Canada: Cooperative System Legislation And Regulations Released: Fees, "Interface" And Transition Unresolved

On August 25, 2015, a revised consultation draft of the uniform provincial and territorial Capital Markets Act (CMA) and draft initial regulations under the CMA (Initial Regulations and, together with the CMA, the Consultation Drafts) for the proposed Cooperative Capital Markets Regulatory System (Cooperative System) were published for comment. The Consultation Drafts are open for comment until December 23, 2015.

The CMA is intended to replace existing provincial and territorial securities legislation in the participating provinces and territories (Ontario, British Columbia, New Brunswick, Saskatchewan, Prince Edward Island and Yukon). The initial consultation draft of the CMA was published for comment in September 2014 along with the initial consultation draft of the complementary federal Capital Markets Stability Act (CMSA). Blakes published a series of Bulletins regarding various aspects of the Cooperative System and subsequently published a series of Bulletins summarizing comments received on the CMA and CMSA (please see the various Bulletins posted on our website). A revised draft federal CMSA has not yet been released.

Given the scope of the Consultation Drafts, Blakes is publishing a series of Bulletins regarding various aspects of the Consultation Drafts. This Bulletin provides an overview of the Consultation Drafts and developments with respect to the structure and inter-provincial cooperation framework of the Cooperative System.

PLATFORM APPROACH MAINTAINED

Specific changes to the CMA from the initial draft CMA will be addressed in our series of Bulletins. However, in general, the revised CMA does not significantly depart from the approach taken in the initial draft CMA.

Several commenters on the initial draft CMA suggested that certain fundamental provisions of capital markets law, such as the 20 per cent take-over bid threshold and the two-day cooling-off period for a prospectus offering, should be set forth in the legislation (as they currently are in the Ontario Securities Act), rather than in the regulations. However, the commentary published with the revised CMA commentary confirms that the platform approach, which involves setting out certain fundamental provisions of capital markets law in the legislation while leaving most of the requirements and exceptions to be addressed in regulations, will be retained.

INTERFACE WITH NON-PARTICIPATING JURISDICTIONS UNRESOLVED

One common theme of comments on the initial draft CMA was the importance of the "interface" between the Cooperative System Authority (Authority), on the one hand, and the non-participating provinces and territories (Alberta, Quebec, Manitoba, Nova Scotia, Newfoundland and Labrador, Nunavut and Northwest Territories), on the other. This issue is important to market participants such as reporting issuers and securities dealers. If the new Authority does not substantially rely on determinations, such as prospectus receipts, issued by non-participating jurisdictions for companies based in these jurisdictions (and vice versa), more, not less, fragmentation may result in the administration and enforcement of securities laws across the country. The memorandum of agreement among the participating jurisdictions states that the Authority will use its best efforts to negotiate and implement an interface mechanism with each non-participating jurisdiction such that the Cooperative System is effectively of national application. The commentary issued with the Initial Regulations states that it is expected that an interface will be agreed upon with non-participating jurisdictions. The Initial Regulations commentary does not indicate whether the interface is expected to be analogous to the current passport system, based on a system of mutual reliance or otherwise.

MARKET PARTICIPANTS FEES

Another important aspect of the Cooperative System to market participants is the fees they will be required to pay to the Authority. The memorandum of agreement provides that the Cooperative System will be self-funded by market participants such as issuers and dealers. The CMA commentary indicates that the fee regulation is under development.

TRANSITIONAL PROVISIONS DON'T ADDRESS MARKET PARTICIPANTS

The CMA provisions that will address the transition to the Cooperative System from the current regulatory regime have not been included in the revised CMA. The CMA commentary indicates that those provisions will be highly dependent on the overall approach to implementing the Cooperative System, which has not yet been determined by the participating jurisdictions. The CMA commentary indicates that the transitional provisions are anticipated to provide, among other things, that decisions of a predecessor regulator will be deemed to be decisions of Authority and obligations incurred to a predecessor regulator will continue as obligations under the Cooperative System.

The Consultation Drafts and CMA commentary do not address the issue of how reporting issuers or securities registrants under one or more of the participating jurisdictions will become reporting issuers or registrants under the Cooperative System or whether existing reporting issuers or registrants in fewer than all of the participating jurisdictions will become reporting issuers in all participating jurisdictions.

INITIAL REGULATIONS

As noted, the revised CMA takes a "platform" approach to regulation. Most of the requirements of capital markets laws and exemptions therefrom in the Cooperative System are addressed in the Initial Regulations, which have been adapted primarily from existing regulations in the participating jurisdictions. The changes from existing regulations will be addressed in our series of Bulletins to be published. In general, the Initial Regulations consist of: regulations adapted from current national and multilateral instruments, forms and policies revised to reflect the CMA and the integration of the participating jurisdictions; and new regulations (CMRA Regulations) designed to replace the local regulations, rules, blanket orders and other local regulatory instruments in participating jurisdictions (Local Rules). The Initial Regulations commentary indicates that all Local Rules were reviewed and considered for inclusion, and the CMRA Regulations contain all of the Local Rules that are proposed to be carried forward and applicable in all participating jurisdictions.

PROSPECTUS EXEMPTIONS, LOCAL POLICIES NOT YET ADDRESSED

Although the Initial Regulations were quite comprehensive, a few matters have not yet been addressed. Given existing differences among participating jurisdictions and regulatory initiatives under consideration, the publication of a harmonized set of prospectus exemption regulations has been delayed. The Initial Regulations commentary indicates that the harmonized regulations will include:

  • An exemption allowing issuers on specified exchanges to raise capital from existing securityholders
  • A family, friends and business associates exemption
  • Two exemptions permitting securities-based crowdfunding
  • An offering memorandum exemption

In addition, it has not been determined which local policies, interpretation notes and staff notices will apply in the participating jurisdictions.

LOOKING AHEAD

The comment period for the revised CMA and Initial Regulations is open until December 23, 2015. The Initial Regulations commentary states that the draft fees regulation and prospectus exemptions regulation will be published in the coming months.

Revised drafts of the federal CMSA and the implementing legislation setting out the structure, responsibilities and powers of the Authority are being developed by the participating jurisdictions. However, no timeline for publication and comment has been provided. The Initial Regulations commentary indicates that regulations under the federal CMSA, which are expected to address data collection and systemic risk mitigation, are not expected to be proposed before the Cooperative System becomes operational.

The memorandum of agreement states that the participating jurisdictions expect the Cooperative System to be operational by the fall of 2016. However, given the scope of the Initial Regulations just published for comment and the fact that important regulations and legislation have not yet been published for comment, the expected timeline, which has been extended a few times already, appears to continue to be ambitious.

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.

Authors
Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
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).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions