In Canada, most crypto asset reporting issuers started entering the public markets in 2017 or 2018 through a restructuring transaction with, or a change of business by, an existing reporting issuer. Given this timing, most of these reporting issuers completed their first annual disclosure filings in 2019 for their annual reporting period ending in 2018. The notice describes several staff observations from their review of these initial disclosures.

The notice outlines the disclosure expectations of CSA staff in key areas such as safeguarding crypto assets, the use of crypto asset trading platforms, risk factors, material changes and promotional activities. The notice also provides guidance to crypto asset issuers on navigating certain complex accounting and disclosure issues.

The CSA will continue to evaluate the disclosure of reporting issuers engaged in crypto asset-related activities and will consider the need for further guidance or policy changes specific to these issuers.

Review the press release and guidance.

The requirements contemplate disclosure largely consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. They will improve the comparability of the information issuers disclose and help investors make more informed investment decisions by enhancing climate-related disclosure. The requirements are also intended to address costs associated with reporting across multiple disclosure frameworks, improve access to global markets and facilitate an equal playing field for issuers.

The proposed requirements contemplate disclosure by issuers related to the four core elements of the TCFD recommendations:

• Governance – an issuer’s board’s oversight of and management’s role in assessing and managing climate-related risks and opportunities.
• Strategy – the short-, medium- and long-term climate-related risks and opportunities the issuer has identified and the impact on its business, strategy and financial planning, where such information is material. As a modification from the TCFD recommendations, the proposed disclosure would not include the requirement to disclose “scenario analysis”, which is an issuer’s description of the resilience of its strategy within different climate-related scenarios, including a 2°C or lower scenario.
• Risk management – how an issuer identifies, assesses and manages climate-related risks and how these processes are integrated into its overall risk management.
• Metrics and targets – the metrics and targets used by an issuer to assess and manage climate-related risks and opportunities where the information is material.

Issuers would be required to disclose their Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions and the related risks, or their reasons for not doing so. The CSA is also consulting on an alternative approach that would require issuers to disclose Scope 1 GHG emissions. Under this alternative, disclosure of Scope 2 and Scope 3 GHG emissions would not be mandatory.

Review the press release on the CSA's website and requirements on the OSC's website.

The proposal provides additional guidance on the interpretation of primary business and predecessor entity including in what situations, and for which time periods, financial statements would be required. It provides guidance on the circumstances when additional information may be necessary for the prospectus to meet the requirement to contain full, true and plain disclosure of all material facts relating to the securities being distributed. The proposal also clarifies when an issuer can use the optional tests to calculate the significance of an acquisition, and when an acquisition of mining assets would not be considered an acquisition of a business for securities legislation purposes.

Subject to the comment process and required approvals, the final amendments are expected to become effective on July 15, 2022.

Review the press release on the CSA's website.

The proposed amendments:

• Streamline and clarify certain disclosure requirements in the management’s discussion and analysis (MD&A) and the annual information form (AIF) for non-investment fund reporting issuers.
• Eliminate certain requirements that are redundant or no longer applicable.
• Combine the financial statements, MD&A and, where applicable, AIF into one reporting document called the annual disclosure statement for annual reporting purposes, and the interim disclosure statement for interim reporting purposes.
• Introduce a small number of new requirements to address gaps in disclosure.

The proposed amendments reflect comments received in response to CSA Consultation Paper 51-404 Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers. They also reflect research on comparable requirements in other countries and other stakeholder feedback about disclosure requirements in annual and interim filings.

The CSA is also consulting on a proposed framework for semi-annual reporting on a limited basis. The framework would allow venture issuers that are not SEC issuers the choice of reporting on a semi-annual rather than a quarterly basis. Alternative disclosure would be required for interim periods where financial statements and MD&A would not be filed. While no rule is being published for comment at the present time, the CSA is soliciting public comment on whether rules consistent with the proposed framework could further reduce regulatory burden for these issuers while still providing investors with adequate information to make informed decisions.

Review the press release and proposed amendments on the OSC's website.

The CSA received feedback, as part of the reducing regulatory burden for non-investment fund reporting issuers consultation, that certain prospectus requirements in the base shelf context create unnecessary regulatory burden for established reporting issuers that have strong market following and up-to-date disclosure records. It was recommended that the CSA enhance the current prospectus system by amending the base shelf prospectus regime to implement a Canadian WKSI regime.  

This pilot project will assist the CSA in evaluating the appropriateness of the eligibility criteria and conditions, and identifying any potential public interest concerns that should be addressed in any future rule amendments to implement a Canadian WKSI regime. Any future rule amendments will be adopted by the CSA through the normal rule-making process.

The exemptions come into effect on January 4, 2022. Full details of the WKSI criteria and conditions are contained in the local blanket orders and CSA Staff Notice 44-306 Blanket Orders Exempting Well-known Seasoned Issuers from Certain Prospectus Requirements.

Review the press release on the CSA's website.

Mr. Liikanen began his speech with a strong statement:

There is a path to global sus­tain­abil­ity standards if we, on the one hand, can create a global baseline of sus­tain­abil­ity-re­lated dis­clo­sures to fa­cil­i­tate com­pa­ra­bil­ity for in­vest­ment decision making and, on the other, work with ju­ris­dic­tions to ensure com­pat­i­bil­ity between this global baseline and their own ini­tia­tives.

He then explained that while gov­ern­ments can establish policy frame­works, it is the investors that price in­vest­ment capital based on how those policies will impact companies in the long term. This in turn provides companies with an incentive to embrace sus­tain­able business models. Whether this process works smoothly depends on high-qual­ity, globally com­pa­ra­ble in­for­ma­tion on which investors can assess sus­tain­abil­ity risks and make informed decisions.

Mr. Liikanen then explained that this is the place where an in­vestor-fo­cused international stan­dard-set­ter such as the IFRS Foun­da­tion comes in.

Firstly, the IFRS Foun­da­tion's approach to global standards is market and demand led. The Foun­da­tion provides a setting where investors, reg­u­la­tors, companies, academics and stan­dard-set­ters from around the world can work and solve problems together. This work follows a trans­par­ent and inclusive due process that has evolved and proven valuable over time.

And secondly, the IFRS Foun­da­tion's ex­pe­ri­ence in international stan­dard-set­ting can help to overcome a situation where many ini­tia­tives attempt to improve com­pa­ra­bil­ity, but their numbers have led to greater diversity. The major players in the field, including the TCFD, the VRF and the CDSB, affirm that con­sol­i­da­tion is required and have welcomed the IFRS Foun­da­tion's proposals to establish a new International Sus­tain­abil­ity Standards Board within the gov­er­nance structure of the IFRS Foun­da­tion. Mr. Liikanen declared:

Our shared ambition is to introduce a global baseline of standards for sus­tain­abil­ity-re­lated dis­clo­sures which are focused on meeting the in­for­ma­tion needs of investors globally when assessing en­ter­prise value. En­ter­prise value is a key concept, designed to capture expected value creation for investors in the short, medium and long term, and is in­ter­de­pen­dent with value creation for society and the en­vi­ron­ment.

Mr. Liikanen then turned to the question of how ju­ris­dic­tional and international standards can be rec­on­ciled. He noted that the approach advocated by IOSCO and others is to establish a global baseline of sus­tain­abil­ity-re­lated dis­clo­sure standards to meet investor needs, which would be made available for use by ju­ris­dic­tions as a base for public policy needs. This approach would provide global com­pa­ra­bil­ity for investors in a way that allows ju­ris­dic­tions to combine the global standards with their own ad­di­tional re­quire­ments. He concluded his speech by stating:

To make this work will require political will, com­pro­mise and flex­i­bil­ity from all parties — including the IFRS Foun­da­tion. Success is by no means certain, but if you want global sus­tain­abil­ity-re­lated dis­clo­sures for investors, this offers a path.

For further information, refer to full text of Mr Liikanen's speech on the IASB website.

Noting that the SEC recently called for public comment on the issue of mandatory climate reporting and that  comments are in the process of being posted on the SEC’s site, she observed that, in the original request for information, one of the questions that the SEC asked was as follows:

What climate-related information is available with respect to private companies, and how should the Commission’s rules address private companies’ climate disclosures, such as through exempt offerings, or its oversight of certain investment advisers and funds?

Not all commenters have responded to this question, but the blog posting by Ms. Ann Lipton highlights a number of interesting responses made by certain commentators to this question.

Re­view the blog posting for more details.

The Insight document published by Davis Polk summarizes thirty comment letters that they consider both important and representative of differing stakeholder views, in anticipation of a formal SEC proposal expected in or before October 2021.

Re­view the Insight document on the Davis Polk website.

The report outlines how CSA members continued to strengthen their technical knowledge on critical and emerging topics, such as open-source intelligence and mobile forensics, and implement best practices and tools across the country to recognize and target fraudulent activity. 

The CSA also formally launched the Market Analysis Platform (MAP) in October 2020. MAP is a data repository and analytics system designed to help all CSA members identify and analyze market misconduct. The system has increased efficiency and speed in accessing and analyzing trading activity, which is critical as capital markets continue to evolve.

Re­view the press re­lease and re­port on the CSA’s web­site.

• National Instrument 45-110 is intended to facilitate securities crowdfunding for start-ups and early stage issuers on a national basis.
• New exemptions will include a prospectus exemption, as well as an exemption from the dealer registration rules for funding portals.
• National Instrument 45-110 will replace the local exemption orders currently in force on a province-by-province basis.
• Assuming Ministerial approvals are obtained, the new national instrument will take effect on September 21, 2021.

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