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.

AMF provides issuers with guidance on modern slavery disclosure requirements

Sep 04, 2018

On September 4, 2018, the Autorité des marchés financiers (AMF) published the Notice relating to modern slavery disclosure requirements. The notice provides issuers with guidance on their modern slavery disclosure requirements so that they can determine what information they need to disclose and can improve or complete that information.

Modern slavery, which can take a variety of forms, includes any work or service performed by a person involuntarily and under the threat of any penalty.

The notice provides an overview of recent key regulatory or government initiatives and highlights investors’ growing interest in the social responsibility of issuers. It also describes some of the requirements that may compel issuers to provide information on modern slavery in their continuous disclosure documents and presents the results of an issue-oriented review by AMF staff of the disclosure practices of certain issuers.

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

AMF publishes annual summary of corporate finance oversight and regulatory activities

Sep 20, 2018

On September 20, 2018, the Autorité des marchés financiers (AMF) published its annual Summary of Oversight and Regulatory Activities, which highlights its key initiatives for the 2017-2018 fiscal year.

As in 2017, the summary presents the main deficiencies identified in companies’ continuous disclosure and financing documents and provides examples of corrected information and reminders to help them prepare compliant documents. New content for this year includes a section on the booming cryptocurrency and marijuana industries, as well as a section on socially responsible investing based on environmental, social and governance criteria. The AMF is taking a closer look at the information provided to investors in these areas and, among other things, has published a notice on the disclosure of climate change-related risks and financial impacts.

The summary also contains an initial report on the application of the Act respecting transparency measures in the mining, oil and gas industries and outlines several regulatory initiatives.

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

ASC announces the addition of a whistleblower program to its expanding enforcement toolbox

Nov 20, 2018

On November 20, 2018, the Alberta Securities Commission (ASC) announced the creation of its whistleblower program and the Office of the Whistleblower (OWB) through the adoption of "ASC Policy 15-602 Whistleblower Program" and accompanying amendments to the Securities Act (contained within Bill 20).

The program allows whistleblowers to safely and easily report potential breaches of Alberta securities laws. A whistleblower is an employee, including a person who is a contractor or a director of that organization, who voluntarily provides information to the ASC about an alleged securities law violation by their employer.

Employees are encouraged to provide good faith tips on securities-related misconduct by their employer, which can be a person or company. Tips could include information on insider trading, market manipulation, fraud, or issues relating to corporate disclosure or financial statements.

Along with new mechanisms and processes to make reporting easier, the program provides rigorous protections for whistleblowers. These include:

  • Heightened protection of the identity of whistleblowers. New provisions in the Securities Act (Alberta) mandate that a whistleblower’s identity is confidential and can only be disclosed in limited circumstances.
  • Protection from reprisal. It is against the law to take a reprisal against an employee, or a relative of the employee, for acting as a whistleblower to the ASC. Examples of a reprisal include dismissal from employment, demotion or harassment, among others. This protection is further strengthened by the ASC’s ability to take enforcement action in the event a reprisal occurs. The Securities Act establishes civil liability for an employer, or fellow employee, who takes a reprisal against a whistleblower.

Review the press release and policy on the ASC's website.

ASC finalizes rule amendments to facilitate cross-border offerings by Alberta issuers

Aug 10, 2018

On August 10, 2018, the Alberta Securities Commission (ASC) published a new rule which will facilitate offerings by Alberta issuers to investors outside Alberta by reducing the regulatory impediments to such offerings. The new rule, ASC Rule 72-501 "Distributions to Purchasers Outside Alberta", will take effect on August 31, 2018. It repeals and replaces an existing rule of the same name, which was originally implemented in 1998.

The new rule significantly expands upon the exemptions available when an Alberta issuer seeks to distribute securities to investors outside of Canada. It also provides a prospectus exemption for distributions made under the offering memorandum exemption within Canada. The exemptions are conditional on material compliance with the disclosure requirements of the purchaser’s jurisdiction. The rule also contains prospectus exemptions for the resale of securities outside of Canada if the issuer is not a reporting issuer in any jurisdiction within Canada.

Review the press release and new rule on the ASC'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.

BCSC releases 2018 Compliance Report Card

Nov 28, 2018

On November 28, 2018, the British Columbia Securities Commission (BCSC) released its annual report on compliance. The annual report card. The BCSC is finding more deficiencies among portfolio managers, investment fund managers and exempt market dealers, as the commission becomes increasingly precise in choosing which firms to closely scrutinize.

Inadequate policies and procedures – including questionable risk management, outdated manuals, and weak cybersecurity policies and procedures – were the single most common category of deficiencies. Other common problems included inadequate disclosure, especially about the registrant-client relationship, and patchy efforts to ensure the suitability of investments for each client.

As a result of the compliance exams, the BCSC imposed extra restrictions on two firms, one of which decided to surrender its registration as a result. Two other firms chose to give up their registrations while still being examined.

The BCSC is increasingly referring the most egregious cases of non-compliance to its enforcement team for further investigation and possible penalties, including suspension or bans from the capital markets, as well as fines. In 2018, the BCSC opened investigations into four cases that began as compliance reviews.

Review the press release and Compliance Report Card on the BCSC’s website.

Canadian 2019 proxy season: what lies ahead

Nov 28, 2018

In November 2018, Norton Rose Fulbright published a summary of their recommendations when preparing for the upcoming proxy season.

Their recommendations include:

  • ESG: Take the lead on ESG, especially on environmental disclosure.
  • Diversity: When reviewing or adopting a diversity policy, keep in mind the definition of “designated group” and consider adopting a specific target relating to gender diversity. Review skill matrices and lists of potential board candidates.
  • Board renewal: Do not let your board become stale. Be proactive in reviewing its composition.
  • Directors: Balance the benefits of having well-known executives and busy corporate directors on the board versus the risk of lower engagement due to other commitments. Take proxy advisors’ voting guidelines into account when making nominations.
  • Proxy access: Stay abreast of developments regarding director appointments, including proxy access.
  • Directors’ elections: Review articles and by-laws, as well as majority voting policies. Consider vulnerability of directors.
  • Say-on-pay: Take your say-on-pay results seriously, have a strategy in place in cases of low approval rates and be ready to implement it when required.
  • Executive compensation: Do not underestimate shareholders’ interest in compensation.
  • Non-GAAP financial measures: Re-evaluate disclosure practices on non-GAAP financial measures in light of the proposed National Instrument and stay tuned for its entry into force.
  • Information to shareholders: Balance the benefits of physically mailing the materials to shareholders versus the savings to be made when only posting documents online.
  • Virtual shareholder meetings: Favour hybrid meetings to enjoy the benefits of both virtual and physical meetings, if you can afford the costs.
  • Accessibility: Ensure you meet the new online disclosure requirements and consider translating documents for shareholder convenience.
  • Director-shareholder engagement: Adopt an engagement strategy and identify topics for a productive discussion with shareholders.

Review the summary on Norton Rose Fulbright's website.

Canadian Securities Administrators highlight common deficiencies in issuers’ continuous disclosure

Jul 19, 2018

On July 19, 2018, the Canadian Securities Administrators (CSA) published Staff Notice 51-355 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2018 and March 31, 2017, a biennial report that summarizes CSA staff’s ongoing review of reporting issuers’ (issuers’) continuous disclosure and highlights common deficiencies and best practices.

The CSA noted that it continues to see deficiencies in issuers’ use of non-GAAP financial measures, and this remains an area of focus for the CSA. It strongly encourages issuers to use this report as a guide to make improvements, as disclosure requirements are at the core of its investor protection regime.

Other areas where issuers can improve disclosures include, but are not limited to: fair value measurements and disclosures; forward looking information; discussions of issuers’ results of operations and significant projects in development; climate change disclosures; and mineral project disclosure. 

In fiscal 2018, 51 per cent (2017 – 43 per cent) of review outcomes required issuers to take action to improve and/or amend their disclosure, or resulted in the issuer being referred to enforcement, cease traded or placed on the default list.

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

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