The Canadian Securities Administrators (CSA) recently announced proposed changes to certain rules and policies in an effort to address key issues within the securities framework. The CSA has published a notice and request for comment for this purpose.
The CSA invited stakeholders to provide feedback on the proposed amendments. Central to the proposed changes is a revision to the definition of “venture issuer,” particularly in light of the Canadian Securities Exchange’s (CSE) creation of a senior tier.
The proposed amendments would redefine “venture issuer” to exclude companies listed on the CSE’s senior tier. This proposed change aims to ensure that these issuers are treated similarly to those on other non-venture exchanges under Canadian securities law, said a news release of the CSA.
The CSE recently established a senior tier intended for non-venture issuers, with listing requirements aligning more closely with those of a non-venture exchange. However, under current securities legislation, these issuers are still classified as venture issuers, subject to regulations applicable to that category.
Canadian lawyers, particularly those focusing on securities law, should note that the proposed amendments could potentially have significant implications for their clients, especially those involved with issuers on the CSE’s senior tier. Legal professionals should closely monitor the progress of these amendments and advise their clients accordingly.
Other proposed changes
Other amendments proposed in the CSA’s notice include aligning certain exemptions and eligibility requirements to apply consistently to the CSE, codifying existing blanket orders relating to “majority voting” provisions under the Canada Business Corporations Act, 1985 (CBCA), and updating regulatory references to reflect recent name changes of significant exchanges.
The CBCA “majority voting” amendments, effective since August 2022, have created uncertainty regarding the voting options required for securityholders in uncontested director elections. To address this, the CSA jurisdictions issued local temporary blanket orders in January 2023 to harmonize the requirements across different provinces. Since the orders will expire soon, particularly in Ontario, ambiguity in the absence of related amendments to National Instrument 51-102 could arise. The proposed changes aim to resolve this issue.
The proposed amendments also include housekeeping changes, such as updating the designation of certain exchanges in National Instruments and revising the rules to reflect recent name changes of significant market players.
The proposed amendments will open for public comment for a 90-day comment period ending Oct. 30, 2024. After the consultation period, the CSA will review the comments received and may make further adjustments before finalizing the amendments.