-market offerings without obtaining prior exemptive relief.

The 107 initiatives outlined in the report address 34 underlying concerns identified by staff during the consultation process. The initiatives will address those concerns by clarifying regulatory expectations, improving technology, enhancing coordination with other regulators, and providing greater support during regulatory interactions.

Review the press release and report on the OSC's website.

Canadian securities regulators outline corporate governance disclosure expectations for cannabis issuers

Nov 12, 2019

On November 12, 2019, the securities regulatory authorities in Ontario, British Columbia, Quebec, New Brunswick, Saskatchewan, Manitoba and Nova Scotia (the participating jurisdictions) published guidance to help cannabis issuers strengthen their governance disclosures, including disclosure of financial interests in significant corporate transactions.

The cannabis industry has experienced significant growth, along with merger and acquisition transactions (M&A Transactions), over the past few years. As the market has expanded, many cannabis issuers and their directors and executive officers have participated in the financing of other cannabis issuers, resulting in higher than usual crossover of financial interests. These interests may include overlapping debt and equity, or other business relationships. Staff in the participating jurisdictions have found instances where the quality of cannabis issuers’ disclosure in this area can be improved.

While the guidance is intended for cannabis issuers, all reporting issuers, especially issuers in other emerging growth industries, should ensure that governance disclosures address potential conflicts of interests. CSA staff will continue to monitor these areas. 

The CSA’s guidance can be found in Multilateral Staff Notice 51-359 Corporate Governance Related Disclosure Expectations for Reporting Issuers in the Cannabis Industry.

Review the press release on the CSA's website and the Multilateral Staff Notice on the participating jurisdictions' website.

Canadian securities regulators propose changes to auditor oversight rules

Oct 03, 2019

On October 3, 2019, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 52-108 "Auditor Oversight" (The Notice) intended to provide the Canadian Public Accountability Board (CPAB) with improved ability to perform audit inspections. Under the proposed changes, some reporting issuers and audit firms may be required to take steps to provide CPAB with enhanced access to audit working papers, particularly in foreign jurisdictions. Comments are requested by January 2, 2020.

Under the proposed new securities requirements, reporting issuers will be required to direct audit firms who are not subject to CPAB oversight, but complete a significant portion of audit work for a reporting issuer’s audit, to enter into an agreement with CPAB to access their files and inspect their work if such firms are not prepared to provide access to CPAB voluntarily upon request.

Known as component auditors, these audit firms complete some of the work that forms part of the evidence used to support an audit opinion. To assess whether sufficient audit evidence has been obtained to support an audit opinion, CPAB has determined it must be able to review all substantial audit work.

Review the press release on the CSA's website and the Staff Notice on the participating jurisdictions' website.

Canadian securities regulators release data regarding women on boards and in executive officer positions

Oct 02, 2019

On October 2, 2019, the securities regulatory authorities in Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan (the participating jurisdictions) published CSA Multilateral Staff Notice 58-311 "Report on Fifth Staff Review of Disclosure Regarding Women on Boards and in Executive Officer Positions".

Key trends from this year’s review include:

  • The total number of board seats occupied by women increased to 17 per cent in 2019, compared to 11 per cent in 2015.
  • Seventy-three per cent of issuers had at least one woman on their board, an increase from 49 per cent in 2015.
  • When board vacancies were filled, a third of those positions were filled by women.
  • Five per cent of issuers had a female chair of their board.
  • Half of issuers adopted a policy relating to the representation of women on their board, representing a significant increase since 2015.

Review the press release on the CSA's website and the Staff Notice on the participating jurisdictions' website.

Institutional Shareholder Services 2019 Global policy survey

Sep 30, 2019

In September 2019, the Institutional Shareholder Services (ISS) released the results of its survey. The survey is a part of ISS' annual global benchmark policy development process, and was, as every year, open to institutional investors, corporate executives, board members and all other interested constituencies to solicit broad feedback on areas of potential policy change for 2020 and beyond.

Questions this year covered a broad range of topics, including: global questions on board gender diversity, director overboarding, and director accountability relating to climate change risk, combined chairman and CEO roles and the sun-setting of multi-class capital structures in the U.S., discharge of directors and board responsiveness to low support for remuneration proposals in Europe, U.S. and Canada.

Review the report on the ISS' website.

AMF publishes annual summary of corporate finance oversight and regulatory activities

Sep 19, 2019

On September 19, 2019, the Autorité des marchés financiers (AMF) published its annual Summary of Oversight and Regulatory Activities, which details the key initiatives of the Direction principale du financement des sociétés (“Corporate Finance”) for the 2018-2019 financial year.

After presenting a profile of companies and the outcomes of continuous disclosure reviews, the summary outlines the main deficiencies observed by the AMF in its oversight activities and gives examples of corrected disclosure. As in previous years, the summary discloses some key figures regarding the representation of women on boards and in executive officer positions of Québec companies, thus helping to monitor progress on this issue.

The AMF also recaps draft regulatory initiatives and staff notices that were published during the past financial year. Lastly, in the section on innovation, the AMF presents the efforts taken to establish a framework for crypto-asset trading platforms and to migrate the SEDAR, SEDI and NRD national electronic systems to a central system.

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

Digital currencies: The rise of stablecoins

Sep 19, 2019

On September 19, 2019, the IMFBlog released a blog on how the adoption of new, digital payment methods could bring significant benefits to customers and society: improved efficiency, greater competition, broader financial inclusion, and more innovation.

But it could invite risks to financial stability and integrity, monetary policy effectiveness, and competition standards, as outlined in a recent IMF staff paper, the first of a new series of Fintech Notes.

Review the full blog on the IMFBlog's website.

2019 Diversity Disclosure Practices report – Women in leadership roles at TSX-listed companies

Sep 18, 2019

On September 18, 2019, Osler published their fifth annual report on diversity disclosure practices, where they highlight the achievement of some key benchmarks and for the first time showcase some examples of excellence in disclosure.

The report also includes a sampling of best practices in fostering greater gender diversity disclosed by leading Canadian companies.

In particular, our research findings provide insight into

  • the breakdown and percentages of women on boards for full-year 2018
  • the breakdown and percentages of women executive officers for full-year 2018
  • the industry breakdown of women directors for full-year 2018
  • diversity policies and targets for full-year 2018
  • 2019 mid-year results regarding the number and percentages of women directors and women in executive officer positions by industry
  • board policies on diversity and policies related to the nomination and identification of women on boards
  • targets for women on boards and in executive officer positions

The data presented in this report was obtained by examining public disclosure documents filed by all TSX-listed companies that are subject to National Instrument 58-101 Disclosure of Corporate Governance Practices, which requires disclosure respecting the representation of women on boards and in executive officer positions.

Review the press release and report on Osler's website.

Canadian securities regulators propose eight initiatives to reduce regulatory burden for investment funds

Sep 12, 2019

On September 12, 2019, the Canadian Securities Administrators (CSA) published for comment proposed rule amendments aimed at implementing eight initiatives that seek to eliminate duplicative requirements, streamline regulatory processes, codify frequently-granted exemptions from certain rules for investment funds, and eliminate the need for certain regulatory approvals. These proposed changes are part of the CSA’s ongoing work to reduce regulatory burden for investment funds. Comments are requested by December 11, 2019.

The proposals would reduce duplicative filing requirements by consolidating the Simplified Prospectus (SP) and Annual Information Form (AIF) for conventional mutual funds, as these contain overlapping disclosure in many places. The proposed rule amendments would also streamline regulatory processes by eliminating the filing of Personal Information Forms (PIFs) in connection with investment fund prospectus filings for individuals that are registered with securities regulators.

The proposals would eliminate the need for investment funds to apply for frequently granted exemptive relief to use the notice-and-access system, and from certain conflict of interest rules. The proposed amendments also introduce exemptions from the requirement to deliver a fund facts document for model portfolio products, portfolio rebalancing services and automatic switch programs, and would allow the use of a consolidated fund facts document under certain conditions. The proposals would repeal the need for regulatory approval for a change of manager or change of control of manager, given similar requirements in the registration system for investment fund managers. Furthermore, the proposed changes would broaden the pre-approval criteria for investment fund mergers.

In addition, the proposed rule amendments would formalize a common industry practice by mandating that investment funds have a designated website for posting regulatory disclosure. This change will allow the CSA to consider alternative methods for providing and delivering disclosure to investors.

Staff anticipate that these changes can be implemented in the near-term. Longer-term, the CSA will look for burden reduction opportunities in other areas, including, continuous disclosure obligations, securityholder meetings and information circular requirements, prescribed notices and reporting requirements and prospectus regime provisions.

Review the press release and notice and proposed rule amendments on the CSA's website.

Canadian securities regulators seek comment on proposed amendments to business acquisition report requirements

Sep 05, 2019

On September 5, 2019, the Canadian Securities Administrators (CSA) published for comment proposed amendments to the business acquisition report (BAR) requirements for reporting issuers that are not venture issuers. Comments are requested by December 4, 2019.

The proposed amendments aim to reduce regulatory burden and address certain concerns expressed by stakeholders by narrowing the circumstances under which a BAR must be filed.

Currently, a reporting issuer that is not a venture issuer must file a BAR after completing a significant acquisition if any one of the three significance tests set out in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) exceeds 20 per cent.

For reporting issuers that are not venture issuers, the proposed amendments will:

  • alter the determination of significance such that an acquisition of a business or related businesses is significant only if at least two of the three existing significance tests set out in NI 51-102 are triggered; and
  • increase the significance threshold from 20 per cent to 30 per cent.

Review the press release and Notice on the CSA's website.

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