CSA Propose to Streamline and Tailor Venture Issuer Disclosure 


September 2011

Securities Bulletin

On July 29, 2011, the Canadian Securities Administrators (CSA) published for comment proposed amendments which introduce a new regulatory regime for venture issuers (the Proposals). The CSA have indicated that the Proposals are meant to streamline and tailor venture issuer disclosure to reflect the expectations of investors and to make the disclosure requirements more manageable for venture issuers.

Under the Proposals, a new National Instrument 51-103 Ongoing Governance and Disclosure Requirements for Venture Issuers would replace the governance, disclosure and certification obligations of venture issuers currently covered by NI 51-102 Continuous Disclosure Obligations, NI 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, NI 52-110 Audit Committees and NI 58-101 Disclosure of Corporate Governance Practices.

The following is a brief summary of the most noteworthy Proposals:

governance and continuous disclosure

With respect to governance and continuous disclosure, the key Proposals:

  • introduce an annual report requirement that combines into one document business, governance and executive compensation disclosure, audited annual financial statements, associated MD&A and CEO/CFO certifications
  • make modifications to current governance and continuous disclosure requirements, including streamlining information circular disclosure requirements to move governance and executive compensation disclosure to the annual report
  • make three and nine month interim financial reports and associated MD&A voluntary
  • introduce a mid-year report that includes a six month interim financial report, associated MD&A and CEO/CFO certifications
  • replace business acquisition reports (BARs) with enhanced material change reporting including financial statements for acquisitions that are 100% significant
  • introduce substantive corporate governance requirements relating to conflicts of interest, related party transactions and insider trading
  • tailor director and executive compensation disclosure

prospectus and certain exempt offerings

With respect to prospectus and certain exempt offerings, the key Proposals:

  • modify the disclosure obligations of venture issuers in connection with a long form prospectus and require only two years of audited financial statements (while maintaining the junior issuer exemption)
  • modify the documents required to be incorporated by reference in the case of a short form prospectus, qualifying issuer offering memorandum and TSXV short form offering document

The CSA have requested written comments on the Proposals and responses to the specific questions contained therein by no later than October 27, 2011.

by Cory Kent and Farzad Forooghian

* Law Corporation

a cautionary note

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 2011