CSA Report the Findings of their Review of the Disclosure of Cyber Security Risks and Incidents

Jan 19, 2017

On January 19, 2017, staff from the British Columbia Securities Commission, the Ontario Securities Commission and the Autorité des marchés financiers (staff) published Multilateral Staff Notice 51-347 Disclosure of cyber security risks and incidents.

The notice reports the findings of a review announced by the Canadian Securities Administrators (CSA) in Staff Notice 11-332 Cyber Security (Staff Notice 11-332) and provides disclosure expectations for reporting issuers based on those findings.

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

CSA seeks comment on approach to determining director and audit committee member independence

Oct 26, 2017

On October 26, 2017, the Canadian Securities Administrators (CSA) published for comment CSA Consultation Paper 52-404 "Approach to Director and Audit Committee Member Independence", which is intended to facilitate a broad discussion on the appropriateness of the CSA’s approach to determining director and audit committee member independence.

The Consultation Paper outlines key historical developments related to the CSA’s corporate governance regime, sets out our approach to determining director and audit committee member independence, and describes the approaches to determining independence in other jurisdictions. The Consultation Paper also examines the benefits and limitations of our approach.

Comments should be submitted in writing by January 25, 2018.

Review the press release on the CSA's website and the Consultation Paper on the CSA members’ websites.

CSA seeks comment on potential oversight requirements for foreign audit firms

Apr 25, 2017

On April 25, 2017, the Canadian Securities Administrators (CSA) published for comment CSA Consultation Paper 52-403 "Auditor Oversight Issues in Foreign Jurisdictions" (Consultation Paper), which seeks input on whether certain oversight requirements should be introduced for audits done by foreign firms.

The Consultation Paper discusses challenges faced by the Canadian Public Accountability Board (CPAB) in accessing audit work performed in certain foreign jurisdictions. The Consultation Paper describes a CPAB request for the CSA to amend National Instrument 52-108 Auditor Oversight to require certain audit firms involved in the audit of a reporting issuer’s financial statements to register as a participating audit firm. This requested amendment would assist CPAB in accessing audit working papers in most foreign jurisdictions.

CSA staff is also considering potential disclosure enhancements to provide stakeholders with information about situations where CPAB has been prevented from inspecting audit work performed.

Comments should be submitted in writing by June 24, 2017.

Review the press release and the Consultation Paper on the CSA's website.

CSA Seeks Comment on Proposed Amendments to Report of Exempt Distribution

Jun 08, 2017

On June 8, 2017, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 45-106 Prospectus Exemptions that would amend the report of exempt distribution set out in Form 45-106F1 Report of Exempt Distribution (Report).

The proposed amendments are intended to address concerns raised by stakeholders about the certification and certain information requirements in the Report. The proposed amendments follow others steps taken by CSA staff in summer and fall 2016 to address these concerns, including providing relief from certain information requirements and issuing revised guidance on preparing and filing the Report.

Comments should be submitted in writing by September 6, 2017.

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

CSA seeks comments on reducing regulatory burden for non-investment fund reporting issuers

Apr 06, 2017

On April 6, 2017, the Canadian Securities Administrators (CSA) published CSA Consultation Paper 51-404 "Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers" (Consultation Paper), which seeks comments on potential options for reducing regulatory burden for non-investment fund reporting issuers in the public markets.

The Consultation Paper identifies and seeks input on potential options for reducing regulatory burden associated with capital raising in the public markets and the ongoing costs of remaining a reporting issuer. These options include:

  • expanding the application of streamlined rules for smaller reporting issuers;
  • reducing the regulatory burden associated with prospectus rules and the offering process;
  • reducing certain ongoing disclosure requirements;
  • eliminating overlap in potentially duplicative regulatory requirements; and
  • enhancing the electronic delivery of documents.

Comments should be submitted in writing by July 7, 2017.

Review the press release and the Consultation Paper on the CSA's website.

Do Cash Payments Promote Whistleblowing? Quebec and Ontario as Test Cases

Nov 17, 2017

On November 17, 2017, Stikeman Elliott LLP released an article where they discuss whether or not offering monetary incentives promotes whistleblowing.

While the program adopted by the OSC incentivizes reports of misconduct by offering monetary awards to whistleblowers meeting certain eligibility criteria, the AMF refused to offer financial awards, arguing that the protection of confidentiality – and not the prospect of financial rewards – is what primarily motivates whistleblowers to report incidents. The discrepancy between the two models raised the question of whether payment is the key to a successful whistleblower program.

Review the full article on Stikeman Elliott LLP's website.

Draft Guideline For Derivatives Sound Practices For Federally Regulated Private Pension Plans

Jul 31, 2017

On July 31, 2017, the Office of the Superintendent of Financial Institutions (OSFI) issued for comment a revised draft derivatives guideline titled "Derivatives Sound Practices for Federally Regulated Private Pension Plans".

When finalized, the Draft Guideline will replace the 1997 guideline “Derivatives Best Practices” that first outlined expectations for federally regulated private pension plans with respect to derivative activities.

The Draft Guideline builds on the 1997 guideline by reflecting on current practices with respect to the risk management of derivatives activities and covers both exchange traded and over-the-counter (OTC) derivatives.  The Draft Guideline also sets out OSFI’s expectations for plan administrators who invest in derivatives indirectly through various types of funds, including pooled funds and hedge funds.

Review the press release and draft guideline on the OSFI's website and an article on Blakes' website.

Dual-Class Structures: Does the Market Already Have a Fix?

Aug 14, 2017

On August 14, 2017, following the recent decision of major indices to exclude “dual-class” companies that offer minimal voting rights to public shareholders, the debate about dual-class companies continues to rage – but this recent study suggests that the market may already have a solution, in the form of investors’ demand for a “risk premium” for these stocks.

Here’s the abstract of the study:

Critics advocate eliminating dual class shares. We find that founding families control 89% of dual class firms, potentially confounding economic inferences regarding limited voting shares. To identify the impact of dual class structures on outside shareholders, we examine stock price returns; finding that dual-class family firms earn excess returns of 350 basis points more per year than the benchmark.

Institutional owners garner a disproportionate fraction of these returns by holding over 97% of their floated shares. Overall, we show that investors demand a risk premium for holding dual-class family firms, suggesting a market-driven resolution to concerns about limited voting shares.

If the study’s right, these above-market returns may go a long way to explaining why institutions continue to throw money into these stocks.

Review the study on the Social Science Research Network's website.

Encouraging the Reporting of Misconduct

Nov 30, 2017

In November 2017, the Anti-Fraud Collaboration released a publication that compiled the best practices from roundtable discussions focused on suspected financial reporting fraud and the negative impact that fear of retaliation has on the timely detection of such fraud.

By understanding the factors that discourage reporting, the Collaboration offers ways to counter such obstacles and makes recommendations for creating and maintaining a retaliation-free environment.

Review the publication on the Anti-Fraud Collaboration's website.

European Commission adopts guidelines on the disclosure of non-financial information

Jun 26, 2017

The EU Directive on disclosure of non-financial and diversity information by large companies and groups addressing environmental, social, and governance (ESG) issues entered into force on December 6, 2014. The European Commission (EC) has now adopted non-binding guidelines on the disclosure of non-financial information by companies. Their objective is to help companies fulfil the requirement to disclose relevant and useful information on environmental and social matters in a consistent and more comparable way.

The guide­lines propose that any company should disclose relevant in­for­ma­tion on the actual and potential impacts of its op­er­a­tions on the en­vi­ron­ment, and on how current and fore­see­able en­vi­ron­men­tal matters may affect the company. Greater and more relevant trans­parency is expected to lead towards a major reduction of green­house gas emissions and cli­mate-re­silient growth and jobs.

The following documents are available on the EC website:

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