The Ontario Securities Commission (the "OSC") recently published Staff Notice 11-784 – Burden Reduction (the "Staff Notice") to seek the consultation of stakeholders to address ways the OSC can reduce unnecessary regulatory burdens. The efforts undertaken by the OSC are intended to support the Ontario government's Open for Business Action Plan and can be seen as complementing the existing regulatory reduction projects initiated by the Canadian Securities Administrators (the "CSA") discussed below in the section entitled "Background".
This article begins by describing the past initiatives the CSA has taken to reduce the regulatory burden and then provides a brief discussion of the primary focus of the OSC's Staff Notice and the recently established a Burden Reduction Task Force (the "Task Force").
Since 2017 the CSA has taken steps to reduce the regulatory burden for issuers. Particularly, the CSA has sought to address the impact that shifts in market conditions, investor demographics, technological innovation and globalization can have on issuers, and to align legislation with the realities of business. Among the guiding principles of the CSA is that business, regulatory costs and other restrictions imposed on the business and investment activities of market participants should be proportionate to the significance of the regulatory objective sought to be realized.
As a result of the changing landscape, the CSA has released several publications discussing different methods of reducing the regulatory burden. In April 2017, the CSA published 51-404 Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers (the "Consultation Paper") with the stated purpose of identifying areas of securities legislation applicable to non-investment fund reporting issuers that could benefit from a reduction of undue regulatory burden without compromising investor protection or the efficiency of the capital markets. Based on the extensive feedback received from stakeholders, the CSA subsequently published Staff Notice 51-353 — Update on CSA Consultation Paper 51-404 Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporters ("Updated Consultation Paper") on March 27, 2018, to set forth the objectives of the CSA to help reduce regulatory burdens. Among the objectives discussed included:
- develop an alternative prospectus model with more concise and focused disclosure requirements than the current short form regime;
- determine how to better facilitate at-the-market offerings to avoid the need for exemptive relief for such offerings;
- revisit Item 32 of Form 41-101F1 Information Required in a Prospectus, being the rules for historical financial statements required to be included in an initial public offering prospectus;
- remove or modify the requirement that a business acquisition report must be filed in connection with "significant acquisitions";
- attempt to consolidate the continuous disclosure requirements of National Instrument 51-102; and
- enhance the electronic delivery of documents.
In May 2018, the CSA also published Staff Notice 81-329, a companion initiative that will be carried out in multiple phases to reduce the regulatory burden for investment fund issuers.
The OSC's Task Force and Consultation
The OSC and the Ministry of Finance recently announced the establishment of the Task Force to consider and act on suggestions to streamline processes and eliminate unnecessary burdens in order to help save Ontario issuers, registrants, investors and other market participants time and money while still protecting investors and the overall integrity of the market. The objectives the OSC's Task Force intends to focus on include:
- improving the methods of operations and procedures of the OSC;
- streamlining forms and filings related to continuous disclosure and other regulatory obligations;
- eliminating or modifying rules that are outdated or no longer serve a valid purpose; and
- harmonizing Ontario's rules with the rules of other jurisdictions.
On March 27, 2019 the OSC will host a roundtable discussion to provide stakeholders with an opportunity to discuss the submissions, to engage in an open discussion about the proposals considered, as well as to discuss identified issues. The comments and suggestions that the OSC receive will be used to identify a series of short, medium and long-term actions to reduce unnecessary burdens.
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