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Securities

Decision of the Supreme Court of Canada - The AMF will continue to fully assume its role as an integrated regulator

Nov 09, 2018

On November 9, 2018, the Autorité des marchés financiers (AMF) acknowledged the decision handed down by the Supreme Court of Canada today, which has validated the constitutionality of the system proposed by the federal government and certain provinces involving the establishment of a new capital markets regulatory body. The AMF reiterated the view of the Québec Minister of Finance in his news release issued earlier today in which he reaffirmed, in particular, that the proposed system is not in the interests of Québec and Québec investors.

The AMF announced that it will continue to fully assume its role as an integrated regulator and focus its efforts on oversight of Québec’s markets and the protection of Québec consumers. Although a new regulatory body may eventually be created that does not involve all the provinces and territories, the AMF advised that it stands ready to do what it is currently doing as a member of the Canadian Securities Administrators—work with its peer regulators across the country to ensure the stability and efficiency of Canada’s markets and maintain a level of cooperation critical to the development of harmonized regulation that is at least as effective as the existing structure.

The AMF also advised that it will closely follow developments in this matter and continue its work with the same determination and concern for quality that have always made it a strong regulator that has influence with its provincial and territorial peers.

Re­view the press re­lease on the AMF's web­site.

Supreme Court of Canada endorses legislation creating national securities regulator

Nov 09, 2018

On November 9, 2018, in a unanimous ruling, the Supreme Court of Canada endorsed legislation creating a unified, pan-Canadian securities regulator. The issue addressed by the Court relates to the constitutionality of a recent proposal by the federal government and the governments of Ontario, British Columbia, Saskatchewan, New Brunswick, Prince Edward Island and Yukon to implement a national cooperative capital markets regulatory system (the “Cooperative System”). The Court found that “the Cooperative System does not improperly fetter the legislatures’ sovereignty, nor does it entail an impermissible delegation of law-making authority.”

By way of background to the ruling:

Canada is the only G20 country that does not have a national securities regulator. The quest to create a national securities regulator goes back to 1935, and calls for such a regulatory body have been strong since the 1970s.

In 2011, the Supreme Court was unanimous in ruling a proposed national regulator unconstitutional, saying that, as drafted by the federal government, it would have been too closely involved in day-to-day regulation of capital markets – a provincial responsibility. Under Canada’s 1867 Constitution, the federal government is responsible for trade and commerce, and the provinces have authority over property and civil rights. The Supreme Court, however, left the door open to the creation of a pan-Canadian regulator involving a co-operative effort.

In 2013, the federal government rewrote its plan for a regulator, called the Capital Markets Regulatory Authority. Five provinces and one territory – Ontario, British Columbia, Saskatchewan, Prince Edward Island, New Brunswick and Yukon – have agreed to participate. Quebec and Alberta oppose the plan, structured as a co-operative agency run by those provinces and territories that choose to opt in. Overseen by a council of ministers from each participating jurisdiction, it was crafted to ensure that the provinces do not cede power to Ottawa.

The Quebec government referred this plan to the Quebec Court of Appeal, which ruled it unconstitutional in 2017.

The Attorney General of Canada then appealed the Quebec Court of Appeal’s opinion to the Supreme Court of Canada, which has now ruled, on November 9, 2018, in favor of the Attorney General of Canada’s appeal i.e. that the plan for a co-operative agency run by those provinces and territories that choose to opt in is not unconstitutional.

Re­view today’s article in the Globe & Mail and the ruling of the Supreme Court of Canada for further details.

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.

Davies Governance Insights 2018

Oct 03, 2018

On October 3 2018, Davies released their annual "Governance Insights" reports that analyze the top governance trends and issues important to Canadian boards, senior management, in-house counsel and governance observers.

Here are a few of the issues that they highlighted in the 2018 edition:

  • Shareholder proposals and proxy access, including trends in shareholder proposals on ESG and other topics; and the tepid adoption of proxy access policies in Canada
  • Gender diversity and #MeToo, including data and trends in women’s representation on boards and executive positions; pending diversity-related amendments to the federal corporate statute; potential implications for companies in the #MeToo movement; and potential changes in securities law disclosure requirements
  • Virtual shareholder meetings, including the advantages and disadvantages of virtual or virtual-hybrid meetings; the positions taken by proxy advisory firms; and issues to consider in deciding whether to go virtual

Review the full report on Davies' website.

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.

AMF publishes annual summary of corporate finance oversight and regulatory activities

Sep 20, 2018

On September 20, 2018, the Autorité des marchés financiers (AMF) published its annual Summary of Oversight and Regulatory Activities, which highlights its key initiatives for the 2017-2018 fiscal year.

As in 2017, the summary presents the main deficiencies identified in companies’ continuous disclosure and financing documents and provides examples of corrected information and reminders to help them prepare compliant documents. New content for this year includes a section on the booming cryptocurrency and marijuana industries, as well as a section on socially responsible investing based on environmental, social and governance criteria. The AMF is taking a closer look at the information provided to investors in these areas and, among other things, has published a notice on the disclosure of climate change-related risks and financial impacts.

The summary also contains an initial report on the application of the Act respecting transparency measures in the mining, oil and gas industries and outlines several regulatory initiatives.

Review the press release and the summary on the AMF's website.

Report: Diversity Disclosure Practices 2018 – Women in leadership roles at TSX-listed companies

Sep 14, 2018

On September 14, 2018, Osler published their fourth annual report on diversity disclosure practices. The survey results are encouraging, but they reveal more work needs to be done at the board level and results at the executive officer level remain disappointing.

The report findings provide insight into the following areas:

  • breakdown and percentages of women on boards for full-year 2017
  • breakdown and percentages of women executive officers for full-year 2017
  • industry breakdown of women directors for full-year 2017
  • diversity policies and targets for full-year 2017
  • 2018 mid-year results regarding the number and percentage of women directors and women in executive officer positions by industry
  • board policies on diversity and policies related to the nomination and identification of women on boards
  • targets for women on boards and in executive officer positions

The report also includes statistics on the proportion of companies with a female CEO and companies with a female board chair.

Review the press release and the report on Osler's 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.

AMF provides issuers with guidance on modern slavery disclosure requirements

Sep 04, 2018

On September 4, 2018, the Autorité des marchés financiers (AMF) published the Notice relating to modern slavery disclosure requirements. The notice provides issuers with guidance on their modern slavery disclosure requirements so that they can determine what information they need to disclose and can improve or complete that information.

Modern slavery, which can take a variety of forms, includes any work or service performed by a person involuntarily and under the threat of any penalty.

The notice provides an overview of recent key regulatory or government initiatives and highlights investors’ growing interest in the social responsibility of issuers. It also describes some of the requirements that may compel issuers to provide information on modern slavery in their continuous disclosure documents and presents the results of an issue-oriented review by AMF staff of the disclosure practices of certain issuers.

Review the press release and notice on the AMF's website.

ASC finalizes rule amendments to facilitate cross-border offerings by Alberta issuers

Aug 10, 2018

On August 10, 2018, the Alberta Securities Commission (ASC) published a new rule which will facilitate offerings by Alberta issuers to investors outside Alberta by reducing the regulatory impediments to such offerings. The new rule, ASC Rule 72-501 "Distributions to Purchasers Outside Alberta", will take effect on August 31, 2018. It repeals and replaces an existing rule of the same name, which was originally implemented in 1998.

The new rule significantly expands upon the exemptions available when an Alberta issuer seeks to distribute securities to investors outside of Canada. It also provides a prospectus exemption for distributions made under the offering memorandum exemption within Canada. The exemptions are conditional on material compliance with the disclosure requirements of the purchaser’s jurisdiction. The rule also contains prospectus exemptions for the resale of securities outside of Canada if the issuer is not a reporting issuer in any jurisdiction within Canada.

Review the press release and new rule on the ASC's website.

Correction list for hyphenation

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