On April 6, 2017, the Canadian Securities Administrators (CSA) published Consultation Paper 51-404 (51-404) Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers. The CSA is looking for input regarding ways that the regulatory burden may be reduced for certain reporting issuers, without having a detrimental impact on the capital markets or investor protection, and focusing on both prospectus and continuous disclosure related requirements. Feedback on the paper must be submitted by July 7, 2017.
Consultation Paper 51-404 includes 33 questions organized into the following broad topics, and is seeking input on how to most effectively:
Extend the application of streamlined rules to smaller reporting issuers
The CSA is requesting input about ways that could potentially ease the continuous disclosure requirements for smaller issuers that are not venture issuers, based on the current definition. This may include a different metric, such as a size-based distinction reflective of an issuer’s assets, revenue, or market capitalization.
Reduce the regulatory burdens associated with the prospectus rules and offering process
The consultation is requesting input on reducing requirements in an IPO prospectus, including those around audited financial statements, Business Acquisition Report (BAR) thresholds, audited interim financial statements, pro-forma financial statements, and more tailored disclosures.
Other questions around this topic pertain to:
- The current short-form prospectus system and whether or not more issuers should be qualified to use it.
- A potential alternative prospectus model.
- Ways to facilitate at-the-market (ATM) offerings.
- Streamlining cross-border prospectus offerings.
- Liberalizing the pre-marketing and marketing regime in Canada.
Reduce ongoing disclosure requirements
Questions regarding disclosure requirements include whether or not there should be changes proposed to the BAR requirements, whether there are disclosure requirements for annual and interim filings that should be reviewed, and whether issuers should be permitted to move from quarterly reporting to semi-annual reporting.
Eliminate overlap in regulatory requirements
Due to the similarity in disclosure requirements of IFRS and NI 51-102, the CSA is requesting input on ways to eliminate the duplication.
Enhance electronic delivery of documents
The CSA has implemented Notice and Access rules to assist with reduction of mailing requirements for issuers, and are now looking for feedback on other ways that the electronic delivery of material could be expanded or streamlined to allow issuers to experience additional benefits.
Computershare is in the process of reviewing the consultation paper and determining any response. We encourage issuers to review 51-404 in its entirety and take advantage of the opportunity to provide input on these important initiatives.