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Securities

CSA publishes update on use of the streamlined rights offering exemption for reporting issuers

Jul 26, 2018

On July 26, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 45-323 (revised) "Update on Use of the Rights Offering Exemption" to provide an update on the use of the streamlined rights offering exemption for reporting issuers adopted in December 2015.

According to the CSA, the exemption has been used 60 times in the past two years, raising $535.5 million across the country.

The CSA report also identified a number of compliance and disclosure issues with the use of the streamlined exemption and provided suggestions for improvements, namely in regards to: stand-by commitments, use of available funds and closing news release.

Review the Staff Notice on the OSC's website and a summary on Stikeman Elliot's website.

CSA provides an update on its approach to determining director and audit committee member independence

Jul 26, 2018

On July 26, 2018, the Cana­dian Se­cu­ri­ties Ad­min­is­tra­tors (CSA) published CSA Staff Notice 52-330, Update on CSA Consultation Paper 52-404 Approach to Director and Audit Committee Member Independence. The notice summarizes feedback received during the CSA’s consultation on the approach to determining director and audit committee member independence, and outlines the CSA’s rationale for maintaining the current approach.

Considering the realities of the Canadian market and the comments received, the CSA have concluded that it is appropriate to maintain its current approach to determining director and audit committee member independence. It recognizes that its current approach has benefits and limitations. Upon review, it is satisfied that it strikes an appropriate balance between affording sufficient discretion to the board of directors to determine whether an individual could reasonably be expected to exercise independent judgement, and providing prescriptive elements that preclude an individual from being considered independent in certain circumstances.

The CSA’s current approach has been in place since 2004 and it notes that stakeholders understand and have adapted accordingly. Making changes to the current approach or replacing it with an alternative approach could result in additional costs for issuers and efforts for investors to adapt to such changes. The CSA is of the view that, in this case, any potential benefits of a change to the approach are outweighed by the potential negative impact of implementing such a change.

Re­view the press re­lease on the CSA's web­site and the Staff Notice on the CSA mem­bers’ web­sites.

 

Canadian Securities Regulators Publish Final Amendments to the Report of Exempt Distribution

Jul 19, 2018

On July 19, 2018, the Cana­dian Se­cu­ri­ties Ad­min­is­tra­tors (CSA) published its final amendments to National Instrument 45-106 Prospectus Exemptions, which revise Form 45-106F1 Report of Exempt Distribution (the Report). The CSA also made a related change to Companion Policy 45-106CP Prospectus Exemptions.

Issuers and underwriters who rely on certain prospectus exemptions to distribute securities are required to file the Report within the prescribed timeframe. The amendments aim to provide greater clarity and flexibility regarding the certification requirement of the Report and streamline certain information requirements, while still providing regulators with the information necessary for oversight and policy development.

Provided all necessary ministerial approvals are obtained, the amendments will come into force on October 5, 2018.

Re­view the press re­lease on the CSA's web­site and the final amendments on the CSA mem­bers' web­site.

 

Canadian Securities Administrators highlight common deficiencies in issuers’ continuous disclosure

Jul 19, 2018

On July 19, 2018, the Canadian Securities Administrators (CSA) published Staff Notice 51-355 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2018 and March 31, 2017, a biennial report that summarizes CSA staff’s ongoing review of reporting issuers’ (issuers’) continuous disclosure and highlights common deficiencies and best practices.

The CSA noted that it continues to see deficiencies in issuers’ use of non-GAAP financial measures, and this remains an area of focus for the CSA. It strongly encourages issuers to use this report as a guide to make improvements, as disclosure requirements are at the core of its investor protection regime.

Other areas where issuers can improve disclosures include, but are not limited to: fair value measurements and disclosures; forward looking information; discussions of issuers’ results of operations and significant projects in development; climate change disclosures; and mineral project disclosure. 

In fiscal 2018, 51 per cent (2017 – 43 per cent) of review outcomes required issuers to take action to improve and/or amend their disclosure, or resulted in the issuer being referred to enforcement, cease traded or placed on the default list.

Re­view the press re­lease on the CSA's web­site and the Staff No­tice on the CSA mem­bers' web­site.

 

OSC Publishes 2018-2019 Statement of Priorities

Jul 05, 2018

On July 5, 2018, the Ontario Securities Commission (OSC) published its 2018-2019 Statement of Priorities, which sets out the 15 priority areas where the OSC intends to focus resources and actions over the coming fiscal year, as well as the expected outcomes.

The OSC received 20 comment letters on its draft 2018-2019 Statement of Priorities. Feedback was broadly supportive of the proposed priorities, including continued improvements to investor protection and efforts to increase the deterrent impact of enforcement actions. This final publication of the 2018-2019 Statement of Priorities now also includes a priority related to the continued review of the effectiveness of the disclosure requirements regarding women on boards and in executive officer positions.

Review the press release and the Statement of Priorities on the OSC's webiste.

OSC Announces Continuous Disclosure Advisory Committee Members

Jul 04, 2018

On July 4, 2018, the Ontario Securities Commission (OSC) announced the new membership of its Continuous Disclosure Advisory Committee (CDAC). Among the new members is Julia Suk, Partner at Deloitte.

The CDAC advises OSC staff on the planning, implementation and communication of its continuous disclosure review program, as well as related policy initiatives. The CDAC also serves as a forum to advise OSC staff on emerging issues. OSC staff recognize the critical importance of consulting with market participants and other stakeholders in carrying out its mandate.

The CDAC will meet approximately five times per year with members serving a two-year term.

Review the press release on the OSC's website.

OSC Whistleblower Program contributing to a stronger culture of compliance

Jun 29, 2018

On June 29, 2018, the Ontario Securities Commission (OSC) released an update on the progress of its Whistleblower Program, the first of its kind by a Canadian securities regulator. This marks two years since the launch of the program.

Here are some highlights from the OSC Whistleblower Program:

  • The program was launched in July 2016 and, as of the end of June 2018, has generated approximately 200 tips, an average of about two per week.
  • Timely, specific and credible tips about securities-related misconduct can be submitted by one or more individuals, and can be submitted anonymously through counsel. The OSC makes all reasonable efforts to protect whistleblowers’ identities.
  • All tips undergo a review process to determine the appropriate course of action. Currently, 22 percent of the total number of tips received (45) are under review.
  • Ten per cent of tips (19) warranting further action by the OSC were referred to Enforcement, of which 15 (or 7 per cent) are associated with active investigations. Thirty-five per cent of tips (68) were or are in the process of being shared with another OSC operating branch or another regulator for further action.
  • Awards are paid 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, tips may not be actionable, for example, because matters fall outside of the OSC’s jurisdiction.

Review the update on the OSC's website.

CSA provide additional guidance on securities law implications for offerings of tokens

Jun 11, 2018

On June 11, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 46-308 “Securities Law Implications for Offerings of Tokens,” which provides additional guidance on the applicability of securities laws to offerings of coins or tokens, including ones that are commonly referred to as “utility tokens.”

CSA Staff Notice 46-308 outlines specific situations that may have an implication on the presence of one or more of the elements of an investment contract in the context of an offering of coins or tokens.

This notice supplements the CSA’s August 2017 publication of CSA Staff Notice 46-307 Cryptocurrency Offerings, which outlines how securities law requirements may apply to initial coin offerings, initial token offerings, cryptocurrency investment funds and the cryptocurrency platforms trading these products.

Any business planning to raise capital through an offering of coins or tokens should consider whether it involves the distribution of a security.

Review the press release on the CSA's website and the Staff Notice on the member's website.

Eliminating Quarterly Guidance

Jun 07, 2018

On June 7, 2018, the Business Roundtable (BRT), the National Association of Corporate Directors (NACD) and the National Investor Relations Institute (NIRI) announced their support for companies moving away from an expectation of providing quarterly earnings per share guidance and potentially dropping such guidance in the future.

Business Roundtable supports corporate strategies that allocate capital for long-term growth and management of risks, with the goal of producing sustainable value creation. Public companies should be managed for long-term prosperity, not to meet the latest forecast. Such short-termism is unhealthy for America’s public companies and financial markets — which are critical to economic growth and financial prosperity.

Review the press releases from Business Roundtable, the National Association of Corporate Directors and the National Investor Relations Institute and publications from the Wall Street Journal and The Accounting Review.

TSX Proposed Changes to Rules Governing Special Purpose Acquisition Corporations

May 31, 2018

On May 31, 2018, the Toronto Stock Exchange (TSX) released proposed amendments to Part X — Special Purpose Acquisition Corporations (SPACs) of the TSX Company Manual (Manual). Notable changes include codifying exemptions previously provided to SPACs and removing the requirement for shareholder approval of a qualifying acquisition subject to certain requirements. Comments are requested by July 3, 2018.

In a summary prepared by Blakes, the Proposed Amendments codify certain market practices and exemptions previously granted by the TSX and remove the requirement for shareholder approval of a qualifying acquisition subject to certain requirements. The Proposed Amendments also include certain non-material amendments to clarify various provisions as well as ancillary changes.

Review the proposed amendments on the TSX's website and a summary on Blakes LLP's website.

Correction list for hyphenation

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