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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 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 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.

CSA reports on climate change-related disclosure project

Apr 05, 2018

On April 5, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-354 "Report on Climate change-related Disclosure Project". The report summarizes the findings of the CSA’s previously announced project to review the disclosure by reporting issuers of risks and financial impacts associated with climate change, and outlines its plans for future work.

The CSA intends to develop new guidance and initiatives to educate issuers about the disclosure of climate change-related risks, opportunities and financial impacts. The CSA also intends to consider new disclosure requirements regarding non-venture issuers’ corporate governance practices in relation to material business risks including, for example, emerging or evolving risks and opportunities arising from climate change, potential barriers to free trade, cybersecurity and disruptive technologies. As a general rule, materiality is the determining factor in considering whether information must be disclosed to investors. 

In addition to these initiatives, the CSA will continue to monitor the quality of issuers’ climate change-related disclosures, best practices in this area and developments in reporting frameworks. The CSA will also continue to assess whether investors require additional types of information, such as disclosure of certain categories of greenhouse gas emissions, to make investment and voting decisions.

The report reflects the CSA’s consideration of key research findings, a review of the disclosure of large TSX-listed issuers, a survey of TSX-listed issuers and extensive consultation with investors, issuers and other stakeholders. The CSA also reviewed how current Canadian securities disclosure requirements differ from or are consistent with international climate change-related disclosure requirements and voluntary frameworks.

Review the press release and a backgrounder with additional details on the CSA's website and the Notice on the CSA members’ websites.

Demystifying Crypto in Canada: Will 2018 Be the Year of Blockchain?

Mar 07, 2018

On March 7, 2018, Davies published an article on how the year 2017 was one of tremendous growth for blockchain, as the technology underlying Bitcoin gained attention from mainstream media outlets, financial institutions, investment funds and securities regulators across the globe.

Blockchain’s rise to prominence was led by an interest in blockchain-based token sales, commonly referred to as initial coin offerings (ICOs), which raised almost US$4 billion in 2017 alone. Yet despite blockchain’s impressive growth, many commentators believe we have just scratched the surface, labelling 2018 the “Year of Blockchain.”

Review the full article on Davies' website.

Dodd-Frank Whistleblower Protection Extends Only to Employees Who Report to SEC

Feb 21, 2018

On February 21, 2018, the United States Supreme Court narrowed the universe of plaintiffs who can claim protection under the whistleblower anti-retaliation provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

In a unanimous decision, the Court held that employees are not protected under Dodd-Frank unless they report information relating to a violation of the securities laws to the Securities and Exchange Commission (SEC). Employees who only report violations internally within their company, therefore, are not protected by Dodd-Frank’s anti-retaliation provisions.

Review the decision on the Supreme Court's website and an article on Holland & Hart LLP's website.

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