Copyright 2011, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Securities Regulation, September 2011
Staff of the securities regulatory authorities of Alberta, Ontario, Quebec, Nova Scotia, New Brunswick and Northwest Territories (the Jurisdictions) have published CSA Multilateral Staff Notice 51-336 Issuers Using Mass Advertising (the Notice) setting out their views with respect to issuers using television, radio, Internet, social media or print advertising in an apparent effort to promote interest in their securities.
Under the securities legislation of the Jurisdictions, advertising or marketing activities undertaken during a period of distribution of securities or in furtherance of a distribution are subject to restrictions, including the prospectus requirement (unless an exemption is available). Restricted advertising or marketing activities may be oral, written or electronic, and include televised communications.
In the Notice, Staff note that they have observed a practice whereby issuers in various industries have aired television advertisements focusing mainly on positive aspects of their businesses or prospects. In the case of advertisements by issuers listed on a stock exchange, the issuer's stock symbol figures prominently. In the case of unlisted issuers, contact information for investment enquiries is provided. Staff state that these advertisements appear to be for the specific purpose of promoting interest in the issuer's securities.
Staff are of the view that these advertisements may fail to comply with disclosure requirements under applicable securities legislation and/or may be misleading to investors. Staff state that the advertisements at issue do not appear to be aimed at selling the products or services of the issuer or raising public awareness of the issuer (and confirm that the Notice is not directed towards advertising or publicity campaigns that are legitimately aimed at such purposes).
Staff note that a number of the advertisements at issue contain scientific and technical disclosure regarding mineral or oil and gas projects which must comply with National Instrument 43-101 Standards of Disclosure for Mineral Projects and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities, respectively.
Staff advise that they will continue to monitor issuers' advertisements and that if an issuer's advertisement breaches securities legislation or appears to be misleading to investors or contrary to the public interest, the issuer should anticipate that Staff will take regulatory action, which may include a review of the issuer's overall disclosure or issuances of securities.
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