Tag archives: CSA

Trust and transparency: New guidance from CSA regarding enhanced disclosure of conflicts of interest in cannabis M&A

Trust and transparency have been challenging in the cannabis industry: whether related to product trust and transparency or to public disclosure of conflicts of interest and the need for trust and transparency has not gone unnoticed by securities regulators. In reviewing disclosure relating to M&A and other significant corporate transactions by cannabis issuers, the Canadian Securities Administrators (CSA) suggested that there was inadequate transparency and disclosure of financial and other interests.

For the full article, please click on the following link:


 … Continue Reading

Stop the presses! Canadian securities regulators raise concerns about press releases and other promotional activities

The Canadian Securities Administrators (CSA) have issued a notice regarding misleading promotional activities by issuers.  The notice includes examples such as press releases, presentations, social media posts and other marketing materials that provide insufficient or unbalanced information or that include unsubstantiated claims about the issuer.

Problematic Promotional Practices

Examples of potentially misleading promotional activities identified by the CSA include:

  • describing early-stage plans with “unwarranted certainty”, or making unsupported predictions about growth of the market or future product demand;
  • issuing multiple press releases that do not disclose any new material facts;
  • compensating third parties for promotion through social media
Continue Reading

CSA Proposes Rule Regarding Non-GAAP and Other Financial Measures

Introduction and Background

On September 6, 2018, the Canadian Securities Administrators (CSA) issued a notice and request for comment on Proposed National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (the Proposed Instrument), Proposed Companion Policy 52-112 Non-GAAP and Other Financial Measures Disclosure (the Proposed Companion Policy) and related proposed consequential amendments and changes to various other instruments and policies.[1]

Currently, CSA staff guidance on non-GAAP and other financial measures is contained in CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures (SN 52-306), which was first introduced in 2003. Although SN 52-306 has … Continue Reading

Class actions come to the cryptocurrency markets

In the U.S. there has been an notable uptick in class action lawsuits launched against companies in the cryptocurrency market in late 2017. As public attention turned to the roller-coaster ride of cryptocurrency markets over the past year, it is not surprising that ambitious class counsel have jumped on the ride by issuing their first putative class actions against companies funded through initial coin/token offerings (ICO) and companies that are otherwise active in the cryptocurrency space.  With over $3 billion dollars raised through ICOs in 2017, and few signs of the market dynamics changing any time soon, we … Continue Reading

Certainty or Flexibility? Changing the Approach to Director and Audit Committee Member Independence

The Canadian Securities Administrators (the CSA) is seeking comments on its consultation paper: CSA Consultation Paper 52-404 Approach to Director and Audit Committee Member Independence (the Consultation Paper). The Consultation Paper intends to facilitate a discussion on the appropriateness of the CSA’s approach to determining Director and Audit Committee Member Independence.[1] The deadline to submit comments is quickly approaching; the CSA must receive all comments by January 25, 2018.

National Instrument 52-110 (NI 52-110) prescribes the current approach to determining director and audit committee member independence. It states that directors and audit committee members must … Continue Reading

More Cyber Security Lessons from the Canadian Securities Administrators

Earlier this year, we reported on continuing efforts by the Canadian Securities Administrators (the CSA) to inform the market about cyber security best practices with the publication of Multilateral Staff Notice 51-347 which concerned the disclosure of cyber security, attacks, and risks.

The CSA’s efforts continue with CSA Staff Notice 33-321 (the Staff Notice) as the CSA turns its attention to firms’ social media practices.

Eat your vegetables, floss every day, and mind your cyber security

In coordination with regulators worldwide, the CSA continues to press for firms to treat cyber security as a key part of its … Continue Reading

Canadian Securities Regulators Announce Prohibition of Binary Options

Securities regulatory authorities for all Canadian jurisdictions, save for British Columbia, (the Participating Authorities) announced the implementation of Multilateral Instrument (the Instrument) and Companion Policy 91-102 on the Prohibition of Binary Options on September 28, 2017.

Binary options are defined in the Instrument as a contract or instrument that provides for only a predetermined fixed amount if the underlying interest meets one or more predefined conditions, and zero or another predetermined amount if it does not. Essentially, this definition captures a range of products that are based on the outcome of a yes/no proposition, also referred to as … Continue Reading

Regulatory and civil consequences of Initial Coin Offerings in Ontario

A great deal has been written recently about the possible regulatory uncertainty surrounding Initial Coin Offerings (ICOs) in Canada.  In an ICO, a newly issued cryptocurrency is sold to purchasers, who acquire a right of ownership symbolized by a “coin” or token, which may appreciate in value. Depending upon the characteristics of the ownership interest that is acquired, the “coin” may constitute a security. Once issued, the way a coin may be traded is a product of its design; some coins may be freely traded on exchanges as if they were traditional securities, while others may only be … Continue Reading

The OSC Explores the Elimination of Embedded Commissions

The Ontario Securities Commission (OSC) hosted a roundtable discussion on September 18, 2017 (the Roundtable Discussion) to help evaluate potential regulatory changes to discontinue embedded commissions in investment funds. The term “embedded commission” refers to the remuneration of dealers and their representatives for mutual fund sales through a commission paid by investment fund managers (for example, deferred sales commissions and annual trailing commissions). The Roundtable Discussion built on the Canadian Securities Administrators’ (CSA) Consultation Paper 81-408, released January 10, 2017, which identified a number of investor protection and market efficiency issues resulting from the … Continue Reading

Canadian Securities Administrators to regulate Cryptocurrency Offerings and Crypto-Investment Funds

2017 has been an extraordinary year for cryptocurrencies.[1] The recent increase in the number of cryptocurrency offerings reflects a dramatic shift in investor-attitudes towards the crypto-economy. However, the increased popularity of initial coin offerings (ICO), initial token offerings (ITO) and cryptocurrency investment funds has triggered a wave of regulatory responses, from the USA to Singapore and to, most recently, Canada.[2]

On August 24, 2017, the Canadian Securities Administrators (CSA) announced that securities law requirements may now apply to cryptocurrency offerings (ICOs and ITOs) involving persons or companies conducting business from within Canada … Continue Reading

Another Kick at the Canadian Effort to Create a National Securities Regulator

In a recent decision, a majority of the Quebec Court of Appeal held that the latest proposal to create a national securities regulator was unconstitutional.

The Spectre of Federalism

Unlike every other G-20 country, Canada does not have a national securities regulator. There is a long history of attempts to change this.  As early as 1935, the Royal Commission on Price Spreads recommended the formation of a national securities board.  In 2011 the issue came before the Supreme Court of Canada in the Securities Reference. The Supreme Court held that a draft Canadian Securities Act was outside of … Continue Reading

#needsimprovement: CSA releases report on social media disclosure practices by Canadian public companies

The Canadian Securities Administrators (CSA), concerned by the increased prevalence of corporate disclosure through social media, have issued guidance for Canadian public companies. Their notice follows a review of the tweets, blogs, posts and videos of 111 public companies on various social media websites, as well as the companies’ own websites.  The three key areas identified for improvement are: (i) ensuring that material company information is not released on social media before being generally disclosed; (ii) providing sufficient and balanced information so as not to be misleading or inconsistent; and (iii) putting in place adequate social media governance policies.

  1. Selective
Continue Reading

Only 61% of issuers address cyber security in their risk factor disclosure. Is your company one of them?

Earlier this year, the Canadian Securities Administrators (CSA) released the results of a review of the disclosure of 240 issuers in the S&P/TSX composite index on cyber security issues.  The review found that only 61% of issuers addressed cyber security in their risk factor disclosure, 20% of these issuers had identified a person or group responsible for cyber security, and “few” issuers disclosed that they had been subject to cyber-attacks but none disclosed these as material.

The Securities and Exchange Commission’s (SEC)’s Office of Compliance Inspections and Examinations (OCIE) also conducted a survey on … Continue Reading

Thinking Inside the Sandbox: CSA Supports Innovative Business Models

The Canadian Securities Administrators (CSA) recently launched a regulatory sandbox initiative as part of a push to foster greater innovation among industry participants.  Under the initiative, qualifying businesses that have registered or received relief from certain requirements will be permitted to test novel products and services throughout the Canadian market.

The CSA provided the following examples of business models that may be eligible for the sandbox initiative:

  • online platforms, including crowdfunding portals, online lenders, angel investor networks or other technological innovations for securities trading and advising;
  • business models using artificial intelligence for trades or recommendations;
  • cryptocurrency or distributed
Continue Reading