The OSC has seen a significant number of confidential prospectus pre-files submitted in recent months and reminds issuers of the following best practices when filing a confidential pre-file prospectus to streamline the review process:

• Pre-filed prospectuses should contain all financial and non-financial disclosure that would be included in the actual prospectus filing, and missing disclosure can result in review timelines being extended.
• A deal timeline should be included in the filed cover letter to assist staff in understanding when the review should ideally be completed. The OSC expects that the issuer will file a preliminary prospectus shortly after the completion of the review of the pre-filed prospectus.
• Any legal or accounting questions where OSC staff input is required should be highlighted.

The OSC will not review pre-files of non-offering prospectuses, other than non-offering prospectuses pre-filed in connection with cross-border financings or where there is a specific legal or accounting matter requiring staff input. Pre-files of prospectuses that solely qualify the issuance of securities on conversion of convertible securities, such as special warrants, will also not be reviewed.

Review the press release on the OSC's website.

Under the OSC's Order, eligible issuers are exempt from NI 52-112 in respect of a disclosure of a specified financial measure pursuant to an OSFI Guideline where: (i) the OSFI Guideline specifies the composition of the measure and the measure was determined in compliance with that OSFI Guideline; and (ii) in proximity to the measure, the eligible issuer discloses the OSFI Guideline under which the measure is disclosed. "Eligible issuer" in the Order is defined to mean a reporting issuer that "is, or that has a subsidiary or an affiliate that is, a federal financial institution subject to OSFI Guidelines". A "federal financial institution" is defined in reference to the Bank Act (Canada), and generally includes banks, cooperative credit associations, trust companies and insurance companies.

The conditions for the exemption mirror the existing exception under section 4(1)(e) NI 52-112 in respect of disclosure of a specified financial measure that is required under law or by an SRO of which the issuer is a member. According to the OSC, the Order is intended to reduce the burden for eligible issuers subject to OSFI Guidelines "since sufficient disclosure exists surrounding these measures."

The Order came into effect on December 2, 2021 and expires on the earlier of June 2, 2023 and the effective date of rules that include an exception to the application of NI 52-112 based on disclosure of a specified financial measure pursuant to an OSFI Guideline.

Re­view the related article by Stikeman Elloitt on the Mondaq web­site.

The report provides issuers with guidance on trends and issues identified during compliance reviews. Key areas of focus in fiscal 2021 included MD&A disclosure, COVID-19 disclosure, mining technical reports, the use of non-GAAP financial measures, as well as diversity on boards and in executive officer positions.

The report also highlights critical policy initiatives affecting reporting issuers’ disclosure, such as proposed changes to the CD requirements to streamline and clarify annual and interim filings, the publication of proposed climate-related disclosure requirements, as well as considerations around broader diversity.

Review the press release and staff notice on the OSC's website.

Since its launch on July 14, 2016, the OSC Whistleblower Program has received approximately 650 tips from whistleblowers across Canada and over 15 foreign jurisdictions. To date, the OSC has awarded more than $8.6 million to whistleblowers. Enforcement actions involving whistleblower tips have resulted in monetary sanctions and voluntary payments of approximately $44 million.

Additional highlights from the Whistleblower Program’s initial five years:

• The number of tips received has grown with each subsequent year as awareness of the program increases.
• Whistleblower tips included reports of potential misleading disclosure to investors, material misstatements in financial statements, illegal insider trading or tipping, market manipulation, abusive short selling, and reprisals against employee whistleblowers.
• Tips were received from individuals with specialized knowledge of misconduct. The whistleblowers were employees and company insiders as well as external analysts, industry professionals, and investors with unique knowledge about misconduct or the perpetrators of misconduct.
• Some whistleblowers reported anonymously through a lawyer.
• As a result of whistleblower tips, OSC staff identified persons and entities involved in misconduct in several industries, including financial services, natural resources, and technology.
• Awards are paid only after cases are concluded, and all rights to appeal have expired. Investigations and proceedings involving securities-related misconduct can be complex and may take several years to complete before an award can be made.
• The OSC values whistleblower tips and reviews each one carefully. In some cases, while not eligible for the OSC’s program, tips may result in a referral to another agency, for example, if a matter falls outside of the OSC’s jurisdiction.
• Robust whistleblower protections are built into the OSC’s Whistleblower Program. The details of each case are kept strictly confidential, and all reasonable efforts are made to ensure a whistleblower’s identity is protected.

The OSC intends to publish a detailed report early next year with more information about the program’s activities.

Re­view the press release on the OSC's web­site.  

The topic of the panel dis­cus­sion was "Reg­u­la­tions, dis­clo­sures, financial risk and private financing for the green economy".

A recording of the one-hour debate is available on YouTube.

In brief: The issue of climate change has evolved and now has serious implications for the duties of directors and officers as well as the potential for additional disclosure obligations for companies. This primer discusses climate change as a financial and systemic risk; it covers directors’ duties and disclosure obligations regarding climate change and current litigation around climate change, as well as providing recommendations that can help directors prepare their companies for the effects of climate change.

This resource can provide your board with valuable insights:

• This primer features jurisdictional overviews for 21 countries/regions.
• Learn more about current litigation on climate change.
• Gain valuable recommendations for proactive steps that your board can take now to prepare your company for the effects of climate change.

Most relevant audiences: risk oversight committee members, audit committee members, the full board

Noting the increasing interest in climate change disclosures, Ms. Lee spoke to the following topics:

• Putting ESG in context in the recent proxy season;
• Understanding ESG and Board obligations; and
• Mitigating ESG risks and maximizing ESG opportunities.

Re­view the full text of Ms. Lee’s speech on the SEC's web­site.

The proposed rules would require an issuer to provide a new Form SR before the end of the first business day following the day the issuer executes a share repurchase. Form SR would require disclosure identifying the class of securities purchased, the total amount purchased, the average price paid, as well as the aggregate total amount purchased on the open market in reliance on the safe harbor in Exchange Act Rule 10b-18 or pursuant to a plan that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c).

Review the press release on the SEC's website.

On June 15, 2021, the SEC announced a settlement with First American Financial Corporation for what the SEC found were inadequate disclosure controls and procedural violations, revealed in connection with a cyber incident last spring.

In a related development, recently the SEC’s Enforcement Division sent information requests to what appears to be a wide range of companies asking about how they responded to a high-profile software vulnerability that came to light in late 2020 involving an information technology company. The information requests in this new Enforcement sweep also ask recipients to provide information about other compromises, including those that were not disclosed at the time.

The authors of the article suggest that, with new Chair Gary Gensler now several months into establishing priorities at the SEC, it is possible that the First American settlement, in combination with the new Enforcement sweep, may signal the SEC Enforcement Division’s increasing scrutiny on cybersecurity disclosure policies and procedures.

Re­view the full text of the article.

Regarding the integration of ESG factors by investment managers, most respondents think:

• customers and their investment managers should decide on ESG integration, not regulators;
• regulators should not mandate ESG integration;
• financial materiality should be the primary focus of investment managers who do integrate ESG issues into their investment performance; and
• greenwashing should be addressed with clear and consistent rules on marketing and measuring adherence to ESG product claims.

On public company reporting on ESG matters, most respondents think:

• formal, government-backed standards for public company reporting on ESG should be established;
• mandatory public company reporting on ESG should be delayed until after formal reporting standards are enacted;
• a baseline of globally consistent standards for ESG reporting is preferred to many regional approaches;
• voluntary ESG reporting pursuant to private reporting frameworks is not favored; and
• auditor assurance of ESG reporting should wait until government-backed standards for ESG reporting are in place and mandatory for public companies.

Re­view the press release and the full re­port on the CFA In­sti­tute's web­site.