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Category Archives: Industry News

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Targeted Reforms Update – Most regulators abandon the “Best Interest Standard” but propose to proceed with refined “Targeted Reforms”

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, OSC, Registrants

The Canadian Securities Administrators (CSA) issued CSA Staff Notice 33-319 (the Notice) to provide an update on the “Best Interest Standard” and “Targeted Reforms” proposed last year in an important CSA Consultation Paper that we discussed in a previous post.

Most regulators have decided to abandon the Best Interest Standard which would have introduced a “client best interest” standard against which all registrant-client obligations would be interpreted.

The CSA will still proceed with a refined set of Targeted Reforms. Even in the absence of a Best Interest Standard in most jurisdictions, the Targeted Reforms would nonetheless … Continue Reading

TSX Releases Guidance with respect to Majority Voting Policies and Advance Notice Policies

Posted in Continuous and Timely Disclosure, Industry News, Uncategorized

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

Canadian Securities Administrators Publish Report and Guidelines on Social Media Use by Reporting Issuers

Posted in Continuous and Timely Disclosure, CSA, Industry News

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

Blockchain applications may be caught by Ontario’s securities law

Posted in Fintech, Industry News, OSC

The Ontario Securities Commission (OSC) has issued a press release advising stakeholders that Ontario securities law may apply to any use of distributed ledger technologies (DLT), such as blockchain, as part of financial products or service offerings.

The OSC emphasized that it is keen to support the innovative potential of DLT because, among other things, DLT has the potential to increase transparency and efficiencies in the capital markets. However, because of DLT’s novelty, the OSC encourages business to speak to the OSC about securities law and investor protection requirements that may apply.

The OSC has cautioned that “[p]roducts or other … Continue Reading

Update on the CSA’s “Proxy Plumbing” Initiative

Posted in Industry News, Proposals

The Ontario Securities Commission (OSC) recently held a roundtable on the “Proposed Protocols for Meeting Vote Reconciliation”. The purpose of this roundtable was to discuss issues identified during the consultation phase of CSA Multilateral Staff Notice 54-304, Final Report on Review of the Proxy Voting Infrastructure and Request for Comments on Proposed Meeting Vote Reconciliation Protocols (Staff Notice) as well as to discuss the OSC’s proposed next steps in implementing the protocols outlined in Annex A of the Staff Notice, which protocols are intended to address some of the widely accepted issues with the proxy voting infrastructure.

 Background on the Continue Reading

Proposed regulations to Bill C-25 have now been released, and they add clarity to contemplated changes to majority voting, notice-and-access procedures and diversity disclosure for public corporations governed by the Canada Business Corporations Act

Posted in Continuous and Timely Disclosure, Industry News, Proposals

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

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

Posted in Continuous and Timely Disclosure, Industry News, Proposals

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”
Continue Reading

Ontario and Australian securities regulators become fintech friends

Posted in Fintech, Industry News, OSC

On the heels of its OSC Launch Pad initiative, the Ontario Securities Commission (OSC) has announced another first – an agreement with the Australian Securities and Investments Commission (ASIC), under which innovative fintech companies in Ontario and Australia will be able to draw upon support from the combined resources of the OSC and ASIC as such companies seek to operate in the others’ market. One of the purposes of the arrangement is to help innovative fintech companies reduce regulatory uncertainty and time to market.

To qualify for the support offered by the agreement, innovative businesses will need to meet the … Continue Reading

The OSC LaunchPad – Unveiled

Posted in Fintech, Industry News, OSC

As previously announced, the OSC has opened the OSC LaunchPad which consists of a dedicated team within the securities regulator to support Fintech businesses wishing to navigate securities law requirements.

The OSC LaunchPad will offer tailored support which can include time-limited exemptive relief to allow testing of innovative products and services.

In order to be eligible to receive support from the OSC LaunchPad, a business must meet certain criteria, including:

  • Being a new or early-stage Fintech business that has not yet started operations or is applying to the OSC for exemptive relief.
  • Having a new, innovative or significantly different
Continue Reading

Canadian Deposit Insurance – Framework Under Review

Posted in Industry News

Overview

On September 16, 2016, Canada’s federal Department of Finance launched a consultation process on the deposit insurance framework. The consultation paper can be found here. The consultation process is to help determine whether the scope of targeted Canadian financial products requires adjustments to ensure the deposit insurance framework continues to serve Canadians effectively.

The review comes as a response to changes to the global banking landscape since 2008 financial crisis and, more specifically, changes to deposit products offered by financial institutions. The policy objectives relating to the review include protecting depositors, supporting financial stability and promoting efficient and … Continue Reading

Canada’s First Regulatory Sandbox for Fintech? OSC Announces Plans for “OSC LaunchPad” Innovation Hub

Posted in Fintech, Industry News, OSC

OSC chair Maureen Jensen has announced that the OSC plans to launch an innovation hub for fintech entities. “OSC Launchpad” will be the first fintech hub for a Canadian securities regulator.

Securities regulation in Canada impacts a number of fintech business models (including companies offering online advising, peer-to-peer lending, crowdfunding platforms and angel investor organizations). The OSC had also previously issued a notice on peer-to-peer lending, inviting those operating in this sector to discuss with OSC Staff and reminding prospective marketplace lenders that certain prospectus and registration requirements may be applicable to them, depending on their business model.

OSC Launchpad … Continue Reading

TSX’s New DRIP Rules Now in Effect

Posted in Corporate Finance, Industry News

Effective September 1, 2016, the Toronto Stock Exchange adopted new rules governing dividend / distribution reinvestment plans, which apply to new plans, and amendments to existing plans.

Effective September 1, 2016, the Toronto Stock Exchange (“TSX”) adopted new rules governing dividend / distribution reinvestment plans (“DRIPs”). The new rules are reflected in amendments to Section 6.17.1(c) of the TSX Company Manual.

Prior to the amendments coming into effect, there were no specific requirements applicable to DRIPs in the TSX Company Manual; instead companies and their legal counsel would reach out to the TSX on an … Continue Reading

OSC Clarifies Regulation of Out of Canada Distributions

Posted in Industry News, OSC, Proposals, Requests for Comment

The Ontario Securities Commission (the “OSC”) is seeking comment on Proposed OSC Rule 72-503 – Distributions Outside of Canada and its related companion policy (the “Proposed Rule”), to eliminate longstanding uncertainty about how outside of Canada distributions of securities will be regulated.

Purpose of the Proposed Rule

A distribution of securities by an issuer to foreign investors may or may not fall under the jurisdictional scope of the Securities Act (Ontario) (the “Act”) depending on the connecting factors to Ontario (e.g. the issuer having an active trading market in Ontario or a head office in Ontario).

In an interpretation note … Continue Reading

The AMF Launches Whistleblower Program

Posted in AMF, Industry News

On June 20, 2016, the Autorité des marchés financiers (the “AMF”), Quebec’s financial services regulatory authority, launched its Whistleblower Program. Individuals who have information about offences that have been committed contrary to the laws and regulations administered by the AMF, including the Securities Act, the Derivatives Act and others, may report such wrongdoing under the Whistleblower Program.

The major features of the program are:

  • Confidentiality – The AMF makes every effort to keep the whistleblower’s identity and the information they provide confidential;
  • No reprisal – An employer is prohibited from firing, demoting or otherwise adversely affecting
Continue Reading

Les propositions des ACVM concernant les personnes inscrites ont des effets très importants sur les courtiers et les conseillers au Canada

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, Registrants, Requests for Comment

Les Autorités canadiennes en valeurs mobilières (les ACVM) ont publié un important document de consultation dans lequel il est proposé de rehausser considérablement les obligations de tous les conseillers, courtiers et représentants, y compris les membres de l’OCRCVM et de l’ACFM (les personnes inscrites). Les commentaires sur ce document de consultation peuvent être présentés jusqu’au 26 août.… Continue Reading

Tomorrow, May 18, Registrants Will Receive the OSC’s 2016 Risk Assessment Questionnaire – What Will Your Firm’s Risk Rating Be?

Posted in Exempt Market Dealers, Industry News, Investment Funds, Mutual Funds, OSC, Portfolio Managers, Registrants

For the first time since 2014, the Ontario Securities Commission (OSC) will send Ontario registrants a risk assessment questionnaire (RAQ) that must be completed by portfolio managers, investment fund managers, exempt market dealers, restricted portfolio managers and restricted dealers registered in Ontario. Registrants will receive the 2016 RAQ tomorrow, May 18.

The OSC uses data gathered through the RAQ to apply a risk ranking to firms. Firms with higher risk rankings are more likely to be targeted by the OSC for compliance reviews. As a result, it is important that the RAQ answers be considered … Continue Reading

CSA Registrant Proposals Have Far-Reaching Effects on Dealers and Advisers in Canada

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, Registrants, Requests for Comment

Recently, the Canadian Securities Administrators (CSA) released an important Consultation Paper that proposes to significantly increase the obligations of all advisers, dealers and representatives, including IIROC and MFDA members (Registrants). Comments on the Consultation Paper can be made until August 26.

The CSA is proposing two distinct categories of changes that, if adopted, will significantly impact the economics of existing Registrant business models and Registrant compliance costs:

1. Best Interest Standard: A “client best interest” standard against which all Registrant-client obligations would be interpreted.

2. “Targeted Reforms”: A comprehensive set of so-called “targeted reforms” will affect … Continue Reading

IIROC Announces Dealer Sweep on Compensation-Related Conflicts

Posted in Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, Marketplaces, Registrants, Uncategorized

On April 6, IIROC published Notice 16-0068 – Managing Conflicts in the Best Interest of the Client (the 2016 IIROC Notice). IIROC intends to strengthen compliance by Dealer Members (DMs) with IIROC’s conflicts of interest rules, with a particular focus on the management of compensation-related conflicts.

Specifically, IIROC announced that it will take the following actions:

  1. Immediately enhance its compliance test procedures to more closely examine compensation grids, supervisory oversight of advisors recommending products with high commissions, and the monitoring of advisors approaching compensation thresholds;
  2. By June 2016, conduct a comprehensive survey to gather more detailed information
Continue Reading

ICD Publishes Guidance for Director-Shareholder Engagement

Posted in Industry News, Shareholder Activism

Many boards today realize that proactive engagement between directors and shareholders can address shareholder concerns which, if ignored, can manifest themselves in undesirable ways such as negative votes on “say on pay” resolutions, withheld votes for directors, proxy contests or other forms of shareholder activism.

The Institute of Corporate Directors (“ICD”) has now published “ICD Guidance for Director-Shareholder Engagement” (the “Guidelines”) to assist boards with shareholder engagement processes and procedures.

The ICD Guidelines are intended to be flexible and are meant to be tailored to a company’s individual circumstances. The ICD Guidelines are based on six … Continue Reading

Streamlined Rights Offering Regime

Posted in Corporate Finance, CSA, Industry News

Background

In the world of private companies (where shares are not listed for trading on public stock exchanges) there are often restrictions set out in the charter documents requiring that when the company needs fresh capital it will offer its existing shareholders rights to purchase additional shares before it offers them to new investors (a “rights offering”). The thinking is that if there is to be a new round of financing, it’s only fair that current shareholders have the first opportunity to buy those shares, particularly if they are to be offered for sale at a discount.

In some jurisdictions, … Continue Reading

Final crowdfunding rules to come into force in five provinces, including Ontario, in January 2016

Posted in AMF, Industry News, OSC

Introduction and Legislative History

After a lengthy review process beginning in 2013, the Ontario Securities Commission (the “OSC”) along with provincial securities regulators from Quebec, Manitoba, Nova Scotia and New Brunswick (with Ontario, the “Participating Jurisdictions”), have finalized amendments introducing a crowdfunding prospectus exemption and a regulatory framework for crowdfunding portals. This new crowdfunding regime (the “45-108 Regime”) will, subject to provincial Ministerial approvals, come into force on January 25, 2016 via Multilateral Instrument 45-108 (“MI 45-108”). For the OSC’s bulletin which includes Multilateral Instrument 45-108, click here. Saskatchewan, which participated in the drafting of MI 45-108, has also … Continue Reading

The 2016 Proxy Season: Glass Lewis Canadian Proxy Voting Guidelines Update

Posted in Industry News

Earlier this week, we commented on updated proxy voting guidelines released by Institutional Shareholder Services Inc. (“ISS”). Glass, Lewis & Co., LLC (“Glass Lewis”) has now also released its guidelines for the 2016 proxy season. The guidelines include changes and clarifications in areas such as proxy access, director overboarding, environmental and social risk oversight and exclusive forum provisions. A copy of the voting guidelines is available here, and a summary of certain key changes follows.

Proxy Access

Glass Lewis has stated that it generally supports affording shareholders the right to nominate director candidates for inclusion … Continue Reading

The 2016 Proxy Season: Updates to the ISS Canadian Proxy Voting Guidelines

Posted in Industry News

On November 20, 2015, Institutional Shareholder Services Inc. (“ISS”) released its updated Canadian proxy voting guidelines for meetings on or after February 1, 2016.[1] The updates provide new or updated guidance with respect to voting for equity compensation plans, electing directors with too many board appointments and electing directors of externally managed issuers such as REITs.

Equity Compensation Plans

ISS guidance on equity compensation plans for issuers listed on the Toronto Stock Exchange (“TSX”) takes a “case-by-case” approach to votes on equity compensation plans, using a new “scorecard” similar to the one adopted by ISS … Continue Reading

OSC Proposes Higher Financial Awards for Whistleblowers

Posted in Amendments, Compliance and Supervision, Enforcement, Industry News, OSC, Proposals, Registrants, Requests for Comment, SEC, Uncategorized

The OSC is close to adopting a proposed final version of its previously-announced whistleblowing policy (the Program). The Program would award eligible whistleblowers up to $5 million for reporting serious securities- or derivatives-related misconduct that leads to significant enforcement or settlement outcomes.

We summarized the original OSC consultation paper in a previous article. The OSC received comments on the consultation paper and also hosted a stakeholder roundtable on the proposals. Reporting issuers will want to re-examine their internal compliance and reporting systems, codes of conduct and employment agreements in light of the proposed program. Key features are summarized … Continue Reading