No Summer Break for the CSA: Selected Securities Law Developments

The Canadian Securities Administrators (CSA) recently provided updates on various outstanding initiatives concerning continuous disclosure obligations and prospectus filings in respect of non-investment fund reporting issuers.

Selected developments from the CSA’s 2023-2024 Year in Review Report (Annual Report) and a recent CSA Notice and Request for Comment (Notice) are summarized below.

• Climate-related disclosure – The Annual Report discloses that the CSA intends to publish a revised proposal on climate-related disclosure requirements for comment that will take into account the final Canadian sustainability disclosure standards published by the Canadian Sustainability Standards Board, once available. See our October 2022 Blakes Bulletin: CSA Provides Update on Proposed Climate-Related Disclosure Rules for more information regarding the climate-related disclosure rules initially proposed by the CSA. See also our March 2024 Blakes Bulletin: New Developments in the Sustainability Disclosure Landscape.
• Diversity disclosure – In April 2023, the CSA published for comment proposed amendments to the “comply or explain” disclosure regime concerning diversity on boards of directors and in executive officer positions at public companies in Canada. The public comment period expired in September 2023. The Annual Report indicates that CSA staff are working towards publishing final amendments but does not specify when the final amendments are proposed to take effect. Read our April 2023 Blakes Bulletin: CSA Discloses Diversity of Potential Changes to Diversity Disclosures to learn more about the initial proposed amendments.
• Access models for corporate issuers – In April 2022, the CSA proposed amendments and changes to several national instruments and companion policies to introduce an “access equals delivery model” for prospectuses as well as certain continuous disclosure documents. As discussed in a previous January 2024 Blakes Bulletin: CSA Finalizes Amendments to Implement Access Model for Prospectuses of Non-Investment Fund Reporting Issuers, the “access equals delivery” model for prospectuses of non-investment fund reporting issuers came into force in April 2024. The Annual Report states that CSA staff are currently considering the feedback received in response to the proposed “access equals delivery” model for certain continuous disclosure documents (CD Access Model). 
• Streamlined continuous disclosure – The CSA anticipates that the previously announced amendments to National Instrument 51-102 – Continuous Disclosure Obligations aimed at streamlining annual and interim disclosure requirements for reporting issuers will be implemented following the advancement of the CD Access Model. Read more about these amendments in our October 2023 Blakes Bulletin: CSA Provides Update on Proposed Continuous Disclosure Reforms.
• Alternative offering system for Canadian well-known seasoned issuers (WKSIs) – As discussed in our October 2023 Blakes Bulletin: CSA Proposes Permanent Exemptions for Well-Known Seasoned Issuers, the CSA has published a proposed regulatory framework that would establish a permanent expedited shelf prospectus regime for WKSIs. The Annual Report notes that CSA staff are in the process of reviewing comments received in response to the proposed framework.
• Reviewing the rules relating to special transactions – The Annual Report discloses that the CSA has completed research and informal consultations aimed at reviewing Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions and is currently preparing to publish for comment proposed amendments and updated guidance to clarify the role of boards of directors and/or special committees of independent directors and to enhance disclosure obligations. 
• Review of early warning reporting regime – The Annual Report notes that the CSA, after having conducted research and informal consultations, is currently preparing to publish for comment proposed targeted amendments to National Instrument 62-104 – Take-over Bids and Issuer Bids, as well as guidance aimed at enhancing the early warning reporting regime.
• Proxy voting against director elections – As discussed in a previous Blakes Bulletin: Coming Soon: Changes to CBCA Director Elections – The Sequel, amendments to the Canada Business Corporations Act and the related regulations came into force in August 2022 and provide for a majority-voting requirement and the ability of shareholders to vote “for” or “against” (rather than “withholding” shares from voting) each nominee in uncontested director elections (i.e., where there is only one nominee for each available board seat). On August 1, 2024, the CSA published the Notice for comment, including proposed amendments that would codify the substantively harmonized local blanket orders that currently exempt reporting issuers incorporated under the Canada Business Corporations Act from the securities law requirement to include a “withhold” option on a form of proxy for an uncontested election of directors.

Looking Ahead

As Canadian capital markets continue to evolve, the needs of Canadian market participants are changing. In response, the CSA has recognized the need to modernize its regulatory regime by reducing regulatory burden while at the same time maintaining and enhancing investor protection and education. As the CSA continues to take steps toward achieving these goals, Blakes will continue to monitor and provide updates regarding significant legal developments affecting the continuous disclosure obligations and prospectus filings in respect of non-investment fund reporting issuers.