Canada: 2015 Securities Year In Review

Insight And Analysis On Key Securities Law Developments In 2015
Last Updated: March 24 2016
Article by Amandeep Sandhu and Andjela Vukobrat

FOREWORD

Through our annual Securities Year in Review publication we seek to highlight key changes in the capital markets sector, particularly with respect to significant changes in securities laws.

In this respect, 2015 was a notable year for capital markets in Canada with important developments in several areas, including a continuing march towards a national securities regulator, numerous reforms to the exempt market system and notable changes to public disclosure requirements. Although most of the amendments were evolutionary rather than revolutionary, they are nonetheless significant for issuers and other stakeholders and hold promise for certain landmark changes in the future.

As we move into 2016, we continue to regularly monitor securities laws developments. Updates on issues relating to capital markets and corporate law are routinely published by McMillan lawyers on our website.

EXECUTIVE SUMMARY

Move Towards a National Securities Regulator

2015 was marked by a number of noteworthy developments in Canadian securities laws, including a continued push forward by a number of the provinces and the federal government to create a common securities regulatory regime and a uniform Capital Markets Act (CMA). The past year saw various revisions to the draft CMA, including amendments to the regulatory and criminal enforcement provisions, significant proposed amendments to the Canadian takeover bid regime, revisions to the provisions of the CMA pertaining to civil liability for insider trading, and changes to the draft derivatives regulations.

Reforms to Exempt Market System

The past year also saw a number of noteworthy revisions to the exempt market system in Canada, including the introduction of a new existing security holder exemption and a revised rights offering regime designed to streamline and facilitate the rights offering process. Other developments include a series of amendments to the exemptions available to accredited investors and to the minimum amount investment prospectus exemption, as well as changes in Ontario intended to harmonize the exemptions relating to offering memorandums and family, friends and business associates with those of other jurisdictions.

Changes to Disclosure Requirements

Significant changes were announced to disclosure and record keeping requirements with the aim of streamlining disclosures rules for venture issuers as well as improving accountability and transparency in the extractive sector. For venture issuers, changes were made to the disclosure requirements relating to executive compensation, business acquisition reports, and prospectuses. For issuers in the extractive sector, the Extractive Sector Transparency Measures Act came into force. Changes were also made to the TSX Manual to give security holders a vote before their securities were voluntarily delisted.

We also witnessed the introduction of certain proposed legislative changes to disclosure requirements, including the CSA's proposal for a single, harmonized exempt distribution reporting form for all provinces, as well proposed changes to National Instrument 41-101 General Prospectus Requirements pertaining to the disclosure requirements for mutual funds and exchange-traded mutual funds.

Rules for Foreign and Interlisted Issuers

A number of revisions were also made to securities laws applicable to foreign and interlisted issuers. The TSX Company Manual was amended to expand the exemptions available to TSX interlisted issuers, and blanket orders issued in certain Canadian provinces resulted in enhanced relief for certain issuers in connection with obligations under Multilateral Instrument 51-105 Issuers Quoted on the U.S. Over-the-Counter Markets. Additional relief for foreign issuers followed in the form of amendments that reduce the disclosure burden on foreign issuers privately placing securities in Canada by reducing the type of disclosure typically required in a Canadian "wrapper" to an offering document.

The Arrival of Crowdfunding in Canada

Another notable amendment included the creation of a crowdfunding prospectus exemption adopted by certain provinces in the form of Multilateral Instrument 45-108 – Crowdfunding. This exemption provides a legal framework for crowdfunding as a means for early-stage companies to raise capital by balancing the need for fewer disclosure requirements with a continuing commitment to investor protection.

TSX Company Manual – Requirements for Non-Corporate Issues

On September 17, 2015, the TSX amended the TSX Company Manual (the Manual) to codify existing practices of the TSX with respect to listing and other requirements for certain types of non-corporate issuers, namely closed-end funds, exchange traded products (ETPs) and structured products. It also introduced certain which are generally consistent with current Ontario Securities Act requirements for these types of issuers.

Amendments to OTC Derivative Trade Reporting Rules

In late 2015, the Ontario Securities Commission published proposed amendments relating to the regulation of the over-the-counter (OTC) derivatives market in Ontario, Manitoba and Quebec (the MOQ Authorities). In January of 2016, the provinces of Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, and Saskatchewan adopted their own rules relating to the regulation of the OTC derivatives market which are substantively harmonized with the OTC derivative trade reporting rules adopted by the MOQ Authorities.

Judicial and Administrative Decisions

The past year witnessed several noteworthy decisions from the courts and securities regulators dealing with a number of interesting subject matters relevant to regulation of the capital markets - from the scope of the public interest authority of securities regulators to the fairness of a plan of arrangement. These notable developments should be of interest to capital markets participants and are discussed below.

Noteworthy Proposed Amendments

In addition to the above noted proposed amendments to disclosure requirements, the past year also witnessed a number of noteworthy proposed amendments, including a proposed Whistleblower Policy by the Ontario Securities Commission (OSC). The Whistleblower Policy is designed to encourage reporting to the OSC of misconduct or possible breaches of Ontario securities laws and would if implemented be the first of its kind among Canadian securities regulators. In early 2015, the CSA also published an update on the proposal for a comprehensive regulatory framework for publicly offered alternative investment funds.

Guidance from Regulatory Authorities

In the past year, several securities regulatory authorities provided useful guidance relating to various matters of importance to capital markets participants, including the following:

CSA: Corporate Governance Disclosure

The Canadian Securities Administrators (CSA) released a report discussing its review of compliance with the new corporate governance disclosure rules introduced in October 2014, and provided further guidance for issuers on improving compliance.

OSC: Related Party Transaction Reporting

In February 2015, the OSC released a report based on a review of related party transaction disclosure in which it identified disclosure issues and provided guidance to issuers preparing required related party disclosure. While financial and MD&A disclosure met most key disclosure requirements, a number of deficiencies were identified.

IIROC: Underwriting Due Diligence

In December 2014, the Investment Industry Regulatory Organization of Canada (IIROC) issued its final guidance regarding due diligence conducted by underwriters on public offerings of securities in Canada. The proposed guidance was originally published by IIROC in March 2014 and was amended to address a number of comments. The final guidance promotes consistency and enhanced standards by setting out the elements of the underwriting due diligence process as well as the types of policies and procedures dealer members need to follow.

CSA: Proxy Voting

The CSA have been engaged in a review of the Canadian voting infrastructure since August 2013. In January of 2015, the CSA issued a report that discusses the progress made to date in their review and outlines next steps. The progress report confirms that the CSA believes the current system to be fragmented and requiring modernization and improvement.

IIROC: Priorities for Upcoming year

In April 2015, IIROC published a Notice setting out its key priorities for the upcoming year, including a list of strategic goals and a comprehensive list of activities and projects it plans to undertake. The Notice is a result of IIROC's efforts to adjust its strategic objectives and priorities in order to better fulfill its regulatory mandate.

ISS: Proxy Voting Guidelines

Institutional Shareholder Services (ISS) released its 2016 Proxy Voting Guidelines Updates for shareholder meetings held in 2016. The Guidelines are a product of ISS' 2015 global policy survey, which solicited the views of investors, companies, and other interested parties with respect to corporate governance issues. Among the topics considered are director overboarding, proxy access, compensation programs and compensation disclosure at externally-managed issuers.

To read this Review in full, please click here.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2016

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
Amandeep Sandhu
 
In association with
Related Topics
 
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