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Canadian securities regulators outline corporate governance disclosure expectations for cannabis issuers

  • Securities - CSA Image

Nov 12, 2019

On November 12, 2019, the securities regulatory authorities in Ontario, British Columbia, Quebec, New Brunswick, Saskatchewan, Manitoba and Nova Scotia (the participating jurisdictions) published guidance to help cannabis issuers strengthen their governance disclosures, including disclosure of financial interests in significant corporate transactions.

The cannabis industry has experienced significant growth, along with merger and acquisition transactions (M&A Transactions), over the past few years. As the market has expanded, many cannabis issuers and their directors and executive officers have participated in the financing of other cannabis issuers, resulting in higher than usual crossover of financial interests. These interests may include overlapping debt and equity, or other business relationships. Staff in the participating jurisdictions have found instances where the quality of cannabis issuers’ disclosure in this area can be improved.

While the guidance is intended for cannabis issuers, all reporting issuers, especially issuers in other emerging growth industries, should ensure that governance disclosures address potential conflicts of interests. CSA staff will continue to monitor these areas. 

The CSA’s guidance can be found in Multilateral Staff Notice 51-359 Corporate Governance Related Disclosure Expectations for Reporting Issuers in the Cannabis Industry.

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

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