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

Introduction

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.

Continue Reading CSA to Combine IIROC and MFDA in a Single Self-Regulatory Organization

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 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

The author wishes to thank Gilles Leclerc for his advice and contributions.

“Nothing happens. Nobody comes, nobody goes. It’s awful.” This quote from Estragon, one of the main characters in Samuel Beckett’s play “Waiting for Godot”, summarizes well the previous year from an economic and social perspective. Today, while the hopes of a vaccine rollout and economic recovery are looming on the horizon,
the Covid-19 pandemic continues to have a material adverse impact on our economy. It poses widespread challenges for many businesses, including challenges in reporting and disclosing the effect of Covid-19 to investors.

In a series of bulletins[1] published last year, we highlighted the guidance provided by both the Canadian Securities Administrators (“CSA“) and the U.S. Securities Exchange Commission relating to the continuous disclosure obligations of public issuers in the context of Covid-19. On February 25, 2021,  CSA issued Staff Notice 51-362 (the “Staff Notice“) to report the results of  their review of the disclosure provided by reporting issuers on the impact of Covid-19 on their business. CSA examined the filings of approximately 90 issuers
Continue Reading Continuous Disclosure Obligations in Times of a Continuous Pandemic: Canadian Securities Regulators’ Review of Issuers’ Disclosure

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