Changes to start-up crowdfunding exemption will increase access to capital for B.C. issuers

Sep 21, 2017

On September 21, 2017, the British Columbia Securities Commission (BCSC) announced improvements to crowdfunding rules that will enable B.C.-based issuers to access investors in Alberta when conducting crowdfunding campaigns. The amendments also permit an increased investment, for some investors, of up to $5,000.

“With these amendments, B.C. is harmonizing the crowdfunding regime and providing start-up and early stage issuers with access to more potential investors and more investment dollars,” said Peter Brady, Executive Director of the BCSC.

The BCSC’s Tech Team recommended the amendments to B.C. Instrument 45-535 Start-up Crowdfunding Registration and Prospectus Exemptions (BCI 45-535) following stakeholder consultations and after reviewing the results of the BCSC’s 2017 Tech Survey.

Survey respondents who were involved in crowdfunding identified harmonization across jurisdictions as one of their biggest concerns. The new amendments take steps to resolve that issue by allowing an interface between the B.C. and Alberta crowdfunding rules. Respondents also recommended increasing the investment amounts allowed under the current crowdfunding rules. The new amendments raise the investment limit from $1,500 to $5,000, if the investor has obtained advice from a registered dealer that the investment is suitable for them.

Review the press release and the crowdfunding page on the BCSC's website.

Cryptocurrency-Related Securities Lawsuits: A Litigation Filing Trend for the New Year?

Dec 25, 2017

On December 25, 2017, the D&O Diary published an article on how even after the precipitous drop on Friday in the price of Bitcoin and other digital currencies, the developments during the past several months involving cryptocurrencies have to be one of the year’s top business stories.

Part of this year’s cryptocurrency story has to include the SEC’s increasingly active approach to policing digital currency trading, as well as the rising numbers of lawsuits filed against cryptocurrency sponsors. In recent weeks claimants have filed a number of cryptocurrency-related securities lawsuits.

Taken collectively, the lawsuits give the definite impression the skyrocketing prices of Bitcoin and other cryptocurrencies have attracted a lot of questionable activity. The questionable activity has in turn in many cases led to litigation. Even the downturn on Friday in the price of Bitcoin and other cryptocurrencies could generate further litigation, as investors who lose money on their investment may be motivated to pursue their litigation alternatives.

Signs are that cryptocurrency related litigation will be one of the early litigation filing trends and the sudden surge at year end of these kinds of lawsuits in all likelihood will continue.

Review the full article on the D&O Diary's website.

CSA announces climate change disclosure review project

Mar 21, 2017

On March 21, 2017, the Canadian Securities Administrators (CSA) announced a project to review the disclosure of risks and financial impacts associated with climate change.

The project will gather information on the current state of climate change disclosure in Canada and internationally, and will include consultation with investors and reporting issuers.

Reporting issuers in Canada are currently required to disclose material risks, which may include risks associated with climate change, among other environmental matters, in their periodic disclosure.

CSA Staff intend to review disclosure prepared by large TSX-listed reporting issuers on the material risks and financial impacts associated with climate change as well as related governance processes.

Review the press release on the CSA's website.

CSA highlights need for improved social media disclosure practices

Mar 09, 2017

On March 9, 2017, the Canadian Securities Administrators (CSA) released CSA Staff Notice 51-348, Staff’s Review of Social Media Used by Reporting Issuers, which summarizes staff’s findings and disclosure expectations for reporting issuers that use social media.

Staff reviewed the social media disclosure of 111 reporting issuers to determine if they were consistent with the principles of National Policy 51-201 Disclosure Standards and the requirements of National Instrument 51-102 Continuous Disclosure Obligations by providing balanced disclosure and ensuring that information is not selectively disclosed or misleading.

The review found that a significant number of issuers, or 77 per cent, had not developed a specific governance policy to direct their disclosure practices on social media websites.

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

CSA propose a new prospectus exemption for the resale of securities of a foreign issuer

Jun 29, 2017

On June 29, 2017, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 45-102 Resale of Securities (NI 45-102) that would introduce a new prospectus exemption for the resale of securities of a foreign issuer.

If adopted, the proposed exemption would allow Canadian investors to resell, outside of Canada, securities of a foreign issuer acquired under a prospectus exemption where the issuer is not a reporting issuer in any jurisdiction of Canada. The proposed amendments suggest a different approach for determining minimal connection to Canada by introducing a definition of foreign issuer to replace the current 10 per cent Canadian ownership test.

Comments on the proposed amendments should be submitted in writing by September 27, 2017.  Re­view the press re­lease and related documents on the AMF’s web­site.

Concurrently on June 29, 2017, the Ontario Securities Commission (OSC) published for a 90-day comment period revised OSC Rule 72-503 Distributions Outside Canada and proposed Companion Policy 72-503 Distributions Outside Canada. Under these proposals, resale provisions of securities of a foreign issuer would instead be covered by the CSA’s foreign issuer resale exemption above.

CSA publishes summary of the roundtable on response to cyber security incidents

Apr 06, 2017

On April 6, 2017, the Canadian Securities Administrators (CSA) published CSA Staff Notice 11-336 "Summary of CSA Roundtable on Response to Cyber Security Incidents", which provides an overview of the themes discussed and some of the key takeaways.

The CSA hosted a roundtable on February 27, 2017 to explore cyber security issues and opportunities for greater collaboration, communication and coordination in the event of a large-scale cyber security incident.

Participants focused on the importance of robust Incident Response Plans (IRPs) for entities, including entities that may be indirectly affected by a cyber incident.

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

CSA regulators outline securities law requirements that may apply to cryptocurrency offerings

Aug 24, 2017

On August 24, 2017, the Canadian Securities Administrators (CSA) published CSA Staff Notice 46-307 "Cryptocurrency Offerings," which outlines how securities law requirements may apply to initial coin offerings (ICOs), initial token offerings (ITOs), cryptocurrency investment funds and the cryptocurrency exchanges trading these products.

The notice describes the factors CSA staff consider in assessing whether prospectus, registration and marketplace requirements apply. It also outlines how the CSA Regulatory Sandbox can help fintech businesses contemplating such offerings and summarizes key issues that businesses should be prepared to discuss with CSA staff.

Any business that is planning to raise capital through an ICO or ITO, or that is seeking to establish a cryptocurrency investment fund, should consider whether it involves a security. Businesses should also contact their local securities regulatory authority to discuss possible approaches to complying with securities laws.

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

CSA releases detailed data from review of women on boards and in executive officer positions

Nov 30, 2017

On November 30, 2017, the securities regulatory authorities in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Québec, Saskatchewan and Yukon published the underlying data used to prepare CSA Multilateral Staff Notice 58-309 Staff Review of Women on Boards and in Executive Officer Positions – Compliance with NI 58-101 Disclosure of Corporate Governance Practices, which was published on October 5, 2017.

The data was compiled from public documents filed on SEDAR and includes the name, industry and year-end of the 660 non-venture issuers with year-ends between December 31, 2016 and March 31, 2017 that filed information circulars or annual information forms by July 31, 2017 as it relates to women on boards and in executive officer positions.

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

CSA releases review of registered firms’ cyber security and social media practices

Oct 19, 2017

On October 19, 2017, the Canadian Securities Administrators (CSA) published CSA Staff Notice 33-321 "Cyber Security and Social Media", which summarizes survey results of registered firms’ cyber security and social media practices, in addition to providing guidance to firms in these areas.

The survey found that more than half (51 per cent) of firms experienced a cyber security incident in 2016. Common incidents reported included phishing (43 per cent), malware incidents (18 per cent) and fraudulent email attempts to transfer funds or securities (15 per cent).

The notice summarizes results from a survey on the cyber security and social media practices of 649 registered firms, which include investment fund managers, portfolio managers and exempt market dealers. Questions were structured to gather relevant information on cyber security policies and plans, social media practices, third-party vendors and the frequency of risk assessments.

Review the press release and Staff Notice on the CSA members' websites.

CSA Renew Term of Chair and Vice-Chair

Mar 30, 2017

On March 30, 2017, pursuant to the last meeting of the members of the Canadian Securities Administrators (CSA), the term of CSA President Louis Morisset, President and CEO of the Autorité des marchés financiers, was renewed for a further two years, until March 31, 2019.

Mr. Morisset was first appointed CSA Chair in March 2015.

Review the press release on the CSA's website.

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