Canadian Securities Administrators (CSA) Multilateral Staff
Notice 51-336 Issuers Using Mass Advertising (the Notice) provides
the views of staff of the securities regulators in Alberta,
Ontario, Québec, Nova Scotia, New Brunswick and the
Northwest Territories on TV advertisements apparently aimed at
promoting interest in an issuer's securities.
Staff have observed the practice of employing short TV
advertisements (15-30 seconds) that convey positive images of an
issuer's business or prospects. If an issuer is a listed
company, its stock symbols are typically shown prominently in the
advertisement. If an issuer is an unlisted company, the contact
information for investment inquiries is usually provided. Staff
take the position that such advertisements appear to be for the
purpose of promoting interest in the issuer's securities.
Therefore, they might be "contrary to the securities
legislation and misleading to investors". In staff's
opinion, such advertisements do not appear to fall into the
category of advertisements aimed at selling the products or
services of the issuer or raising public awareness of the issuer.
Staff believe that mass advertisements aimed at generating interest
in the issuer's securities do not "reflect positively on
issuers or the Canadian capital markets", may raise investor
protection concerns or may be contrary to the public interest.
Although the Notice specifically addresses TV advertisements, the
same concerns apply to advertising through other means of mass
communication (radio, Internet, social media or print).
The Notice is instructive in indicating that inappropriate mass
advertising may trigger action under the regulators' public
interest jurisdiction or prompt a review of the issuer's
overall disclosure record and history of securities issuances, with
a view to determining if there has been a breach of applicable
securities laws. It is clear that issuers featuring their stock
symbols or investor contacts in their advertisements should ensure
that the content of the advertisement cannot be construed as
misleading. However, further guidance from the securities
regulators regarding permissible advertising would be welcome.
In expressing their views, staff refer to National Instrument
41-101 General Prospectus Requirements and Part 6 of the Companion
Policy 41-101CP, which provides an interpretation of the
advertising as trading. The definition of "trade" in
securities legislation is expansive and includes various activities
involving the sale of securities, including: "any act,
advertisement, solicitation, conduct or negotiation directly or
indirectly in furtherance of" such activities. When such
conduct occurs in the context of a trade that is a
"distribution" (generally including any primary issuance
of securities by the issuer), the prospectus requirement under
securities legislation applies. Given that a prospectus generally
qualifies the distribution of securities, rather than the
associated advertising, the prospectus requirement is interpreted
as effectively prohibiting such advertising activities.
This trade analysis has traditionally been applied to
advertising in the absence of specific rules or guidance. However,
it provides very little meaningful guidance to issuers and does not
apply to advertising related to trading in the secondary market in
the exempt market. Applying this analysis to brief 15-30 second
commercials highlights the lack of effective regulation in this
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