On February 8, 2018, the Canadian Securities Administrators (the “CSA”) published Staff Notice 51-352 (Revised) (the “Notice”) setting forth disclosure obligations applicable to issuers (“U.S. Cannabis Issuers”) engaged in the cultivation, possession or distribution of cannabis in the United States (“U.S. Cannabis Activities”) in light of the uncertainty resulting from cannabis being legalized in certain U.S. states while remaining a controlled substance under U.S. federal law. The Notice updates the CSA’s previously issued guidance by clarifying, expanding upon and detailing additional disclosure obligations for U.S. Cannabis Issuers, particularly with respect to describing … Continue Reading
2017 was a year of significant developments in governance and disclosure requirements and guidelines. Many of these developments will have an impact on Canadian public issuers during the 2018 proxy season. Issuers need to understand, and in many cases must comply, with the changes that have occurred over the last year. Equally, issuers need to understand the changes that are expected in the near future.
This post summarizes some of last year’s most noteworthy developments in governance and disclosure requirements and guidelines, including developments in the following areas:
- Proxy Advisory Firm Guidance
- Majority Voting
- Board and Executive Gender Diversity
On October 19, 2017, the Toronto Stock Exchange (“TSX”) announced amendments to the TSX Company Manual which introduce new website and security-based compensation arrangement disclosure requirements for most TSX-listed issuers.
The website disclosure amendments are intended to improve the accessibility of information to investors by centralizing the location of certain publicly-available documents and will be effective as of April 1, 2018.
The amendments to the security-based compensation arrangement disclosure requirements were introduced to enhance and clarify the disclosure of security-based compensation arrangements and better align the TSX disclosure requirements with the executive compensation disclosure requirements under Canadian securities … Continue Reading
The Canadian Securities Administrators recently released the results of their third review of compliance with the new gender diversity disclosure rules.
In 2015, new rules were implemented pursuant to National Instrument 58-101 – Disclosure of Corporate Governance Practices which require Canadian public companies to disclose, on an annual basis, certain information regarding women in executive positions and on boards (the Gender Disclosure Rules). The Canadian Securities Administrators (CSA) have closely monitored compliance with the Gender Disclosure Rules since their coming into effect. On September 28, 2015, the CSA published a summary of the findings of their review … Continue Reading
On March 9, 2017, Toronto Stock Exchange issued Staff Notice 2017‑001 (the “Notice”), which provides guidance with respect to the TSX’s majority voting requirements for the election of directors (“Majority Voting Requirements”) and the use of advance notice policies and by-laws.
This guidance will be noteworthy for TSX‑listed companies whose majority voting policy and/or advance notice policy or by‑law has not yet been subject to review by the TSX. Such companies should assess their majority voting policy and any advance notice policy or by-law against the guidance in the Notice as soon as possible so that … Continue Reading
On March 9, 2016, the Canadian Securities Administrators published CSA Staff Notice 51-348 (the “Notice”) which reports on a study of social media use by reporting issuers and provides guidance for public companies who engage with investors and other stakeholders using those channels.
Scope of Review
The review was conducted by securities regulatory authorities in Alberta, Ontario and Quebec and surveyed the social media activity of 111 reporting issuers of varying sizes and industries listed on the TSX, TSXV and CSE. The review included information on websites such as Facebook, Twitter, Instagram, LinkedIn, YouTube and others, as well … Continue Reading
On December 14, 2016, the Government of Canada published proposed regulations to Bill C-25. Bill C-25, which completed the second reading debate stage in the Parliament of Canada on December 9, 2016, would, if passed into law, result in important changes for public corporations that are governed by the Canada Business Corporations Act (CBCA).
For a summary of the proposed changes, see our previous post Bill C-25 contemplates important changes to director elections, notice-and-access procedures and other matters for public corporations governed by the Canada Business Corporations Act.
This post discusses updates regarding certain of the proposed changes … Continue Reading
On September 28, 2016, Bill C-25 passed first reading in the Parliament of Canada. The Bill is currently at the second reading debate stage. If passed into law, the Bill will result in important changes for public corporations that are governed by the Canada Business Corporations Act (CBCA) including:
- Director Election Matters. Enshrining majority voting into the CBCA such that a director will only be elected if the number of votes cast in his or her favour represents a majority of the total number of votes cast at the meeting, enshrining the practice of “individual voting” rather than “slate voting”
The Canadian Securities Administrators recently released the results of its second review of compliance with the new gender diversity disclosure rules.
Last year new rules came into effect requiring Canadian public companies to disclose, on an annual basis (either in their annual proxy circular or annual information form), certain information regarding women on boards and in executive positions (the Gender Disclosure Rules).
The Gender Disclosure Rules represent some of the most significant changes to the annual disclosure requirements of Canadian public companies that have come into effect in the last few years, and the Canadian Securities Administrators (CSA… Continue Reading
The Canadian Securities Administrators (CSA) published on July 7, 2016 their priorities for the three-year period 2016 to 2019 under four categories: “Enhanced Investor Protection”, “Fair and Efficient Markets and Reduction of Risks to Market Integrity”, “Enhancement of Enforcement Effectiveness” and “Enhancement of Information Technology”.
The CSA states its strategic objectives without once mentioning the possible impact on it of the proposed national Cooperative Capital Markets Regulatory Authority (CCMRA) some of its members support. On July 22, it was announced that the CCMRA is expected to be operational in 2018.
Enhanced Investor Protection
The CSA proposes to … Continue Reading
On July 18, 2016, the Canadian Securities Administrators (CSA) published a summary of the results of their annual continuous disclosure (CD) review of reporting issuers for fiscal year 2016. See CSA Staff Notice 51-346 – Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2016 (Staff Notice).
The CSA annually conducts both “full reviews” and “issue-oriented reviews” to identify material deficiencies in reporting issuers’ CD records. This year, a total of 902 CD reviews were conducted (down from 1,058 in fiscal 2015), with full reviews comprising 31% of the total reviews and issue-oriented reviews comprising 69%.… Continue Reading
Des modifications importantes au régime de déclaration du système d’alerte canadien entrent aujourd’hui en vigueur (se reporter à notre article publié le 3 mars 2016 qui s’intitule Les règles du système d’alerte du Canada se resserrent en mai). Nous mettons ici l’accent sur les exigences nouvelles et plus rigoureuses liées à la description de l’objectif de l’acquisition.… Continue Reading
Effective today, significant amendments to the Canadian early warning reporting (EWR) regime (EWR Amendments) come into force (see our March 3, 2016 publication, Canada’s Early Warning Rules Get Tougher in May). Here we focus on the new, more stringent requirements to describe the purpose of acquisitions.
The new EWR Amendments require the filer to describe any plans or future intentions it might have with respect to 11 specific potential corporate actions:
- the acquisition of additional securities of the reporting issuer, or the disposition of securities of the reporting issuer;
- a corporate transaction, such as a merger, reorganization or liquidation,
The Canadian Securities Administrators (CSA) are proposing to introduce a mandatory standardized risk classification methodology for mutual funds and ETFs (the Proposed Methodology). Fund managers would be required to use the Proposed Methodology to determine the investment risk level of conventional mutual funds (which must be disclosed in the Fund Facts document) and exchange-traded mutual funds (ETFs) (to be disclosed in the proposed ETF Facts document). Currently, fund managers may determine the risk level of a mutual fund using a methodology of their choosing, though the methodology developed by the Investment Funds Institute of … Continue Reading
Last week, the Canadian Securities Administrators (CSA) published for comment Proposals that would require trade information for all corporate debt securities executed by dealers to be made publicly available, subject to delayed dissemination and volume caps, by the end of 2017. The CSA Proposals aim to enhance the regulation and transparency of the Canadian fixed income market, partly in response to certain limitations highlighted in a Report on “The Canadian Fixed Income Market 2014” published earlier this year by the Ontario Securities Commission which suggested that retail investors in corporate fixed income securities have less access to … Continue Reading
On July 16, 2015, the Canadian Securities Administrators (CSA) published the summary of the results of their annual continuous disclosure (CD) review program of reporting issuers (other than investment funds) for issuers with a fiscal year end of March 31, 2015 in CSA Staff Notice 51-344 – Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2015 (Staff Notice).… Continue Reading
Fin mai 2014, le cours de l’action de Theratechnologies inc. (Thera) chute brusquement de 58 % en deux jours. Le marché réagit à l’annonce des sociétés d’analyse financière faisant état de risques potentiels suite à la publication par la Food and Drug Administration (FDA) américaine de certains renseignements recueillis durant son processus d’approbation relativement à un nouveau médicament de Thera, la tésamoréline, notamment de questions soulevées par la FDA concernant ses effets secondaires. Quelques jours plus tard, l’action de Thera reprend sa valeur initiale après l’annonce que la FDA avait approuvé son médicament.
Suite aux évènements, 121851 Canada Inc. (121Can), … Continue Reading
The Canadian Securities Administrators (CSA) published on April 9, 2015, in final form, amendments to the continuous disclosure and governance obligations of venture issuers (the Amendments). The objective of the Amendments is to streamline and tailor disclosure by venture issuers. In Canada, venture issuers are generally junior public companies whose shares are listed on the TSX Venture Exchange (TSX-V) or the Canadian Stock Exchange (CSE). Provided all necessary ministerial approvals are obtained, the amendments will come into force on June 30, 2015.
The Amendments will affect the continuous disclosure and governance obligations contained in National Instrument 51-102 – Continuous … Continue Reading
The OSC recently published its 2014 Summary Report for Investment Fund and Structured Product Issuers which includes, among other topics, a summary of key OSC policy initiatives affecting investment fund issuers and highlights of 2014 continuous disclosure and compliance reviews of investment funds The report also sets out OSC Staff observations on key emerging issues and trends for mutual funds.
OSC criticizes reinvestment of distributions by “default”
Some mutual funds offer a choice between making distributions to investors in cash, or in the form of reinvested units. OSC Staff is concerned about mutual funds that set the payment of distributions … Continue Reading
One of the items that frequently vexes registered firms is keeping their “outside business activities” (“OBA”) disclosure up to date. The Ontario Securities Commission (“OSC”) regards OBA disclosure as an important means for registrants to monitor for conflicts of interest. What constitutes OBA is very broad and includes volunteer unpaid board positions or other “positions of influence”. Some registered firms send out internal reminders to individuals asking them to keep the firm’s compliance department up to date on OBA disclosure. The OBA disclosure, however, must be updated within 10 days of a change and failure to … Continue Reading
Des obligations d’information ont été mises en place sur les marchés des capitaux pour que la communication de l’information auprès du public se fasse de façon périodique et continue. L’objectif en est un de transparence : l’on vise un accès équitable à l’information importante afin d’assurer une stabilité des marchés et de maintenir la confiance des investisseurs.
Conformément à la Loi sur les valeurs mobilières, un émetteur assujetti qui a fait appel public à l’épargne est tenu à des obligations d’information continue.
L’information continue se compose entre autres de l’information périodique au sujet des activités et des affaires internes … Continue Reading
The OSC Staff has announced steps it will take to eliminate trailing commissions for fee-based mutual fund series when they file their next annual renewal prospectuses. In the latest edition of the OSC’s Investment Funds Practitioner, OSC Staff expressed the view that a mutual fund series intended for fee-based accounts should not also have a trailing commission embedded in the ongoing cost of the fund series. In Staff’s view, this compensation structure is inconsistent with fee-based mutual fund series because of the extra trailing charge on top of the fee. The OSC Staff maintains this result may be contrary … Continue Reading
Le 15 octobre 2014, les Autorités canadiennes en valeurs mobilières (ACVM) ont publié la version définitive des modifications relatives aux règles d’information sur la gouvernance énoncées dans le Règlement 58-101 sur l’information concernant les pratiques en matière de gouvernance (modifications), lesquelles exigeront que les sociétés ouvertes qui sont des émetteurs assujettis au Manitoba, au Nouveau-Brunswick, en Nouvelle-Écosse, au Nunavut, en Ontario, au Québec, en Saskatchewan, à Terre-Neuve-et-Labrador et dans les Territoires du Nord-Ouest fournissent, dans leurs circulaires de sollicitation de procurations par la direction (ou, en l’absence d’envoi de circulaires aux porteurs de titres, dans leurs notices annuelles), de l’information … Continue Reading
The Canadian Securities Administrators (CSA) published October 15, 2014 in final form amendments to the governance disclosure rules contained in National Instrument 58-101 – Disclosure of Corporate Governance Practices(Amendments) that will require public companies which are reporting issuers in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Quebec and Saskatchewan to provide disclosure in their management proxy circulars (or in their Annual Information Form, if no circular is sent to their securityholders) regarding the representation of women on their boards and in executive officer positions. The Amendments do not apply to issuers listed on the … Continue Reading