2017 Diversity Disclosure Practices Report: Women in leadership roles at TSX-listed companies

Sep 18, 2017

On September 18, 2017, Osler’s Corporate Governance Practice Group released its third annual edition of its comprehensive report on diversity disclosure practices.

Gender diversity remains a key item on the corporate governance agenda, and institutional shareholders are increasingly prioritizing a greater representation of women in leadership positions among the companies in which they invest.

The report finds that progress is being made, but at a glacial rate of improvement and provides best practices for improving gender diversity among boards and executive teams.

Review the report, 2017 Diversity Disclosure Practices Report: Women in leadership roles at TSX-listed companies, on Osler’s website.

AICPA ASB issues standard for auditors involved with exempt offering documents

Jul 26, 2017

On July 26, 2017, the AICPA Auditing Standards Board (ASB) issued a new auditing standard. The new standard establishes when an auditor is involved with an exempt offering document and describes the procedures an auditor is required to follow when involved with such a document.

The Statement on Auditing Standards (SAS) No. 133, Auditor Involvement With Exempt Offering Documents, does not amend or supersede any previous guidance and will take effect for exempt offering documents that are initially distributed, circulated, or submitted on or after June 15, 2018.

An auditor’s involvement with an exempt offering document is established under SAS No. 133 if both of the following occur:

  • The auditor’s report on financial statements or the auditor’s review report on interim financial information is included or incorporated by reference in an exempt offering document; and
  • The auditor performs one or more specified activities with respect to the exempt offering document.

When an auditor is involved with an exempt offering, SAS No. 133 requires the practitioner to perform procedures described in Paragraphs 6–16 of AU-C Section 720, Other Information in Documents Containing Audited Financial Statements, on the exempt offering document.

In addition, SAS No. 133 requires the auditor to perform procedures designed to identify events occurring between the date of the auditor’s report and the date of distribution, circulation, or submission of the exempt offering document that may have caused the auditor to revise the auditor’s report had the events been known to the auditor as of the date of the auditor’s report.

Review the article on the Journal of Accountancy's website.

Alberta MJDS Changes Would Cut Paperwork on Southbound Offerings

Sep 28, 2017

On September 28, 2017, the Alberta Securities Commission (ASC) proposed to repeal and replace existing ASC Rule 71-801 "Implementing the Multijurisdictional Disclosure System" in an effort to update outdated references and better align the requirements of Alberta securities law with the southbound multijurisdictional disclosure system (MJDS).

The proposal for a new ASC Rule 71-801 follows comparable initiatives by the British Columbia and Ontario commissions.

The proposed changes would not affect the core principles of the MJDS, which are set out in a separate instrument (National Instrument 71-101 The Multijurisdictional Disclosure System). Instead, its impact is limited to the provincial framework that surrounds and implements NI 71-101 in Alberta.

Review the proposal for a new ASC Rule 71-801 on the ASC's website and an article on Stikeman Elliott LLP's website.

Alternative Performance Measures: A New Zealand user-needs survey

Sep 25, 2017

In September 2017, the International Accounting Standards Board (IASB) released a survey summary by the External Reporting Board (XRB), which surveyed users of financial reports to find out whether they find Alternative Performance Measures (APMs) useful.

In the survey, 88.5% of respondents found APMs useful or sometimes useful and 68.7% of respondents stated that a company's performance measures should not be limited to GAAP measures.

Further, 56.3% of respondents said that they use both GAAP measures and APMs together as the primary indicators for assessing a company's performance.

Review the survey summary on the IASB's website and the full report on the XRB's website.

AMF Issues First Summary of Corporate Finance Oversight Activities

Sep 14, 2017

On September 14, 2017, the Autorité des marchés financiers (AMF) published its first Summary of Oversight and Regulatory Activities in respect of corporate finance.

The Summary, which was prepared by the Direction principale du financement des sociétés ("AMF Corporate Finance") will serve as a go-to tool for communications between the AMF and Québec companies that seek to raise capital through the markets, as well as their advisers.

It includes information on the main deficiencies identified in the continuous disclosure and financing documents of companies. It also contains examples of corrected information, particularly with respect to the presentation of non-GAAP (Generally Accepted Accounting Principles) financial measures, a company's ability to continue as a going concern and the sufficiency of proceeds from a prospectus offering. As well, in addition to giving data regarding distributions made by Québec companies and the industries in which they operate, the publication covers certain issues related to technological innovations (fintech) and the measures adopted to meet the oversight challenges arising from new financial products and services.

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

Another Nail in the Coffin – Report of C.D. Howe Institute on the Capital Markets Regulatory Authority

Sep 22, 2017

On September 22, 2017, Norton Rose Fulbright Canada LLP released an article on how many have called for the creation of a single national regulator that would oversee Canada’s capital markets. In recent years, a newly proposed regulatory body, the Capital Markets Regulatory Authority (CMRA), has been gaining traction. With a launch date scheduled for late 2018, many long-time advocates of a national regulator feel hopeful that a new era is around the corner.

However, a newly released report from the C.D. Howe Institute suggests that that hope may be misplaced. According to the report, the CMRA, which has the support of the federal government, Ontario, British Columbia, Saskatchewan, Prince Edward Island, and New Brunswick, is the product of significant concessions and compromises, lacks the ability to impose regulatory authority across the country, and may ultimately be unsuccessful.

Review the full article on Norton Rose Fulbright's website and the report on C.D. Howe Institute's website.

ASC publishes updated companion policy for ASC Rule 45-517

Oct 03, 2017

On October 3, 2017, the Alberta Securities Commission (ASC) announced changes to Companion Policy 45-517 "Prospectus Exemption for Start-up Businesses," effective immediately. The changes provide guidance for Alberta-based issuers seeking to raise funds from investors resident in either Alberta or British Columbia (B.C.) under ASC Rule 45-517 Prospectus Exemption for Start-up Businesses.

To facilitate small, local financings by Alberta-based start-up businesses, the ASC adopted ASC Rule 45-517 in the summer of 2016. In response to the recently announced amendments to B.C. Instrument 45-535 Start-up Crowdfunding Registration and Prospectus Exemptions, the ASC has updated its Companion Policy 45-517 to clarify how cross-border financings into B.C. are possible and outline how ASC Rule 45-517 and B.C. Instrument 45-535 work together.

Review the press release on the ASC's website.

BCSC grants landmark bitcoin investment fund manager registration

Sep 06, 2017

On September 6, 2017, the British Columbia Securities Commission (BCSC) announced the first registration of an investment fund manager in Canada solely dedicated to cryptocurrency investments.

The BCSC has granted First Block Capital Inc. registration as an investment fund manager and an exempt market dealer in order to operate a bitcoin investment fund.

Cryptocurrency investments raise risks that are different from traditional asset classes, including the cybersecurity risks inherent in dealing with digital currencies. These risks relate not only to the registrant, but also to the bitcoin fund's custodian, a third party chosen to facilitate the safekeeping and exchange of bitcoins.

Review the press release on the BCSC's website.

BCSC releases 2017 Compliance Report Card

Jun 28, 2017

On June 28, 2017, the British Columbia Securities Commission (BCSC) released its 2017 Compliance Report Card. The annual report card summarizes the findings from the BCSC's compliance reviews of B.C.-based portfolio managers, investment fund managers, and exempt market dealers over the last fiscal year.

At March 31, 2017, there were 116 firms directly registered with the BCSC. In its reviews, the BCSC found the following positive practices among firms with good cultures of compliance: reviewing guidance from CSA Staff Notices to take timely proactive corrective actions; consulting with BCSC relationship managers to resolves issues before they become compliance deficiencies in a compliance exam; providing meaningful annual chief compliance officer (CCO) reports to their firm's board; and considering how changes to business, staff, or revenue may affect compliance programs, and updating policies and procedures manuals appropriately

The report also noted that in the 26 compliance reviews conducted last year, 171 total compliance deficiencies were found, averaging 6.58 deficiencies per review. The top areas for deficiencies were: client statements and reporting; registration administration; know-your-client and suitability; policies and procedures; disclosures; and advertising, marketing, and holding out

The top deficiency areas represent approximately 59 per cent of all compliance deficiencies found.

Refer to the press release and 2017 Compliance Report Card on the BCSC’s website.

Bill 141 Proposed amendments to the Act respecting the AMF with regard to whistleblowing

Oct 05, 2017

On October 5, 2017, the Government of Quebec released a proposed amendments to the "Act respecting the Autorité des marchés financiers", which is intended to protect whistleblowers. The proposed amendments could have significant and potentially problematic consequences under certain circumstances.

The Bill states that it is forbidden to take a reprisal or to threaten to take a reprisal against a person who, in good faith, makes a disclosure to the Authority or who cooperates in an investigation. It specifies that the demotion, suspension or dismissal or transfer of the employee is presumed to be a reprisal.

The Bill also states that persons who make a disclosure may do so despite any disclosure constraints provided elsewhere in Quebec laws, such as the Act respecting the protection of personal information in the private sector (chapter P-39.1). The Bill goes further by providing that persons who make a disclosure may do so despite any provision of a contract or duty of loyalty or confidentiality that may be binding on them. The Bill specifies, however, that the authorized waiver of professional secrecy does not apply to professional secrecy between a lawyer or a notary and a client.

The waiver of professional secrecy, therefore, applies to all other professionals, such as accountants. If this provision is adopted as proposed, it may create significant challenges for auditors in establishing the relationship of trust with clients and their audit committees, in particular, because transparent communication of information between a client and an auditor is a key ingredient to audit quality.

Review the Bill and proposed amendments on the Government of Quebec's website and an article on McCarthy Tétrault LLP's website.

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