The Canadian Securities Administrators (“CSA”) recently published a Staff Notice (the “Notice”) to report on the results of the reviews conducted  by the CSA within the scope of its Continuous Disclosure Review Program. The goal of this program is to improve the completeness, quality and timeliness of continuous disclosure provided by reporting issuers.

The focus on this post is mainly aimed towards the Notice’s guidance for continuous disclosure in the context of the coronavirus pandemic. In order to support investors in making informed investment decisions, CSA reminds reporting issuers to provide transparent disclosure, including information about the impact of COVID-19 on their operating performance, financial position, liquidity and future prospects. The guidance builds on information disseminated by the CSA earlier this year, as we have discussed in this previous blog post. Continue Reading Canadian Securities Administrators publish Guidance on Continuous Disclosure in Time of COVID-19

The Ontario Securities Commission, like several other regulatory investigators, has extensive power to compel testimony and require the disclosure of documents and information.  A recent decision of the OSC, B (Re) (2020 ONSEC 21), has highlighted a gap in the Commission’s power to compel testimony from a witness where such testimony may constitute a breach of the witness’s contractual obligations to a third party.

The Case

Staff of the Commission is conducting an investigation pursuant to an investigation order issued by the OSC under section 11 of the Securities Act.  Investigation orders empower Staff to issue a summons pursuant to section 13 of the Act, to compel an individual to provide oral testimony under oath and to provide documentary evidence.  Section 16 of the Act prohibits the recipient of a summons from disclosing information relating to the summons or the investigation, subject to narrow exceptions.

Staff served upon an individual, identified only as “B”, a summons under section 13 of the Act.  Although B was prepared to cooperate with Staff, B was concerned that doing so would violate B’s employment contract, which imposes confidentiality over all matters relating to B’s employment without an exception that is relevant to a regulatory investigation. Continue Reading Recent OSC Decision Raises Uncertainty for Witnesses Responding to a Summons

Further to our earlier post discussing COVID-19 and Material Adverse Change (“MAC”) provisions in merger and acquisition agreements, and the procedural ruling in respect of the dispute involving Rifco Inc. (“Rifco”), ACC Holdings Inc. (“Purchaser”), and the Purchaser’s parent company, CanCap Management Inc. (“CanCap”), each of Rifco, the Purchaser and CanCap, (collectively, the “Parties”) settled their claims against each other for a payment by CanCap and the Purchaser to Rifco of an aggregate of $1.5 million. Further, the Parties entered into a full and final mutual release settlement agreement dated July 29, 2020 (the “Settlement Agreement”) in connection with the arrangement agreement dated February 2, 2020.

As a result of this Settlement Agreement, the interpretation of MAC provisions in Canada remains uncertain due to the continued lack of court decisions. We will continue to follow future court proceedings relating to the interpretation of MAC provisions, including with respect to the COVID-19 pandemic.


On June 25, 2020 the Canadian Securities Administrators (“CSA”) released their Consultation Paper 25-402 – Consultation on the Self-Regulation Organization Framework (“Consultation Paper”). The Consultation Paper discusses seven key issues of the existing framework for self-regulatory organizations (“SROs”) and is seeking feedback from industry representatives, investor advocates, and the public on how the innovation and development of the financial services industry has impacted the current regulatory regime.

CSA announced its plan to undertake this review in December 2019. In anticipation of CSA’s Consultation Paper, the Investment Industry Regulatory Organization (“IIROC”) and the Mutual Fund Dealers Association of Canada (“MFDA”) released papers outlining their proposed new framework for SROs.

MFDA -­ Proposal for a Modern SRO

MFDA released its special report titled A Proposal for a Modern SRO on February 3, 2020. MFDA recommended creating an entirely new SRO referred to as “NewCo”. NewCo would be a Canadian business conduct and securities regulator and its mandate would include registration, business conduct standards, prudential matters, policy and rule development and enforcement. However, its mandate would not include market surveillance and regulation. Regulation of markets and exchanges would be integrated with the CSA Statutory Regulators (e.g., OSC, BCSC, etc.,).

IIROC – Improving Self-Regulation for Canadians

IIROC released its proposal titled Improving Self-Regulation for Canadians on June 9, 2020. The proposal recommends bringing together IIROC and MFDA as divisions of a consolidated SRO. IIROC believes that the consolidation would save hundreds of millions of dollars over the next decade from reduced duplicative regulatory costs. The proposal highlights the burdensome and lengthy process of trying to develop a new rule book from scratch and emphasizes that a consolidation of IIROC and MFDA would allow dealers and representatives to continue performing under their existing regulatory regime or consolidate their regulatory oversight under one division of the combined SRO.

CSA – Consultation Paper

CSA’s Consultation Paper discusses seven key issues of the existing SRO framework that were identified during informal consultations. The issues were grouped into three broad categories: structural inefficiencies, investor confidence, and market surveillance. With respect to each issue, the Consultation Paper provides a targeted outcome for consideration. The following summarizes each issue and states the CSA’s targeted outcome.

Issue 1 – Duplicative Operating Costs for Dual Platform Dealers

Dual platform dealers often experience higher operating costs and difficulty achieving economies of scale. This inhibits dealers’ ability to minimize costs for investors and innovate product and service offerings. In addition, dual platform dealers are faced with maintaining separate compliance functions and, as a result, are saddled with separate information technology systems. Lastly, dual platform dealers incur both IIROC and MFDA fees.

CSA’s targeted outcome is a “regulatory framework that minimizes redundancies that do not provide corresponding regulatory value.”

Issue 2 – Product-Based Regulation

Different rules or different interpretations of similar rules between IIROC and MFDA exist at a time where there is a convergence of similar products and services between registrants of each SRO. The inconsistent application of rules and compliance between the SROs creates an opportunity for some registrants to take advantage of these differences.

CSA’s targeted outcome is a “regulatory framework that minimizes opportunity for regulatory arbitrage, including the consistent development and application of rules.”

Issue 3 – Regulatory Inefficiencies

There is inefficient access to certain products and services for some registration categories. For example, mutual fund dealers under the MFDA are unable to easily distribute exchange traded funds. The current framework also makes it difficult for any one of the SROs or even the CSA to effectively resolve issues that span multiple registration categories.

CSA’s targeted outcome is a “regulatory framework that provides consistent access, where appropriate, to similar products and services for registrants and investors.”

Issue 4 – Structural Inflexibility

Evolving business models are restricted by the current framework. The structural inflexibility is posing challenges for dealers to accommodate changing investor preferences and to access to a wider range of products and services from a single registrant. Additionally, the current regulatory structure places unnecessary barriers on professional advancement. For example, the higher IIROC proficiency standard makes the transition from mutual fund dealer to investment dealer challenging.

CSA’s targeted outcome is a “flexible regulatory framework that accommodates innovation and adapts to change while protecting investors.”

Issue 5 – Investor Confusion

Investors are generally confused by the existing regulatory framework. There is investor confusion surrounding the number of SROs and their roles and jurisdictions, accessing the complaint resolution processes, and why an investor cannot access similar investment products from a single source.

CSA’s targeted outcome is a “regulatory framework that is easily understood by investors and provides appropriate investor protection.”

Issue 6 – Public Confidence in the Regulatory Framework

There is a possible lack of public confidence in the existing SRO framework. Inadequacies in the SRO governance structure (industry-focused boards and a lack of formal investor feedback mechanisms) fail to provide enough support for SRO’s public interest mandate. Further, there is concern regarding ineffective SRO compliance and enforcement practices.

CSA’s targeted outcome is a “regulatory framework that promotes a clear, transparent public interest mandate with an effective governance structure and robust enforcement and compliance processes.”

Issue 7 – The Separation of Market Surveillance from Statutory Regulators (CSA)

IIROC continues to conduct the surveillance of trading activity on the debt and equity marketplaces in Canada. Statutory Regulators that regulate marketplace operations require IIROC to provide the necessary information. There is concern over possible information gaps and lack of market transparency resulting from this separation of market surveillance away from Statutory Regulators.

CSA’s targeted outcome is an “integrated regulatory framework that fosters timely, efficient access to market data and effective market surveillance to ensure appropriate policy development, enforcement, and management of systemic risk.”

Going Forward

CSA is collecting feedback on the Consultation Paper for a 120-day comment period ending October 23, 2020. The consultation process will result in a CSA paper outlining a proposed regulatory framework for SROs whereby the CSA will seek further public comment.


In an effort to reduce the regulatory burden for issuers who wish to conduct “at-the-market” (“ATM”) offerings in Canada and facilitate capital raising by public companies, the Canadian Securities Administrators (the “CSA”) announced significant amendments (the “Amendments”) to the ATM distribution regime under National Instrument 44-102 – Shelf Distributions (“NI 44-102”) and Companion Policy 44-102CP. Notably, the Amendments, which will become effective on August 31, 2020, will streamline the process for ATM offerings in Canada.  Going forward, issuers commencing an ATM offering will no longer have to apply for and obtain exemptive regulatory relief or be subject to the limitations on (i) overall ATM offering size under a single prospectus supplement (which the current regime limits to 10% of an issuer’s market capitalization at the time of the ATM launch (the “10% Aggregate Cap”)), or (ii) the aggregate number of a class of securities that can be distributed on any trading day (which the current regime restricts to 25% of an issuer’s average daily trading volume of that class (the “25% Daily Cap”)).

ATMs – An Overview

An ATM offering is a distribution of equity securities (typically common shares) at variable market prices that is qualified by a base shelf prospectus and prospectus supplement under the shelf offering procedures of NI 44-102. Through an ATM offering, an issuer may, from time to time, on an as-needed basis, sell its securities at the prevailing market price into a pre-existing trading market in which securities of the same class are traded. Sales of securities under an ATM offering are effected by one or more registered securities dealer(s) engaged by the issuer to act as its agent(s).

ATM offerings can be an effective capital raising alternative for issuers, as they: (i) allow issuers to sell securities into an existing market, typically at no discount to the current market price; (ii) offer quick access to capital, on an ongoing basis, in line with an issuer’s financing needs; (iii) allow issuers to capitalize on favourable market conditions; (iv) are typically subject to lower commissions, fees and expenses than traditional offerings; (v) do not require road shows or marketing, thereby allow management to continue to focus on the business; and (vi) give issuers more discretion as to the size, price, timing and terms of the offering.

Although the current regime under NI 44-102 permits ATM distributions, in order to conduct an ATM offering in Canada issuers first needed to apply (on a case-by-case basis) for exemptive relief from the Canadian securities regulators as it is impracticable for issuers and dealers to comply with certain requirements under applicable securities laws, including:

  • the requirement to deliver a prospectus to purchasers (the “Delivery Requirement”);
  • disclosure of certain modified withdrawal and rescission rights and certification requirements (the “Form Requirements”); and
  • the requirement to publicly disclose the number and average price of the securities distributed under the ATM offering and the aggregate gross and net proceeds raised and aggregate commissions paid or payable on a monthly basis (the “Monthly Reporting Requirement”).

ATM offerings have historically required French translations of the base shelf prospectus, applicable ATM offering prospectus supplement and all documents incorporated by reference.  The Amendments do not provide issuers relief from the French translation requirement, however, an application to the Autorité des marchés financiers can be made to obtain exemptive relief from the French translation requirements in connection with an ATM offering.

The Amendments

When the Amendments take effect on August 31, 2020 they will, among other things, codify certain standard terms that are typically included in ATM exemptive relief orders. As a result, issuers will not have to apply for exemptive relief to conduct ATM offerings in Canada.

In particular, the Amendments will make the following changes to the Canadian ATM offering regime:

  • Delivery Requirement – The Delivery Requirement will not apply in connection with a distribution of securities under an ATM offering.
  • Form Requirements – The Form Requirements for ATM offerings to include: (i) specified “forward-looking” certificates, to be included in the base shelf prospectus or applicable prospectus supplement and (ii) modified form of statement of rights
  • Reporting Obligations – The Monthly Reporting Requirement is replaced with a new quarterly reporting requirement, pursuant to which issuers conducting an ATM offering must disclose the number and average price of the securities distributed under the ATM offering and the aggregate gross and net proceeds raised and aggregate commissions paid or payable by either: (i) filing a standalone report within 60 days after the end of each applicable interim period or 120 days after the end of each applicable annual period; or (ii) including such disclosure in their interim and annual financial statements and related management discussion and analysis.
  • Limits on Offering Size and Trading Volume – ATM offerings will not be subject to the 25% Daily Cap and 10% Aggregate Cap. Notwithstanding the removal of these limitations, the CSA has advised that they will continue monitoring ATM offerings, focusing on distributions that may have had a material impact on the price of the issuer’s securities where prior public disclosure of the distribution was made, and expect issuers and dealers to conduct ATM offerings in a manner that limits any negative impact on market integrity.
  • Additional Disclosure Obligations – To ensure the applicable prospectus contains full, true and plain disclosure of all material facts relating to the securities distributed under the ATM offering, issuers may incorporate new material facts into the prospectus by disseminating a news release disclosing information that, in the issuer’s determination constitutes a “material fact”, provided that such news release is identified on its face page as a “designated news release”. Similarly, a prospectus for an ATM offering should disclose that any such designated news release will be deemed to be incorporated by reference therein.
  • Investment Funds – All (i) non-redeemable investment funds and exchange traded mutual funds that are not in continuous distribution, and (ii) all mutual funds that are traded on an exchange that are in continuous distribution and meet the definition of an “ETF” in National Instrument 41-101 – General Prospectus Requirements, will now be permitted to conduct ATM offerings.

Anticipated Impact

By reducing the time and cost required to implement an ATM offering in Canada, the Amendments stand to make ATM offerings a more accessible and attractive capital raising alternative for Canadian issuers. As such, we expect to see more Canadian issuers using ATM offerings as a way to raise supplemental capital once the Amendments come into effect.

Historically, ATM offerings have been more popular in the United States than Canada and cross listed issuers typically relied on the United States markets to complete ATM programs. This is attributable, in part, to the more favourable regulatory framework that exists in the United States. The Amendments help align the Canadian and United States’ regimes which should facilitate cross-border ATM offerings, allowing issuers to capitalize on favourable market conditions and access capital in both markets.


Issuers with a base shelf prospectus filed prior August 31, 2020 under which the issuer is qualified to make an ATM distribution pursuant to an exemptive relief order will not have to re-file their base shelf prospectus to comply with the Amendments.  Issuers will be permitted to rely upon the more lenient framework prescribed by the Amendments through the filing of an ATM prospectus supplement or an amended and restated ATM prospectus supplement (in the case of an existing ATM offering).  If you have any questions regarding the Amendments or ATM offerings in general, please feel free to contact either of the authors.

In late May 2020, BDO Canada and Fasken hosted a conversation with leading private equity (PE) firms on the slumping market conditions around the COVID-19 crisis. The panel identified two discrete steps in the PE response:

  1. Navigating current market conditions
  2. Emerging from these conditions to thrive

The webinar discussion featured Chad Danard of TriWest Capital Partners, Sameer Patel of Angeles Equity Partners, and Ted Mocarski of Novacap.

1.     Navigating current market conditions

The PE-portfolio company relationship

PE investing is a relationship-driven business. During times of uncertainty, strong integration between the firm and portfolio company is especially critical. To lead portfolio companies through a pandemic, PE firms have found it helpful to increase the frequency of communication touchpoints with management teams. This allows them to proactively address market softness and liquidity constraints.

In the near term, companies and firms can expect to switch from offensive to defensive strategies. Instead of focusing on growth opportunities, PE firms will add value by leveraging their past experience in economic downturns and offering advice related to capital preservation. Continue Reading Private Equity Point of View: Navigating Through, and Emerging From, the Crisis

“At-The-Market”, or ATM, offerings are likely to continue gaining traction in Canada following the publication of a notice of amendments (the Amendments) to National Instrument 44-102 Shelf Distributions (NI 44-102) by the Canadian Securities Administrators (CSA). The key features of the Amendments are as follows:

  • The Amendments will come into force on August 31, 2020 (subject to ministerial approvals).
  • Canadian ATM offering procedures will be streamlined, resulting in time and cost efficiencies.
  • The Amendments should make Canadian ATM offerings more attractive to cross-listed issuers.
  • ATM offerings may provide access to capital in constrained or otherwise difficult market conditions.
  • ATM offerings allow for rapid access to capital to take advantage of temporary favourable market conditions.


An ATM is a form of offering whereby an issuer engages a designated investment bank (the agent) to sell the issuer’s shares directly into the market through the stock exchange on which the issuer is listed. In most cases, neither the issuer nor the agent knows the identity of the actual purchaser. Ultimately, the use of an ATM offering can optimize an issuer’s capital management strategy by providing rapid market access at favourable times which often are temporary in nature.

Prior to the Amendments, an issuer had to apply to the Canadian securities regulators before launching an ATM offering for exemptive relief from certain Canadian securities law requirements, including the prospectus delivery requirement, rights of withdrawal/rights of rescission, and the form of prospectus supplement certificate page (the ATM exemptions). The traditional exemptive relief orders (the Traditional Orders) often take several weeks and additional expense to obtain.

While the Amendments have codified the ATM exemptions, certain conditions that have been historically applied to ATM offerings by the Traditional Orders have been relaxed in or eliminated by the Amendments. We believe the Amendments will make ATMs more attractive as a corporate finance option for Canadian issuers.

Conducting an ATM offering under the Amendments

ATM Offering Size

The Amendments remove the limit on the aggregate permitted size of an ATM offering. Prior to the Amendments, NI 44-102 limited the number of shares that the Issuer could issue and sell under an ATM offering to 10% of the issuer’s market capitalization.

Daily Sales Volume

The Traditional Orders had required the aggregate number of shares sold on all Canadian marketplaces under an ATM offering to not exceed 25% of the trading volume on all Canadian marketplaces on each trading day.

As a result of the Amendments, there will no longer be any limit on the daily permitted sales volume under an ATM offering. The amended companion policy to NI 44-102 notes, however, that the issuer will have an interest in minimizing the market impact of an ATM offering and that the agent is prohibited from engaging in conduct that may disrupt a fair and orderly market under IIROC rules and standards of conduct. Accordingly, while there may not be an explicit cap on the daily sales volume, there may be a practical cap depending on the liquidity of the issuer’s listed shares.

Prospectus Requirements

Base Shelf Prospectus

In order to implement an ATM offering, an issuer must file a short form base shelf prospectus (base shelf prospectus) which provides the issuer with the ability to undertake an ATM offering. Among other things, the cover page of the base shelf prospectus will need to state that it may qualify an ATM offering.

Issuers should note that a base shelf prospectus that can qualify an ATM offering (ATM prospectus) may result in a more burdensome review process as compared against a regular base shelf prospectus.

Prospectus Supplement

If an ATM prospectus has been filed and receipted, the issuer can look to file a prospectus supplement establishing the parameters for its ATM offering. Once the prospectus supplement is filed, the issuer can then sell its shares under the ATM offering for up to 25 months (the actual time will depend on when the issuer’s ATM prospectus expires). The issuer will then have broad discretion as to if, when and how it will conduct an ATM offering, including deciding on the timing of any sales of shares through the market, the number of shares to be sold at any given time and the minimum price at which the issuer is willing to sell shares.

French Translation

As ATM offerings are made directly on a securities exchange, issuers and dealers are unable to determine where a purchaser is located at the time of the trade. As a result, it is possible that a purchaser under an ATM offering can be located in any jurisdiction of Canada. Accordingly, issuers have traditionally filed their ATM prospectus in each Canadian jurisdiction or, at the very least, in each Canadian province (excluding the territories).

Issuers should note, however, that French translation requirements apply to any distribution of securities in the Province of Québec. If an issuer has not distributed securities in Québec or is otherwise exempt from French translation requirements, that issuer should consider applying for exemptive relief from the French translation requirements from the Autorité des marchés financiers. Exemptive relief from French translation requirements will be important for issuers to avoid the time and expense of French translation of their ATM prospectus, prospectus supplements and continuous disclosure documents incorporated by reference in the ATM prospectus, in particular given that these documents are ultimately not delivered to purchasers of shares under an ATM offering.

Continuous Disclosure

During an ATM offering, Canadian securities law requires that issuers ensure that the ATM prospectus contains full, true and plain disclosure of all material facts relating to the issuer and its shares. This precludes the issuer from making sales under the ATM offering at any time that it is in blackout or otherwise in possession of undisclosed information that would constitute a material fact or a material change under Canadian securities laws. As continuous disclosure documents are prepared, filed and therefore incorporated by reference into the ATM prospectus (such as financial statements, management’s discussion and analysis (MD&A), annual information forms, information circulars and material change reports), the agent conducts ongoing due diligence on the issuer.

The Amendments also codify the concept of a “designated news release” for the purposes of the ATM prospectus. This designation was set out in the Traditional Orders, and the ATM prospectus will provide that any designated news release will be deemed to be incorporated by reference into the ATM prospectus in order to ensure that it contains full, true and plain disclosure of all material facts relating to the issuer and its shares without requiring an amendment to the ATM prospectus or the filing of a material change report. Therefore, in addition to the typical continuous disclosure documents incorporated by reference in a base shelf prospectus, the agent will also conduct due diligence on the subject matter of each designated news release.

Investment Funds

If the issuer is an investment fund, the ATM prospectus must include a statement that the at-the-market distribution will be conducted such that the issue price of its securities sold under the ATM offering will not, as far as reasonably practicable, be a price that causes dilution of the net asset value of other outstanding securities of the investment fund at the time the security is issued.

Reporting Requirements

The Amendments require that issuers file a quarterly notice of proceeds in respect of an ATM offering. The report, which can be included in the issuer’s interim and annual financial statements and MD&A, must disclose the number and average price of shares distributed, gross proceeds, commissions and net proceeds. The Traditional Orders had required certain issuers to make these reports within seven calendar days after the end of any calendar month (in addition to quarterly reports in its financial statements and MD&A).


The Amendments should be of particular interest to issuers that cannot rely on traditional equity offerings, particularly during the prevailing economic and market conditions that resulted from the emergence of the COVID-19 pandemic in early 2020. While ATM offerings have not been historically utilized in Canada to the extent seen in the United States, the inclusion of an ATM offering as part of an issuer’s capital markets strategy should be increasingly common in Canada. Fasken has a depth of experience with this financing structure and is pleased that the CSA has taken steps to streamline the ATM offering procedures.

The Deal 

On December 15, 2019, United Kingdom-based Cineworld Group plc (“Cineworld”), the second largest cinema chain worldwide, entered into an arrangement agreement (the “Arrangement Agreement”) with Cineplex Inc. (“Cineplex”) whereby Cineworld would acquire all of the issued and outstanding shares of Cineplex for $34 per share in cash, representing a premium of 42% to the closing price on the Toronto Stock Exchange (“TSX”) and a premium of 39% to the volume weighted average share price on the TSX for the 30 days ending December 13, 2019. The total transaction value was approximately $2.8 billion including the assumption of net debt.

The transaction was to proceed by way of a statutory plan of arrangement under the Ontario Business Corporations Act, and was expected to close in the first half of this year.

Notably, the Arrangement Agreement contained a definition of Material Adverse Effect that specifically excluded any such change, event, occurrence, effect or circumstance arising out of, relating to, resulting from or attributable to “outbreaks of illness or other acts of God.”

Cineworld Terminates the Arrangement Agreement

As a result of the COVID-19 pandemic, theatres across Europe, the United States and Canada were forced to close in March, causing significant hardship for the industry including Cineplex.

On June 12, 2020, Cineworld announced that it would not be proceeding with the acquisition of Cineplex.  Cineworld stated that it had “become aware of certain breaches” by Cineplex of the Arrangement Agreement, and that “a material adverse effect has occurred with respect to Cineplex.”  Cineworld’s termination notice cited Cineplex’s failure to operate its business in the ordinary course and the occurrence of a material adverse effect on Cinplex’s business.

In response, Cineplex denied that Cineworld had a legal basis to terminate the Arrangement Agreement, and characterized Cineworld’s allegations as “buyer’s remorse” and an attempt to “avoid its obligations under the Arrangement Agreement in light of the COVID-19 pandemic.”  Cineplex promised to “file suit promptly” against Cineworld for damages arising from Cineworld’s refusal to complete the transaction.

Will Canada Finally Have a MAC Case?

If Cineplex follows through on its threat to commence an action for damages against Cineworld, the litigation could result in much-needed judicial consideration of  what constitutes a material adverse effect or change to a business.

In the context of mergers and acquisitions, a material adverse effect or material adverse change (“MAC”) refers to a change in circumstances that reduces the value of a company.  MACs are used as a materiality threshold to measure the negative effect of events on a transaction or on one of the parties to the transaction, and the threshold as to what constitutes a MAC is a high one.

As discussed in our prior blog post titled “COVID-19 and Material Adverse Change Provisions in M&A Agreements”, the Canadian law on material adverse change (“MAC”) is very thin, which means we look to American caselaw for guidance.  And, although there are a number of cases dealing with MAC’s in Delaware, there has only been one case in the state’s courts where a MAC has been found to have occurred:  See our post titled The Big MAC: Affirmed for more information on the 2018 Akorn Inc. v Fresenius Kabi AG case.

It is possible that there will be some Canadian law on MACs before Cineplex’s intended proceeding against Cineworld plays out.  The Court of Queen’s Bench in Alberta recently made a procedural ruling on the final order application for a proposed plan of arrangement involving Rifco Inc., its potential acquirer ACC Holdings Inc. and ACC’s parent company, CapCan Management Inc., as discussed in our post titled MAC Attack: Rifco and CanCap Dispute to be Examined Further. The court’s decision did not determine if the termination of the arrangement agreement on the basis of an alleged MAC was lawful or whether the parties will be required to complete the transaction. We are monitoring that proceeding for further developments.


Client Relationship Managers

On June 10, 2020, the Canadian Securities Administrators sent out a notice by means of a broadcast e-mail (the Notice) confirming that effective immediately portfolio managers (a PM) can register “client relationship management” (CRM) specialists as advising representatives (AR).  A CRM can interact with clients, but cannot give stock picking advice (e.g., analyzing and selecting individual securities) to clients, and there registration as a CRM is subject to certain terms and conditions (see below).

The advantage of a CRM, particularly in a large PM firm, is the person does not have to satisfy all of the proficiency requirements of an AR, which should encourage operational efficiencies as the CRM can deal with clients about certain matters, while ARs can focus on providing investment advice to such clients.

Current PM Business Model

Currently, ARs giving stock picking advice to clients on behalf of a PM must satisfy certain educational requirements (e.g., CFA) and have certain relevant investment management experience (RIME) over a specified period of time.  Associate advising representatives (AAR), who can also give stock picking advice to clients, provided it’s approved by an AR, must satisfy certain less onerous educational requirements and a different period of RIME.

New Rules for Advising Representatives acting as CRMs

As a result of the Notice, a person can now be registered as an AR who is a CRM. The person still has to satisfy the educational requirements of being an AR, but they do not have to satisfy the RIME requirements.  A CRM can interact with clients, can recommend pooled funds and model portfolios (that are advised by or have been developed by an AR, respectively), determine asset allocations, and formulate and draft investment policy statements for clients, but they cannot give stock picking advice to clients.

CRMs do not have to be called “client relationship managers”, but if that’s not their title they are required to ensure that all client communications and marketing materials refer to them acting in such a capacity (e.g., on the PM’s website, e-mails and business cards). A CRM also cannot use any title that would suggest that they can give stock picking advice to clients.

CRMs must also advise all clients that they deal with about the limits of the advice that they can give, and that an AR will provide them with any stock picking advice they require, either on a discretionary or a non-discretionary basis depending on the circumstances.

A CRM can also review and approve advice given by AARs, provided such advice does involve any stock picking advice, which must be provided by an AR.

As noted above, CRMs are also subject to certain standardized, non-negotiable terms and conditions which are set out in the following link:

Terms and Conditions

A CRM can also over time obtain the required RIME to become an unrestricted AR and to have the CRM terms and conditions removed from their registration.

If you are interested, you can review a copy of the Notice at:

If you have any questions about the Notice, please contact Garth Foster at 416 868 3422 or at, or Ederlyn Magno at 416 868 3353 or at


Tendances de l’industrie québécoise de l’investissement – T1 2020

Les données sont enfin disponibles! Réseau Capital et l’Association canadienne du capital de risque et du capital d’investissement ont publié ce mercredi leur Aperçu du marché québécois du capital de risque et du capital de développement pour le premier trimestre de 2020.

Continue Reading Tendances de l’industrie québécoise de l’investissement – T1 2020 / Tendencies in Quebec’s Investment Industry – Q1 2020