The Canadian Securities Administrators (the "CSA") are publishing for a 60-day comment period, which expires on June 29, 2011, proposed amendments to National Policy 11-201 Electronic Delivery of Documents ("NP 11-201"). If the proposed amendments are adopted, they would replace the current version of NP 11-201. In Québec, NP 11-201 and the proposed amendments will replace Notice 11-201 related to the Delivery of Documents by Electronic Means.
The NP 11-201 was implemented to give market participants an opportunity to disseminate documents to security holders and investors in a more timely, cost-efficient, user-friendly and widespread manner than by use of paper-based methods. However, since the implementation of NP 11-201 in 2000, electronic communications have become much more common than when NP 11-201 was first drafted. The CSA believes it is time to review and update NP 11-201 to create provisions of securities legislation that impose delivery requirements to be applied in a manner that accommodates technological developments without undermining investor protection.
The CSA also recognizes that there have been changes to legislation affecting electronic commerce and transactions, including amendments to corporate legislation and the introduction of legislation governing electronic transactions and protection of personal information. The CSA put forward the proposed amendments to recognize the changes to other non-securities legislation and the increased familiarity of securities industry participants and investors with the electronic delivery of documents.
Key changes that would result from the proposed amendments include the alerting of stakeholders to other legislation that addresses the electronic delivery of documents and the simplifying of guidance on the form and substance of security holder consents.
Since the development of NP 11-201, there have been numerous legislative changes that concern electronic delivery of documents. The CSA is proposing to amend NP 11-201 to draw attention to the interaction of securities legislation with other pieces of legislation such as electronic commerce legislation, corporate legislation, privacy legislation and the guidance documents of self-regulatory organizations like the Mutual Fund Dealers Association of Canada and the Investment Industry Regulatory Organization of Canada.
The CSA is also proposing to simplify the consent required from recipients of electronic documents in NP 11-201 to facilitate a more streamlined approach to the delivery of documents. The CSA recognizes that statutory requirements concerning consent are generally provided for in electronic commerce legislation or corporate law. This legislation may require an express consent or may permit a deliverer to rely on an inferred consent for an electronic delivery to be effective. Therefore, the CSA has proposed to eliminate most of the specific securities law rules applicable to these same matters.
NP 11-201 currently contemplates the following existing regime of electronic delivery of a document:
- Recipient of document receives notice that the document has been, or will be sent electronically;
- Recipient of document has easy access to the document;
- Deliverer of the document has evidence that the document has been delivered; and
- Document that is received by the recipient is not different from the document delivered.
In addition to requesting any general comments on the proposed amendments to NP 11-201, the CSA is also inviting comments on certain specific questions which appear to raise the fundamental question as to whether or not securities law is addressing the electronic delivery of documents in an appropriate manner. The specific questions are as follows:
For Industry
- Do you believe that the Policy presents any impediments to electronic delivery?
- The Policy describes four basic components for electronic delivery. Do the requirements of other legislation, including electronic commerce legislation and corporate legislation, impact your ability to satisfy the four basic components for electronic delivery described in the Policy?
- We have proposed amendments to remove guidance on the recommended form and substance of a consent to electronic delivery. Please comment on this proposal.
For Investors
- Are you receiving documents electronically? If not, would you prefer to do so?
- Do you agree that the four basic components for electronic delivery provide an appropriate framework for electronic delivery?
- We have proposed amendments to remove guidance on the recommended form and substance of a consent to electronic delivery. Please comment on this proposal.
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