The “Listed Issuer Financing Exemption”, known as “LIFE”, will enter into effect on November 21, 2022[i]. As its name suggests, LIFE is a prospectus exemption for distributions of securities listed for trading on a recognized Canadian stock exchange. LIFE is intended to help smaller listed issuers raise capital without incurring significant costs, a
Securities Regulatory Authorities
Toronto Stock Exchange Staff Notice on Normal Course Issuer Bids
In May 2022, the Toronto Stock Exchange (“TSX”) issued Staff Notice 2022-0001 (the “Staff Notice”) on normal course issuer bids (“NCIBs”), “providing guidance on Sections 628 and 629 of the TSX Company Manual … for frequently asked questions in respect of normal course issuer bids”. Of the 35 FAQs in the Staff Notice, one question in particular has important implications for listed issuers carrying out NCIBs on TSX.
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CSA & IIROC Warn Crypto-Trading Platforms Against Misleading Marketing Activities
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.
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CSA to Combine IIROC and MFDA in a Single Self-Regulatory Organization
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.
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Fill in the Non-GAAP: New Disclosure Requirements to Become Mandatory in August 2021
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.
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For Non-TSX Companies, Twice a Year May be Enough
On May 20, 2021, the Canadian Securities Administrators (CSA) announced  a 120-day comment period for proposed amendments to National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”) 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”. 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.
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.
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CSA and IIROC publish updated guidance on cryptocurrency regulatory issues; OSC issues deadline for cryptocurrency companies to begin regulatory compliance efforts
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”). 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 and joint CSA/IIROC Consultation Paper 21-402.
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.
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CSA urging crypto asset reporting issuers to improve disclosure quality
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. 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.
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OSC’s Investment Funds and Structured Products Branch Will Consider Filing Extensions for Investment Fund Issuers
On March 15, 2021, the Investment Funds and Structured Products Branch (IFSP Branch) of the Ontario Securities Commission (OSC) issued an eNews communication advising that the IFSP Branch will consider requests for filing date extensions on a case-by-case basis for investment fund issuers that are unable to meet filing requirements as…
Additional Proficiency Options for Distributing Alternative Mutual Funds
On January 3, 2019, the final phase of the Canadian Securities Administrators (“CSA”)’s Modernization of Investment Fund Product Regulation Project relating to the establishment of a regulatory framework for alternative mutual funds came into effect. These amendments introduced a new category of mutual funds, “alternative mutual funds”, which are mutual funds that have…