Securities

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ASC adopts Crowdfunding rule enabling Alberta’s small and medium businesses to raise capital online

Oct 31, 2016

On October 31, 2016, the Alberta Securities Commission (ASC) announced that it has adopted Multilateral Instrument 45-108, Crowdfunding (MI 45-108). The new rule is available immediately and introduces a crowdfunding prospectus exemption for issuers as well as a registration framework for funding portals.

The implementation of MI 45-108 follows the recent adoption of ASC Rule 45-517 Prospectus Exemption for Start-up Businesses (ASC Rule 45-517), which was introduced to help facilitate Alberta-based small or start-up issuers seeking to raise modest amounts of capital from Alberta investors. MI 45-108 is viewed to be complementary with ASC Rule 45-517 and is designed to accommodate moderate financings being raised strictly through an online funding portal across multiple jurisdictions in Canada.

Review the press release on the ASC's website.

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Regulators call for improved non-GAAP financial measure disclosures

Jun 23, 2016

During the first half of 2016, we saw a renewed focus on non-Generally Accepted Accounting Principle (non-GAAP) financial measure disclosures by securities regulators on both sides of the border, as well as globally. In our CFO’s corner series, Alexia Donoghue from our National Securities group explores what this means for Canadian reporting issuers, and highlights what regulators in other jurisdictions are doing to address these non-GAAP financial measures.

Visit the CFO’s corner in Deloitte’s Centre for Financial Reporting to read this editorial as well as any previous articles that you may have missed.

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OSFI Guideline IFRS 9 Financial Instruments and Disclosures

Jun 21, 2016

On June 21, 2016, the Office of the Superintendent of Financial Institutions (OSFI) issued the final version of its guideline IFRS 9 Financial Instruments and Disclosures, which provides guidance to federally regulated entities on the application of IFRS 9 Financial Instruments, and in particular, the implementation of the expected loss framework under IFRS 9.

The guideline also incorporates a number of OSFI’s existing accounting and disclosure guidelines related to financial instruments.

Review the press release and Guideline on the OSFI's Web site.

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AMF launches whistleblower program

Jun 20, 2016

On June 20, 2016, the Autorité des marchés financiers (AMF) launched its whistleblower program, intended to better protect individuals who report wrongdoing and enable the AMF to gather information on offences committed under the laws and regulations it administers.

Under the program, whistleblowers benefit from informer privilege as soon as a wrongdoing is reported. Investigators are trained specifically to respond to the issues faced by whistleblowers and make every effort to maintain the confidentiality of the information and the documents received, as well as the whistleblower’s identity.

Review the press release and program on the AMF's Web site.

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OSC Announces Office of the Whistleblower Launch Date and Appoints Chief

Jun 16, 2016

On June 16, 2016, the Ontario Securities Commission (OSC) announced the appointment of Kelly Gorman as Chief of the Office of the Whistleblower, effective immediately. The Office of the Whistleblower will open to receive tips on July 14, 2016.

The OSC’s Office of the Whistleblower will be the first of its kind for securities regulators in Canada, offering compensation of up to $5 million to whistleblowers who come forward with tips that lead to successful enforcement action. It is expected to increase the effectiveness of the OSC’s enforcement efforts by providing access to high quality information about matters such as insider trading, accounting and disclosure violations and registrant misconduct.

The program provides important whistleblower protections like confidentiality and anti-retaliation provisions. Anti-retaliation provisions, a key feature of the whistleblower program, are expected to be in place by the time of launch.

Review the press release on the OSC's Web site.

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IOSCO issues final statement on non-GAAP financial measures

Jun 08, 2016

On June 8, 2016, the International Organization of Securities Commissions (IOSCO) released its final guidance setting out IOSCO's expectations for issuers with respect to the presentation of financial measures other than those prescribed by Generally Accepted Accounting Principles (GAAP), so called 'non-GAAP financial measures'.

The IOSCO guidance is contained in the Statement on Non-GAAP Financial Measures, which sets out IOSCO's expectations for the presentation of such measures by issuers, including that sufficient information should accompanying non-GAAP financial measures to aid in their understanding, and that the measures should be presented transparently and with disclosure of how they are calculated.

The statement provides specific expectations in the following broad categories:

  • Defining the non-GAAP financial measure. This encompasses providing a clear explanation of the basis of calculation, clearly labelling measures such that they are distinguished from GAAP measures, explaining why the measures are useful, and explicitly stating the non-GAAP measure does not have a standardized meaning and may not be comparable between entities.
  • Unbiased purpose. This requires that non-GAAP financial measures should not be used to avoid presenting adverse information to the market.
  • Prominence of GAAP measures versus non-GAAP financial measuress. Non-GAAP measures and their most directly comparable GAAP measures should be presented with equal prominence, or the GAAP measure given greater prominence, and non-GAAP measures should not in any way confuse or obscure the presentation of GAAP measures.
  • Reconciliation to comparable GAAP measures. Reconciliations should be provided between non-GAAP financial measures and their most directly comparable GAAP measure presented in the financial statements, with adjustments explained and reconcilable to the financial statements, or information about how they are calculated provided.
  • Presentation of non-GAAP financial measures consistently over time. Measures should generally remain consistent from period to period, include comparative information, with any changes in composition explained and also reflected in comparative information and discontinued use of a non-GAAP measure sufficiently motivated.
  • Recurring items. Items that are reasonably likely to affect past and future periods, such as restructuring costs and impairment losses, should not be described as non-recurring, infrequent or unusual.
  • Access to associated information. The information that issuers provide regarding non-GAAP financial measures should be readily and easily accessible to third parties.

The statement is intended to be used by entities applying International Financial Reporting Standards (IFRSs) and other accounting principles.

Please click for (links to IOSCO Web site):

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Equity Compensation Plans and Company Websites: TSX Disclosure Requirements

May 26, 2016

On May 26, 2016, the Toronto Stock Exchange (TSX) published proposed amendments to introduce website disclosure requirements for TSX listed issuers and amend the disclosure requirements regarding security based compensation arrangements in the TSX Company Manual. Comments on the proposals are due by June 27, 2016.

What You Need To Know

  • Shareholder approval and TSX pre-clearance would still be required for security-based compensation arrangements—no rule changes are contemplated in these areas.
  • New disclosure would be required in proxy circulars about the impact of multipliers on the number of securities issuable; burn rates; and default vesting provisions.
  • Security-based compensation arrangements would have to be posted on listed companies' websites. This includes inducement grants and other individual awards not granted under a plan. Companies may want to consider amending their arrangements to remove confidential or competitively sensitive information.

Review the Amendments to Toronto Stock Exchange Company Manual (May 26, 2016) on the TSX's website and an article on the Torys LLP's website.

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New Capital Markets Regulator: Extent of Consultation and CMA Provisions Remain of Concern

Mar 09, 2016

On March 9, 2016, Blakes released a bulletin on the new capital markets regulator. Comments on the revised consultation draft of the provincial/territorial Capital Markets Act (CMA) and the draft initial regulations for the proposed Cooperative Capital Markets Regulatory System, indicate that capital markets stakeholders continue to have major concerns about the adequacy of the consultation process, the interface between the jurisdictions that will be part of the Cooperative System and those that will not, and other provisions of the Consultation Drafts.

The CMA is intended to replace existing provincial and territorial securities legislation in Ontario, British Columbia, New Brunswick, Saskatchewan, Prince Edward Island and Yukon (Participating Jurisdictions). While the 50 comment letters on the Consultation Drafts in large part expressed support for the goal of harmonizing securities regulation in Canada and moving toward a single national regulator, many commenters expressed concern about the inadequacy of the consultation process given the proposed substantive changes to securities law in certain Participating Jurisdictions, notably Ontario.

Review the bulletin on Blakes' Website.

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Securities Regulators in Alberta, British Columbia, Manitoba, New Brunswick and Saskatchewan adopt new investment dealer prospectus exemption

Jan 14, 2016

On January 14, 2016, the Alberta Securities Commission (ASC) issued a press release in which the securities regulators in Alberta, British Columbia, Manitoba, New Brunswick and Saskatchewan announced that they are each adopting a prospectus exemption (exemption) that, provided certain conditions are met, will allow issuers listed on a Canadian exchange to more easily raise money by distributing securities without the need for a prescribed offering document.

Under the exemption, an investor must obtain advice regarding the suitability of the investment from an investment dealer. This is a key condition for investor protection, as the investment dealer must meet its know-your-client and know-your-product obligations when determining the suitability of the investment.

Review the press release on the ASC's Web Site.

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