Three-year business plan of Canada’s securities regulators: Notable items for public companies

Canada’s securities regulators have published their three-year business plan for 2019–2022. Streamlining regulation without reducing investor protection is identified as a key mandate—consistent with the mandate of the OSC’s recently established burden reduction task force.¹ The business plan notes that the regulators’ objectives must be achieved in the context of rapidly evolving technology, expanding market channels and product offerings, and changing investor demographics.

The business plan encompasses the full scope of securities regulation, including initiatives relating to, among others, investor outreach and education; market disruption strategies; crypto-asset trading regulation; registrant requirements, including fee structures and the advisor-client relationship; and OTC derivatives regulation. Highlighted below are notable aspects of the business plan that are specifically targeted at the regulation of reporting issuers and therefore likely to be of particular interest to public companies and companies that are considering an initial public offering in Canada in the next several years.

Using modern technology to promote better regulation

The three-year business plan emphasizes the importance of modernizing and leveraging technology to promote better regulation. Among other initiatives, the securities regulators plan to implement a new marketplace analytics system to improve insider trading investigations; analyze the need for a regulatory response to activist short-selling given the role of social media technology in democratizing access to information; and modernize filing systems and databases like SEDAR and SEDI to improve filing mechanics and facilitate more data-centric regulation.

Examining the role of stock exchanges

The securities regulators noted in the business plan that stock exchanges play a significant role in ensuring market integrity among listed issuers. Stock exchanges are often the initial gatekeepers in deciding issues affecting the capital markets. The business plan did not single out any specific stock exchanges rules; it indicated more generally that securities regulators plan to consider whether changes are appropriate to the current approach for certain issuer-related decisions made in the public interest.

Streamlining public company requirements

To reduce public companies’ regulatory burdens, the business plan reiterates the priorities that were identified in a staff notice published on March 27, 2018,² namely streamlining annual and interim disclosure requirements; relaxing the criteria for filing business acquisition reports in connection with significant acquisitions; clarifying the historical financial information that is required to conduct an initial public offering; removing regulatory impediments to conducting at-the-market offerings; facilitating greater use of electronical delivery of securityholder materials; and consulting with market participants on improving access to capital through an alternative prospectus offering system.

_________________________

¹ For information about the OSC’s burden reduction task force, see our client bulletin “Reducing regulatory burdens for market participants: new Ontario task force.”

² The priorities identified in the 2018 staff notice were discussed in our client bulletin “The Burdens of Being a Public Company: Update on Potential Securities Regulatory Reform.”