2018

Canadian securities regulators release fourth review regarding women on boards and executive officer positions

Sep 27, 2018

On September 27, 2018, the securities regulatory authorities in Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario, Quebec and Saskatchewan (the participating jurisdictions) published CSA Multilateral Staff Notice 58-310 "Report on Fourth Staff Review of Disclosure regarding Women on Boards and in Executive Officer Positions".

Key trends outlined in this year’s review include:

  • The total percentage of board seats held by women increased to 15 per cent in 2018 from 11 per cent in 2015.
  • When board seats became available and were filled, nearly three in 10 were filled by women.
  • The number of issuers with at least one woman on their board increased to 66 per cent in 2018, from 49 per cent in 2015.
  • 42 per cent of issuers had adopted a policy on identifying and nominating women directors in 2018, representing an almost three-fold increase since 2015.
  • Issuers that adopted targets for the representation of women on their boards increased to 16 per cent in 2018 from 7 per cent in 2015.
  • The number of issuers with at least one woman in executive officer positions increased to 66 per cent in 2018, from 60 per cent in 2015.

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

Canadian securities regulators publish guidance on disclosure expectations for cannabis issuers

Oct 10, 2018

On October 10, 2018, the Canadian Securities Administrators (CSA) published Staff Notice 51-357 Staff "Review of Reporting Issuers in the Cannabis Industry", which summarizes CSA staff’s review of 70 reporting issuers’ (issuers) continuous disclosure, and highlights common deficiencies and best practices.

“Given the significant growth and interest in the cannabis industry, it is imperative that investors be provided with transparent information about issuers’ financial performance and risks related to their operations,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Our review shows that the quality of disclosure in this area needs to be enhanced, and we encourage cannabis issuers to use this publication as a guide to make improvements.”

The CSA will continue to monitor and assess disclosure practices in the cannabis industry in its continuous disclosure and prospectus review programs.

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

Canadian Securities Regulators Publish Final Amendments to the Report of Exempt Distribution

Jul 19, 2018

On July 19, 2018, the Cana­dian Se­cu­ri­ties Ad­min­is­tra­tors (CSA) published its final amendments to National Instrument 45-106 Prospectus Exemptions, which revise Form 45-106F1 Report of Exempt Distribution (the Report). The CSA also made a related change to Companion Policy 45-106CP Prospectus Exemptions.

Issuers and underwriters who rely on certain prospectus exemptions to distribute securities are required to file the Report within the prescribed timeframe. The amendments aim to provide greater clarity and flexibility regarding the certification requirement of the Report and streamline certain information requirements, while still providing regulators with the information necessary for oversight and policy development.

Provided all necessary ministerial approvals are obtained, the amendments will come into force on October 5, 2018.

Re­view the press re­lease on the CSA's web­site and the final amendments on the CSA mem­bers' 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 cautions issuers about problematic promotional activities

Nov 29, 2018

On November 29, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-356, "Problematic promotional activities by issuers", cautioning companies to avoid promotional activities that may artificially increase an issuer’s share price or trading volume, or may mislead investors.

The notice outlines CSA Staff’s concerns with certain promotional practices, including dissemination of unbalanced or unsubstantiated material claims. Such practices have been observed among issuers in the venture market, though expectations about disclosure and promotional activities apply to all issuers.

Examples of promotional activities that may be misleading include:

  • Disseminating presentations, marketing materials, social media posts, or other information that describe early-stage plans with unwarranted certainty, or make unsupported assertions about growth of markets or demand for a product;
  • Announcing an issuer name or business change to reference an emerging industry or technology without a supporting business plan or comprehensive risk disclosure;
  • Compensating third parties who use social media and general investing blogs to promote issuers, but do not disclose their agency, compensation or financial interest.

CSA members will continue to monitor promotional activities undertaken by, or on behalf of, issuers, and will take action as necessary, including ordering a clarifying news release, a removal of overly promotional language from company communications, or a re-filing of disclosure documents.

Review the press release on the CSA's website and the Staff Notice on the CSA members’ 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 proposes rule regarding non-GAAP and other financial measures

Sep 06, 2018

On September 6, 2018, the Canadian Securities Administrators (CSA) published for comment Proposed National Instrument 52-112 "Non-GAAP and Other Financial Measures Disclosure" (the Proposed Instrument), which establishes disclosure requirements for issuers that disclose non-GAAP and other financial measures. These measures often lack standardized meanings, resulting in potentially misleading or confusing disclosure.

When implemented, the Proposed Instrument will provide authoritative Canadian securities legislative requirements for issuers when they disclose non-GAAP and other financial measures. The Proposed Instrument would replace Staff Notice 52-306 (Revised) Non-GAAP Financial Measures, which provided guidance to help ensure such disclosure is not misleading. Staff Notice 52-306 was issued in 2003 and updated several times subsequently to respond to changing circumstances.

Additionally, the Proposed Instrument:

  • relates to the disclosure of financial measures (including ratios) that are non-GAAP financial measures, segment measures, capital management measures and supplementary financial measures, as defined in the Proposed Instrument;
  • refers to all documents (e.g., Management’s Discussion and Analysis, news releases, the Annual Information Form, prospectuses etc.) including other written communications in websites or social media; and
  • includes an updated definition of a non-GAAP financial measure which builds upon and incorporates the disclosure guidance in Staff Notice 52-306.

Review the press release on the CSA's website and the Proposed National Instrument 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.

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