On January 13, 2022, TMX Group Ltd. (Toronto Stock Exchange (“TSX”) and TSX Venture Exchange (“TSXV”)), Laurel Hill Advisory Group (“Laurel Hill”) and Fasken hosted a conversation on disclosure and regulatory considerations for issuers leading into the 2022 proxy season. The panel discussed six discrete areas of recent developments that will be relevant for public companies:

  1. diversity disclosure;
  2. an update on proxy voting guidelines;
  3. an update from TSX and TSXV;
  4. continuous disclosure updates;
  5. corporate law amendments; and
  6. capital raising.

For a further discussion of these items, please see the Fasken Proxy Season Preview 2022 webinar.

Continue Reading Proxy Season Preview 2022

The long-awaited amendments to reduce the regulatory burden on investment funds were published by the Canadian securities administrators (CSA) in final form on October 7, 2021 and take effect on January 5, 2022. The amendments mostly relate to housekeeping matters that reduce very little regulatory burden, while other aspects might actually increase regulatory burden in the short term. We are disappointed that the CSA did not introduce a number of additional changes that would have had a far greater impact on reducing the regulatory burden on industry participants.

Continue Reading Securities Law Amendments to Reduce the Regulatory Burden on Investment Funds

Last week, the Canadian Securities Administrators (“CSA”) and the Investment Industry Regulatory Organization of Canada (“IIROC”) jointly published their third staff notice this year targeting crypto-trading platforms (“CTPs”) that are registered or have applied for registration as securities dealers. This staff notice 21-330 (the “Notice 21-330”) provides guidance on the types of advertising activities, social media content, and marketing strategies by CTPs that may breach securities requirement.

Continue Reading CSA & IIROC Warn Crypto-Trading Platforms Against Misleading Marketing Activities


On August 3, 2021, the Canadian Securities Administrators (CSA) announced their plan to “consolidate the functions” of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). The consolidation will create a new single self-regulatory organization (New SRO) with the goal of providing enhanced regulation of the investment industry. The CSA will also consolidate the two existing investor protection funds into a single protection fund independent from the New SRO.  The CSA plans to implement the New SRO in two phases, described below.

This development follows a process that started last year, as discussed in our post when the CSA released a Consultation Paper outlining the key issues in the existing framework for SROs. The CSA then opened a 120-day comment period to receive feedback from industry stakeholders and the public. IIROC and the MFDA both released their own proposals and comment letters with their recommendations. Although the CSA’s proposal differs from the proposals made by IIROC and the MFDA, both of those SROs have announced their support of the CSA’s plan. Position Paper 25-404 stipulates that according to the Autorité des Marchés Financiers (AMF), the creation and recognition of the New SRO will not affect the mandate, functions and powers of the Chambre de la Sécurité Financière (CSF). The CSF has also announced its support of the CSA proposal.

Highlights of the New SRO

The CSA’s vision for the New SRO will involve a number of solutions to address the issues identified in the CSA’s Consultation Paper. There is a focus on improving governance, strengthening proficiency for investment and mutual fund dealers, enhancing investor education and reducing investor confusion, increasing access to advice, reducing industry costs, fostering harmonization and efficiencies, harmonizing directed commissions, maintaining strong market surveillance, and leveraging ongoing related projects. In particular:

  • To address concerns that the current SRO corporate governance structure underrepresents the concerns of investors and stakeholders to the benefit of industry, the CSA has emphasized the need for an improved corporate governance structure. The CSA’s solutions include the following requirements: a majority of the New SRO’s directors be independent; the Chair of the board is to be an independent director; the New SRO will undertake due diligence as well as the use of evergreen lists and board skills matrices to ensure a balanced board; a “cooling-off period” where CSA regulators are considered for independent director positions; maintenance of appropriate term limits for new board members; and the New SRO is to develop diversity and inclusion policies;
  • A policy review of the existing IIROC and MFDA rule books will be conducted to identify differences and overlaps in the rules. The CSA will propose either to maintain the necessary differences or will seek amendments to harmonize or eliminate any regulatory gaps;
  • To foster harmonization, the New SRO will be required to solicit CSA comment and input on annual priorities, business plan and budget;
  • A review of the complaint resolution processes will be conducted to assess the merits of creating a single complaint filing portal with a standard complaint form for investors. The portal would then consolidate, filter and route the complaint to the appropriate organization.

One of the unresolved issues relates to Directed Commission arrangements. These arrangements involve a dealing representative or other individual submitting a request for their sponsoring firm to pay all or part of the commissions or fees earned by the individual to a personal corporation owned by the individual or their family members. With the exception of Alberta, the MFDA currently permits Directed Commission arrangements, but the IIROC rules preclude them. Given the complexity involved in this matter, further work and consultation will need to be completed to reach a conclusion on the appropriate treatment under the New SRO model. A Directed Commissions Working Group will be formed to engage solely in this analysis and will be directed to consider the tax status of advisors using these arrangements, consult with stakeholders, and propose a rule to provide protections.

Going Forward: A Two-Phase Process

To establish and operationalize the New SRO, the CSA has outlined a two-phase process. Phase 1 of the New SRO will include investment dealer and mutual fund dealer registration categories, as well as marketplace members. Phase 2 will then consider the addition of other registration categories, such as portfolio managers, exempt market dealers, and scholarship plan dealers.

Phase 1 will begin immediately with a focus on design, integration, harmonization and governance. An Integrated Working Committee (IWC) will be established and led by CSA staff, and will be responsible for a number of key roles in the plan. First, the IWC will be required to determine the appropriate corporate structure for the New SRO. Second, the IWC will be required to define and oversee the implementation and integration of the existing SROs and consolidation of the two Investment Protection Funds, and facilitate the adoption of enhanced governance mechanisms. Third, the IWC is responsible for coordinating the harmonization of SRO rules, policies, compliance and enforcement processes, and fee models. In addition, the current IIROC and MFDA rules will be reviewed by the IWC to identify any differences and propose changes to harmonize where appropriate. Finally, the IWC will be required to oversee the review and approval of the by-laws for the New SRO.

Phase 1 will also require new Recognition Orders that include many of the governance enhancements for the New SRO and will require the approval of each statutory regulator. A new Memorandum of Understanding will also need to be implemented. This will require consideration of the oversight relationship management structure between CSA members and the New SRO, which must be agreed upon by all recognizing regulators. Once the corporate structure has been finalized, an implementation timeline will be released.

Phase 2 will focus on modification and consultation by formulating a CSA SRO Working Group (Working Group) to engage in consultation with stakeholders. At this stage, the Working Group will coordinate with the CSA Registration Steering Committee to consider incorporating other registration categories. This phase will also involve continued harmonization efforts with insurance regulatory bodies.

Now that the plan has been announced, the Working Group is accepting written representations on the New SRO framework, and will accept those submitted on or before October 4, 2021. In the meantime, the CSA will be working to establish and lead the IWC to begin its work in implementing the New SRO. For the time being and until the New SRO is formed, IIROC and the MFDA will work with the CSA to implement the new framework while continuing operations as usual.



The Canadian Securities Administrators (CSA) published for a 90 day comment period proposed amendments to National Instrument 45-106 Prospectus Exemptions and CSA Staff Notice (NI 45-106), National Instrument 13-101 System for Electronic Document Analysis and Retrieval (NI 13-101) and National Instrument 45-102 Resale of Securities (NI 45-102) to introduce a new capital raising exemption for reporting issuers that are listed on a Canadian stock exchange (Listed Issuer Financing Exemption).

Continue Reading Canadian Securities Administrators Propose New Prospectus Exemption for Listed Issuers

Lack of transparency in calculations, insufficient context and significant variations by issuer and industry, a “stronger tool was needed to take appropriate regulatory action”, said the Canadian Securities Administrators (CSA) when they first presented their new set of rules to regulate disclosure of non-GAAP financial metrics. That was in 2018.

Many comment letters and three versions later, we now have the final version of the National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (the Instrument).

Unlike the existing guidance on non-GAAP financial measures (Staff Notice 52-306), the new Instrument has the force of law. This means that the “adjusted earnings”, “adjusted EBITDA”, “free cash flow”, “pro forma earnings” and other financial measures of this world will soon be the target of much scrutiny, because the new Instrument, while short, is accompanied by a 20-pages long Companion Policy, which clearly spells out the intention of the legislators. Continue Reading Fill in the Non-GAAP: New Disclosure Requirements to Become Mandatory in August 2021

On May 20, 2021, the Canadian Securities Administrators (CSA) announced [1] a 120-day comment period for proposed amendments to National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”)[2] under the unwieldy title “Proposed Amendments to National Instrument 51-102 Continuous Disclosure Obligations and Other Amendments and Changes Relating to Annual and Interim Filings of Non-Investment Fund Reporting Issuers and Seeking Feedback on a Proposed Framework for Semi-Annual Reporting – Venture Issuers on a Voluntary Basis[3]. The proposed amendments and request for comments follow CSA Consultation Paper 51-404 Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers issued in April 2017[4].

The proposed amendments to NI 51-102 include combining an issuer’s annual financial statements, management’s discussion and analysis (MD&A) and annual information form into one annual reporting document called an “annual disclosure statement”, and combining interim financial statements and MD&A into an “interim disclosure statement” for quarterly reporting purposes, all as set out in proposed Part 3A of NI 51-102. According to the CSA, subject to the comment process and required regulatory approvals, the final amendments to NI 51-102 are expected to become effective on December 15, 2023. Continue Reading For Non-TSX Companies, Twice a Year May be Enough

On March 29, 2021, the Canadian Securities Administrators (“CSA”) and the Investment Industry Regulatory Organization of Canada (“IIROC”) jointly published Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements (“Notice 21-329”)[1]. Notice 21-329 provides guidance on how securities legislation will be applied to crypto-asset trading platforms (“CTPs”) and in doing so expands on the regulatory guidance previously set out in CSA Staff Notice 21-327[2] and joint CSA/IIROC Consultation Paper 21-402[3].

On the same day, the Ontario Securities Commission (“OSC”) issued a news release imposing a deadline of April 19, 2021 for CTPs to contact OSC regarding bringing their operations into compliance. The OSC intends to take enforcement actions towards those CTPs who fails to do so by the deadline, including CTPs located outside of Ontario that allow access to Ontarians. Continue Reading CSA and IIROC publish updated guidance on cryptocurrency regulatory issues; OSC issues deadline for cryptocurrency companies to begin regulatory compliance efforts

On March 24, 2021, the Minister of Innovation, Science and Industry (the “Minister”) announced updates to the Guidelines on the National Security Review of Investments (the “Guidelines”) issued under the Investment Canada Act (the “ICA”).

This first update since the Guidelines were issued on December 21, 2016 appears to respond to widely expressed concerns about the sanctity of personal information, vulnerability of Canadian intellectual property, and the growing importance of things like critical minerals to Canada’s geopolitical positioning and the basic health and safety of citizens in a post-pandemic world. Additionally, areas of technology broadly understood to be of concern to the Government of Canada (the “Government”) have been expressly listed, with the only potential surprise being “Advanced Ocean Technologies.” Continue Reading A Step in the Right Direction: Updated Guidelines on Canada’s National Security Review Bring Greater Clarity

On March 11, 2021, the Canadian Securities Administrators (“CSA”) published Staff Notice 51-363 – Observations on Disclosure by Crypto Assets Reporting (“Notice 51-363”), the first update from CSA regarding entities dealing in crypto assets in more than a year[1]. Based on the disclosure of reporting issuers acting in the crypto asset space, Notice 51-363 provides staff guidance on expectations for disclosure in this industry.

Crypto asset reporting issuers have the same obligations as other public companies in disclosing material information and changes that affecting their businesses, as well as the financial impacts of such risks. Notice 51-363 reiterates the importance of fulfilling these obligations, and at the same time, recognizes the emerging nature of the crypto asset industry and novel issues reporting issuers may face.

Notice 51-363 can assist current and future reporting issuers because it provides detailed guidance on disclosure expectations in the context of crypto assets industry and highlights perceived insufficiencies in the disclosure of current reporting issuers. Continue Reading CSA urging crypto asset reporting issuers to improve disclosure quality