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2018

A Multitude of Cryptocurrency Developments

Feb 05, 2018

On February 5, 2018, the D&O Diary released a blog on how the astonishing bitcoin bubble may have burst over the last several days.

From its intraday peak in December 2017 of $19,783, the price for bitcoin had fallen to $8,524, a decline of over 60%. Bitcoin’s price has fallen before and it has generally proven to be volatile. The price may yet escalate again. But if it has always been hard to specify a reason for the phenomenal price movements of bitcoin and other cryptocurrencies, there certainly have been recent developments aplenty to undermine the price for these digital assets.

Review the blog on the D&O Diary's website.

BCSC consulting on disclosure requirements relating to women on boards and in executive officer positions

Feb 26, 2018

On February 26, 2018, the British Columbia Securities Commission (BCSC) published a notice and request for comment seeking input on gender diversity disclosure requirements in National Instrument 58-101 "Disclosure of Corporate Governance Practices" (NI 58-101).

NI 58-101 requires non-venture issuers to provide annual disclosure regarding certain gender diversity related matters, including policies regarding the representation and number of women on the board and in executive officer positions. Comments are requested by April 10, 2018.

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

Canadian securities administrators adopt amendments related to reselling securities of foreign issuers

Mar 29, 2018

On March 29, 2018, the Canadian Securities Administrators (CSA) published amendments to National Instrument 45-102 Resale of Securities and changes to Companion Policy 45-102CP to National Instrument 45-102 Resale of Securities.

The amendments introduce a new prospectus exemption for the resale of securities (and underlying securities) of a foreign issuer if the issuer is not a reporting issuer in any jurisdiction of Canada, and the resale is on an exchange or a market outside of Canada or to a person or company outside of Canada.

A foreign issuer is an issuer that is not incorporated or organized under the laws in Canada unless the issuer has a head office in Canada or the majority of its directors or executive officers ordinarily reside in Canada.

Provided all necessary regulatory and ministerial approvals are obtained, these will come into force on June 12, 2018.

Review the announcement on the CSA's website and the Notice on the OSC's website.

CSA announces policy projects aiming to reduce regulatory burden in public markets

Mar 27, 2018

On March 27, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-353 "Update on CSA Consultation Paper 51-404 Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers", which outlines the CSA’s plan to pursue policy projects to examine specific prospectus requirements,  revisit certain continuous disclosure requirements, and enhance electronic delivery of documents.

Specific initiatives the CSA intends to pursue include:

  • removing or modifying the criteria for reporting issuers to file a business acquisition report;
  • facilitating at-the-market offerings;
  • revisiting the primary business requirements to provide greater clarity to issuers preparing an IPO prospectus;
  • considering a potential alternative prospectus model;
  • reducing or streamlining certain continuous disclosure requirements; and
  • enhancing electronic document distribution for investors.

Selection of these projects follows a consultation initiated by the CSA in 2017 on reducing regulatory burden in the public markets. Subsequently, CSA staff received a number of comment letters and certain jurisdictions held in-person consultations on the topic. The chosen initiatives reflect input from a diverse range of stakeholders, including reporting issuers, investor advocates, and industry groups. Certain projects may require longer timeframes than others to complete.

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

CSA focuses on areas for reducing regulatory burden for investment funds

May 24, 2018

On May 24, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 81-329 "Reducing Regulatory Burden for Investment Fund Issuers", which outlines the CSA’s plan to pursue four initiatives in the near-term that would remove redundancies and streamline disclosure requirements for investment fund issuers.

CSA staff will undertake initiatives to codify exemptive relief that is routinely granted, and to use web-based technology to provide certain information about investment funds. Other areas of focus include the removal of redundant information in select disclosure documents and minimizing the filing of documents that may contain duplicative information, such as Personal Information Forms. The CSA anticipates publishing proposed rule amendments for comment, as appropriate, to address these initiatives by March 2019.

The proposed four initiatives are part of the CSA Rationalization of Investment Fund Disclosure project, which was established in 2017. This project identifies opportunities for reducing regulatory burden for investment fund issuers. To identify the focus areas for the project, staff conducted a comprehensive review of the current investment fund disclosure regime. Other efforts that helped inform the proposals included evaluating disclosure elements borrowed from the non-investment fund reporting issuer regime, gathering information on relevant regulatory reforms conducted by other regulators internationally, and receiving feedback from stakeholders.

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

CSA issues statement following rescission of the Cole Memorandum

Jan 12, 2018

On January 12, 2018, the Canadian Securities Administrators (CSA) announced that it is considering whether their disclosure-based approach for issuers with U.S. marijuana-related activities remains appropriate in light of the rescission of the Cole Memorandum.

On January 4, 2018, the U.S. Attorney General rescinded all previous guidance specific to federal law enforcement relating to marijuana, including the prior approach under the Cole Memorandum.

Issuers with no U.S. marijuana-related activities and that otherwise operate in compliance with applicable Canadian laws are not the focus.

The CSA will communicate more details about their position shortly.

Review the press release on the CSA's website.

CSA outlines disclosure expectations for real estate reporting issuers

Apr 12, 2018

On April 12, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 52-329 "Distribution Disclosures and Non-GAAP Financial Measures in the Real Estate Industry". The notice details findings of a recent review and provides additional guidance on disclosure expectations relating to distributions and non-GAAP financial measures for real estate reporting issuers.

The CSA reviewed distribution disclosures relative to National Policy 41-201 Income Trusts and Other Indirect Offerings and non-GAAP financial measure disclosures relative to CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures. The findings of the review indicate that the quality of disclosure pertaining to distributions and non-GAAP financial measures in the real estate industry needs improvement. 

Key findings from the review included the following items. For distributions, staff found opportunities for better disclosure when distributions exceed operating cash flows. For non-GAAP financial measures, staff identified a lack of transparency about various adjustments made in arriving at non-GAAP financial measures, particularly those relating to maintenance capital expenditures and working capital. Staff also noted instances where non-GAAP financial measures were presented with greater prominence than the most directly comparable measure specified under the issuer’s GAAP.

Non-GAAP financial measures and distribution disclosures continue to remain areas of focus for the CSA, and real estate reporting issuers are encouraged to refer to the guidance published.

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

CSA provide additional guidance on securities law implications for offerings of tokens

Jun 11, 2018

On June 11, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 46-308 “Securities Law Implications for Offerings of Tokens,” which provides additional guidance on the applicability of securities laws to offerings of coins or tokens, including ones that are commonly referred to as “utility tokens.”

CSA Staff Notice 46-308 outlines specific situations that may have an implication on the presence of one or more of the elements of an investment contract in the context of an offering of coins or tokens.

This notice supplements the CSA’s August 2017 publication of CSA Staff Notice 46-307 Cryptocurrency Offerings, which outlines how securities law requirements may apply to initial coin offerings, initial token offerings, cryptocurrency investment funds and the cryptocurrency platforms trading these products.

Any business planning to raise capital through an offering of coins or tokens should consider whether it involves the distribution of a security.

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

CSA provides an update on its approach to determining director and audit committee member independence

Jul 26, 2018

On July 26, 2018, the Cana­dian Se­cu­ri­ties Ad­min­is­tra­tors (CSA) published CSA Staff Notice 52-330, Update on CSA Consultation Paper 52-404 Approach to Director and Audit Committee Member Independence. The notice summarizes feedback received during the CSA’s consultation on the approach to determining director and audit committee member independence, and outlines the CSA’s rationale for maintaining the current approach.

Considering the realities of the Canadian market and the comments received, the CSA have concluded that it is appropriate to maintain its current approach to determining director and audit committee member independence. It recognizes that its current approach has benefits and limitations. Upon review, it is satisfied that it strikes an appropriate balance between affording sufficient discretion to the board of directors to determine whether an individual could reasonably be expected to exercise independent judgement, and providing prescriptive elements that preclude an individual from being considered independent in certain circumstances.

The CSA’s current approach has been in place since 2004 and it notes that stakeholders understand and have adapted accordingly. Making changes to the current approach or replacing it with an alternative approach could result in additional costs for issuers and efforts for investors to adapt to such changes. The CSA is of the view that, in this case, any potential benefits of a change to the approach are outweighed by the potential negative impact of implementing such a change.

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

 

CSA publishes revised disclosure expectations for issuers with U.S. marijuana-related activities

Feb 08, 2018

On February 8, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-352 (Revised) "Issuers with U.S. Marijuana-Related Activities", which sets out CSA staff’s disclosure expectations for specific risks facing issuers with marijuana-related activities in the U.S.

The revised notice includes additional disclosure expectations that apply to all issuers with U.S. marijuana-related activities, including those with direct and indirect involvement in the cultivation and distribution of marijuana, as well as issuers that provide goods and services to third parties involved in the U.S. marijuana industry. Issuers are expected to provide these disclosures in prospectus filings and other required documents, such as their Annual Information Form and Management’s Discussion and Analysis.

The CSA will continue to monitor developments in the U.S. marijuana industry.

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

Correction list for hyphenation

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