Originally published in Blakes Bulletin on Securities,
16% of reporting issuers reviewed were required to file missing
3% of reporting issuers reviewed were required to revise
Reporting issuers must continually assess whether or not a
given contract is material
The Canadian Securities Administrators (CSA) recently released
CSA Staff Notice 51-334 – Continuous Disclosure
Review Program Activities for the fiscal year ended March 31,
2011 (the CSA Staff Notice).
The CSA Staff Notice summarizes the results of CSA reviews of
compliance by reporting issuers with certain continuous disclosure
provisions of securities legislation during the year ended March
31, 2011. In particular, the CSA Staff Notice discloses that the
CSA completed reviews of approximately 60 reporting issuers to
assess compliance with the material contract filing requirements
under Part 12 of National Instrument 51-102 –
Continuous Disclosure Obligations (NI 51-102).
Securities legislation mandates that, subject to available
exceptions, reporting issuers file on SEDAR any contracts that the
issuer or any of its subsidiaries is a party to and that are
material to the issuer, in connection with certain events,
including: (i) the filing of the issuer's annual information
form (or, if the issuer is not required to file an annual
information form, within 120 days after the end of its financial
year); (ii) the filing of a material change report; and (iii) the
filing of a prospectus.
the deeming of certain categories of material contracts not to
be in the ordinary course and, therefore, not excepted from the
disclosure and filing requirements;
restrictions on the extent to which a reporting issuer may
redact or omit provisions from the filed copy of a material
notice of the policy of the CSA that, generally, a material
contract includes a schedule, side letter or exhibit referred to in
such a contract.
Identified Areas of Concern
The CSA Staff Notice reminds reporting issuers to carefully
consider the material contract filing rules in NI 51-102, as well
as the related companion policy guidance, and notes three areas of
concern identified in the CSA review.
Availability of the Ordinary Course of Business
If a material contract was entered into in the ordinary course
of business, it is typically excepted from the material contract
filing requirements in NI 51-102. However, as a consequence of the
2008 Amendments, reporting issuers are unable to avail themselves
of the ordinary course exception in certain circumstances. The CSA
Staff Notice states that the ordinary course exception will be
unavailable generally where it is determined that the contract is
important to understanding the reporting issuer's business. In
2011, the CSA required 16% of the reporting issuers it reviewed to
file missing material contracts to comply with the applicable
Redaction or Omission of Contract Provisions
Ordinarily, an issuer is permitted to redact or omit certain
provisions of a material contract if an executive officer of the
reporting issuer reasonably believes that disclosure of such
provisions would be seriously prejudicial to the interests of the
reporting issuer or would violate confidentiality provisions.
However, the 2008 Amendments placed limits on the ability of an
issuer to redact terms and conditions of material contracts,
including if such terms and conditions are necessary for
understanding the impact of the material contract on the business
of the reporting issuer. In 2011, the CSA required 3% of the
reporting issuers it reviewed to revise redacted provisions of
previously filed material contracts to comply with the applicable
Further, the CSA Staff Notice cautions that reporting issuers
must continually assess whether or not a given contract is material
since a contract that was not previously material to an issuer may
become material if, due to changes in the issuer's business or
other contracts, the issuer becomes substantially dependent on that
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.
Emotional culture is influenced in great part by the mindset and actions of leadership, although employees also play more of a role than they may realize in creating the culture that exists in the group.
The session will be led by Dr. Robert Brooks, an award-winning author and psychologist. In his presentation, Dr. Brooks will describe the mindset and realistic practices of leaders and staff that help to nurture and sustain a culture characterized by positive emotions, satisfying, respectful relationships, a sense of meaning and ownership for one’s work, and enhanced job performance. Examples will be offered to illustrate strategies for developing a positive emotional culture in an organization.
Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).