deloitte’s digest an overview of standard-setting activities · recent developments in...
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Deloitte’s Digest An overview of standard-setting activities
April 30, 2015
At a time when it has become a difficult task to keep up to date with the
recent developments in standard-setting activities, the Deloitte Digest
presents a useful single source of reference for current financial
reporting developments.
Table of Contents
Summary by standard ............................................................................................................................................. 1
Abbreviations, a list of most commonly used acronyms ....................................................................................... 25
Additional resources .............................................................................................................................................. 26
Contacts, our experts network is available for your questions .............................................................................. 27
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 1
Summary by standard From time to time, standard-setters and regulators issue new rules and standards that affect your financial reporting. This document briefly describes these pronouncements and other regulatory and professional developments and indicates their effective date, transition application and entities affected. At the time of publication, the external links included in this page were active. However, if the documents on the hosting site have been subsequently modified, moved or archived, these external links may no longer work. If you need to locate a specific document and/or external site listed on this page that is no longer active, please contact us.
Table of contents
Summary by standard ............................................................................................................................................. 1
Final standards ................................................................................................................................................. 3
BCSC – 2014 Enforcement Report NEW ............................................................................................... 4
CSA Amendments to National Instrument 45-106, Prospectus and Registration Exemptions ........... 5
CSA Amendments to Reduce the Regulatory Burden on Venture Issuers NEW................................... 6
CSA 2014 Enforcement Report ........................................................................................................... 7
CSA National Policy 25-201, Guidance for Proxy Advisory Firms NEW ................................................ 8
CSA Notice - Research into Canada’s Mutual Fund Fee Structure .................................................... 9
CSA Staff Notice 43-309, Review of Website Investor Presentations by Mining Issuers NEW ........... 10
CSA Staff Notice 51-342, Staff Review of Issuers Entering Into Medical Marijuana Business Opportunities...................................................................................................................................... 11
OSC Results of Enforcement Activity in 2014 ................................................................................... 12
OSC Amendments to OSC Rule 45-501, Ontario Prospectus and Registration Exemptions: Family, Friends and Business Associates Exemption .................................................................................... 13
OSC Report on the Canadian Fixed Income Market and Details of the Next Steps to Enhance Regulation and Transparency NEW ..................................................................................................... 14
OSC Rule 91-506, Derivatives: Product Determination, and OSC Rule 91-507, Trade Repositories and Derivatives Data Reporting ......................................................................................................... 15
Proposed standards ........................................................................................................................................ 17
Canadian Regulators Seek Comment on Further Expansion of the Passport System NEW .............. 18
CSA Notice of Proposed Amendments to Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and National Policy 62-203 Take-Over Bids and Issuer Bids .................................................... 19
CSA National Instrument 94-101, Mandatory Central Counterparty Clearing of Derivatives ............ 20
OSC Draft Statement of Priorities for 2015-2016 NEW ........................................................................ 21
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 1
OSC Staff Consultation Paper 15-401, Proposed Framework for an OSC Whistleblower Program 22
OSC Staff Notice, Prospectus Exemptions ....................................................................................... 23
Securities Regulators in British Columbia, New Brunswick and Saskatchewan Propose New Investment Dealer Prospectus Exemption NEW .................................................................................. 24
Abbreviations, a list of most commonly used acronyms ....................................................................................... 25
Additional resources .............................................................................................................................................. 26
Contacts, our experts network is available for your questions .............................................................................. 27
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 2
Final standards
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 3
Final standards
Securities
BCSC – 2014 Enforcement Report NEW Issued: April 21, 2015
Standard: BCSC Enforcement Report for 2014
Transitional provisions:
Not applicable
Published by: BCSC
Last updated: April 2015
Applicable to: Registrants of the BCSC
Recent activities On April 21, 2015, the BCSC released a report detailing its enforcement activities for 2014.
In summary
Overview The report provides a high-level overview of the BCSC’s efforts to deter misconduct, protect investors, and ensure that B.C.’s capital markets function fairly and efficiently. This is the first Enforcement Report published by the BCSC and includes summaries of 22 administrative cases and three criminal cases that resulted in findings from a BCSC hearing panel or a criminal court in 2014
Available resources and links • BCSC Press Release (April 2015) • BCSC Enforcement Report for 2014 (April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 4
Final standards
Securities
CSA Amendments to National Instrument 45-106, Prospectus and Registration Exemptions Issued: February 19, 2015
Standard: Amendments to National Instrument 45-106, Prospectus and Registration Exemptions
Transitional provisions:
The amendments are to be effective from May 5, 2015
Published by: CSA
Last updated: February 2015
Applicable to: All registrants
Recent activities On February 19, 2015, the CSA announced the adoption of two sets of amendments to National Instrument 45-106, Prospectus and Registration Exemptions (NI 45-106).
In summary
Overview The first set of amendments relates to the accredited investor prospectus exemption (AI exemption) and the minimum amount investment prospectus exemption (MA exemption). These amendments are intended to address investor protection concerns. Among other things, the amendments: (i) introduce a new risk acknowledgement form for individual accredited investors that describes, in plain language, the categories of individual accredited investor and identifies the key risks associated with purchasing securities in the exempt market; (ii) provide expanded guidance on the steps a seller should take to verify the status of purchasers acquiring securities under prospectus exemptions, including the AI exemption; and (iii) restrict the MA exemption to distributions to non-individual investors. The second set of amendments relates to the short-term debt prospectus exemption (short-term debt exemption) in NI 45-106.These amendments are intended to address investor protection and systemic risk concerns. Among other things, the amendments: (i) modify the credit ratings required to distribute short-term debt, primarily corporate commercial paper, under the short-term debt exemption; and (ii) make the short-term debt prospectus exemption unavailable for short-term securitized products, which are primarily asset-backed commercial paper, and create a new prospectus exemption for the distribution of short-term securitized products (the short-term securitized products exemption).
Available resources and links • CSA Press Release (February 2015) • Amendments to NI 45-106 (February 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 5
Final standards
Securities
CSA Amendments to Reduce the Regulatory Burden on Venture Issuers NEW Issued: April 9, 2015
Standard: CSA Amendments to Reduce the Regulatory Burden on Venture Issuers
Transitional provisions:
Provided all necessary Ministerial approvals are obtained, the amendments will come into force on June 30, 2015
Published by: CSA
Last updated: April 2015
Applicable to: Venture issuers
Recent activities On April 9, 2015, the CSA announced the final implementation of amendments that will streamline and tailor disclosure by venture issuers.
In summary
Overview The amendments address continuous disclosure and governance obligations, as well as disclosure for prospectus offerings. Once in effect, the amendments will: (i) allow all venture issuers to meet interim management’s discussion and analysis requirements by preparing a brief “quarterly highlights” document; (ii) allow venture issuers to use a new tailored form of executive compensation disclosure; (iii) reduce the instances in which venture issuers will have to file business acquisition reports by increasing the significance threshold from 40 per cent to 100 per cent; (iv) streamline prospectus disclosure requirements by reducing the number of years of company history and audited financial statements required in a venture issuer initial public offering prospectus from three to two years; and (v) strengthen corporate governance by requiring venture issuers to have an audit committee of at least three members, the majority of whom cannot be executive officers, employees or control persons of the venture issuer or of an affiliate of the venture issuer.
Available resources and links • CSA Press Release (April 2015) • CSA Amendments re Venture Issuers (April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 6
Final standards
Securities
CSA 2014 Enforcement Report Issued in February 2015
Standard: CSA 2014 Enforcement Report
Transitional provisions:
N/A
Published by: CSA
Last updated: February 2015
Applicable to: All reporting issuers
Recent activities On February 19, 2015, the CSA released its seventh annual Enforcement Report that emphasizes the collaboration and cooperation among CSA members and between CSA members and local, national and international organizations in targeting illegal activities in Canada’s capital markets.
In summary
Overview Key highlights of the 2014 Enforcement Report:
• Cases concluded against 144 respondents by contested hearings, 78 respondents by settlement agreement and 33 respondents by court decision.
• Cases concluded resulting in: (i) fines and administrative penalties of more than $58 million; (ii) almost $66 million in restitution, compensation and disgorgement; and (iii) jail sentences totalling seven and a half years handed down to five individuals.
• 105 cases commenced against a total of 149 individuals and 106 companies. • 24 freeze orders issued against a total of 57 individuals and companies, involving more than $18
million in assets in bank accounts.
Available resources and links • CSA Press Release (February 2015) • CSA 2014 Enforcement Report (February 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 7
Final standards
Securities
CSA National Policy 25-201, Guidance for Proxy Advisory Firms NEW Issued: April 30, 2015
Standard: National Policy 25-201, Guidance for Proxy Advisory Firms
Transitional provisions:
This Policy comes into force on April 30, 2015
Published by: CSA
Last updated: April 2015
Applicable to: Proxy advisory firms
Recent activities On April.30, 2015, the CSA issued National Policy 25-201, Guidance for Proxy Advisory Firms (the Policy).
In summary
Overview The Policy provides guidance on recommended practices and disclosure for proxy advisory firms to promote transparency in the services they provide to clients and to foster an understanding among market participants about proxy advisory activities. The guidance addresses the identification, management and mitigation of actual or potential conflicts of interest; the transparency and accuracy of vote recommendations; the development of proxy voting guidelines; and communications matters.
Available resources and links • CSA Press Release (April 2015) • National Policy 25-201 (April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 8
Final standards
Securities
CSA Notice - Research into Canada’s Mutual Fund Fee Structure Issued: September 19, 2014
Standard: CSA Notice - Research into Canada’s mutual fund fee structure
Transitional provisions:
N/A
Published by: CSA
Last updated: February 2015
Applicable to: All reporting issuers
Recent activities On February 4, 2015, in response to concerns raised by certain fund managers regarding the security, confidentiality and scope of use of data gathered, the CSA has arranged that mutual fund managers be provided with a standard confidentiality undertaking which sets out the terms and conditions that will apply to the collection, safeguarding, and use of their data. On November 10, 2014, the CSA announced that independent third party research is now underway to assess the impact of commissions and embedded fees on mutual fund flows. Requests have been sent to all Investment Fund Managers offering public mutual funds across Canada for data, which will inform the CSA's examination of the current mutual fund fee structure. On September 19, 2014, the CSA announced that two research contracts have been awarded that will further its review of Canada’s mutual fund fee structure.
In summary
Overview This research marks an important step in advancing a policy decision on mutual fund fees and follows a request for proposals by the CSA for independent third-party research to evaluate whether regulatory action is needed regarding these fees. The CSA has selected Professor Cumming of York University to collect and review data on whether sales and trailing commissions influence fund sales. As part of his research, Professor Cumming will be requesting data from a representative sample of investment fund managers in the coming months. In addition, the Brondesbury Group will conduct a literature review to assess whether the use of fee-based vs. commission-based compensation changes the nature of advice and investment outcomes over the long term. The research reports by Professor Cumming and the Brondesbury Group are expected to be completed and made publicly available in the first quarter of 2015.
Available resources and links • CSA Draft Letter to Fund Managers re Confidentiality Concerns (February 2015) • CSA Notice (November 2014) • CSA Notice (September 2014)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 9
Final standards
Securities
CSA Staff Notice 43-309, Review of Website Investor Presentations by Mining Issuers NEW Issued: April 9, 2015
Standard: CSA Staff Notice 43-309, Review of Website Investor Presentations by Mining Issuers
Transitional provisions:
Not applicable
Published by: CSA
Last updated: April 2015
Applicable to: Mining issuers
Recent activities On April 9, 2015, members of the CSA released CSA Staff Notice 43-309, Review of Website Investor Presentations by Mining Issuers.
In summary
Overview CSA Staff Notice 43-309 summarizes the findings of staff of the AMF, the BCSC and the OSC (collectively, the Principal Mining Jurisdictions) and outlines the CSA’s expectations for website disclosure by mining issuers. The review highlighted the need for mining issuers to improve their disclosure in the following key areas: (i) naming the qualified person; (ii) preliminary economic assessments; (iii) mineral resources and mineral reserves; (iv) exploration targets; (v) historical estimates; and (vi) avoiding overly promotional terms and potentially misleading information.
Available resources and links • CSA Press Release (April 2015) • CSA Staff Notice 43-309 (April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 10
Final standards
Securities
CSA Staff Notice 51-342, Staff Review of Issuers Entering Into Medical Marijuana Business Opportunities Issued: February 23, 2015
Standard: CSA Staff Notice 51-342, Staff Review of Issuers Entering Into Medical Marijuana Business Opportunities
Transitional provisions:
Not applicable
Published by: CSA
Last updated: February 2015
Applicable to: Reporting issuers contemplating involvement in Canada’s medical marijuana industry
Recent activities On February 23, 2015, the CSA released CSA Staff Notice 51-342, Staff Review of Issuers Entering Into Medical Marijuana Business Opportunities, which summarizes the CSA’s findings and disclosure expectations for reporting issuers contemplating involvement in Canada’s medical marijuana industry.
In summary
Overview “Overall, the review found unbalanced and promotional disclosure that often promoted the benefits, but failed to outline the risks involved,” said Bill Rice, Chair of the CSA and Chair and CEO of the Alberta Securities Commission. “The level of deficiency in issuers’ disclosure is unacceptable as investors need comprehensive, balanced information to understand the business changes being proposed by these issuers.” The CSA determined that 25 reporting issuers raised serious investor protection concerns. These reporting issuers were generally at a preliminary stage of entry into the medical marijuana field. The CSA sent comment letters to all issuers in the scope of its review and asked 92 per cent of them to file a clarifying disclosure document, which they did.
Available resources and links • CSA Press Release (February 2015) • CSA Staff Notice 51-342 (February 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 11
Final standards
Securities
OSC Results of Enforcement Activity in 2014 Issued in March 2015
Standard: OSC Results of Enforcement Activity in 2014
Transitional provisions:
Not applicable
Published by: OSC
Last updated: March 2015
Applicable to: OSC registrants
Recent activities On March 2, 2015, the OSC announced the results of its enforcement efforts for the 2014 calendar year.
In summary
Overview The OSC recognizes the importance of a strong and visible enforcement presence to public confidence in the capital markets. Proceedings were concluded against a total of 91 individuals and companies in 2014. Of these, 87 respondents had their proceedings concluded before the tribunal of the Commission. In the other matters, two defendants had their cases concluded before the court under provincial securities legislation and two defendants by way of court proceedings under the Criminal Code. Of the four concluded court proceedings, two defendants received jail terms. One was sentenced to three years in jail after pleading guilty to two charges contrary to the Criminal Code. Another was sentenced to 60 days in jail for breaching the Securities Act (Ontario), following a quasi-criminal proceeding. Both jail sentences were handed down following investigations by the OSC in partnership with police services.
Available resources and links • OSC Press Release (March 2015) • OSC Enforcement Report for 2014 (March 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 12
Final standards
Securities
OSC Amendments to OSC Rule 45-501, Ontario Prospectus and Registration Exemptions: Family, Friends and Business Associates Exemption Issued: February 19, 2015
Standard: OSC Amendments to OSC Rule 45-501, Ontario Prospectus and Registration Exemptions: Family, Friends and Business Associates Exemption
Transitional provisions:
The amendments are expected to come into force on May 5, 2015
Published by: OSC
Last updated: February 2015
Applicable to: OSC Registrants
Recent activities On February 19, 2015, the OSC published a family, friends and business associates prospectus exemption which is expected to provide a cost-effective way for issuers (other than investment funds) to raise capital from their networks of family, close personal friends and close business associates.
In summary
Overview Subject to Ministerial approval, the exemption comes into effect on May 5, 2015. The exemption is largely harmonized with an exemption that is currently available in other Canadian jurisdictions. It allows for the sale of securities by a selling security holder or an issuer to principals of the issuer as well as certain family members, close personal friends and close business associates. The exemption is based on investors having a sufficiently close relationship with a principal of the issuer to assess the capabilities and trustworthiness of the principals and access information about their investment.
Available resources and links • OSC Press Release (February 2015) • OSC Amendments to OSC Rule 45-501 (February 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 13
Final standards
Securities
OSC Report on the Canadian Fixed Income Market and Details of the Next Steps to Enhance Regulation and Transparency NEW Issued: April 23, 2015
Standard: The OSC’s Canadian Fixed Income Market Report and OSC Staff Notice 21-708, OSC Staff Report on the Canadian Fixed Income Market and Next Steps to Enhance Regulation and Transparency of Fixed Income Markets
Transitional provisions:
Not applicable
Published by: OSC
Last updated: April 2015
Applicable to: Participants in the Canadian Fixed Income Market
Recent activities On April.23, 2015, the OSC published The Canadian Fixed Income Market Report (the Report) and OSC Staff Notice 21-708, OSC Staff Report on the Canadian Fixed Income Market and Next Steps to Enhance Regulation and Transparency of Fixed Income Markets. Together, these materials summarize the OSC’s study of the fixed income markets and set out the steps the OSC will take to enhance the transparency and regulation of fixed income markets.
In summary
Overview According to the Report, there were approximately $2 trillion in outstanding fixed income securities as of December 2014. The market is dominated by large issuers and institutions, with limited direct participation from individual investors. The adoption of electronic trading and alternative trading systems has been limited in this space. “With this report, we have compiled research that confirms our focus on enhanced post-trade transparency and regulation of the fixed income markets in Canada,” said Howard Wetston, Q.C., Chair and CEO of the OSC. “Our priority now is to develop regulation that will promote more informed decision-making for market participants regardless of size, improve market integrity and ensure that the market is fair and equitable to all investors.”
Available resources and links • OSC Press Release (April 2015) • The OSC’s Canadian Fixed Income Market Report (April 2015) • OSC Staff Notice 21-708,(April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 14
Final standards
Securities
OSC Rule 91-506, Derivatives: Product Determination, and OSC Rule 91-507, Trade Repositories and Derivatives Data Reporting Issued in November 2013; Rule 91-507 amended in April 2014 and in February 2015
Standard: OSC Rule 91-506, Derivatives: Product Determination, and OSC Rule 91-507, Trade Repositories and Derivatives Data Reporting
Transitional provisions:
Except as noted by the amendments, the rules take effect December 31, 2013 and the reporting requirements will begin on October 31, 2014 for clearing agencies and dealers, and on June 30, 2015 for all other OTC derivatives market participants
Published by: OSC
Last updated: February 2015
Applicable to: All reporting issuers
Recent activities On February 12, 2015, the OSC published further amendments to OSC Rule 91-507, Trade Repositories and Derivatives Data Reporting. The amendments delay the effective date for transaction-level data reporting by designated trade repositories until July 29, 2016 and also allow certain market participants to report under the European Union (EU) derivatives trade reporting rules. On June 26, 2014, the OSC published further amendments to OSC Rule 91-507, Trade Repositories and Derivatives Data Reporting, which alleviate certain reporting burdens on Ontario OTC derivatives market participants and enhance the clarity and utility of data reported to the OSC. On April 17, 2014, the OSC published amendments to OSC Rule 91-507, Trade Repositories and Derivatives Data Reporting, which (i) delay from July 2, 2014 the effective date of reporting obligations under this rule to October 31, 2014 for clearing agencies and dealers, and to June 30, 2015 for all other OTC derivatives market participants. The OSC has also repealed the requirement for Ontario non-dealer counterparties to monitor and confirm that transaction reporting requirements have been satisfied by their foreign dealer reporting counterparties. On November 14, 2013, the OSC issued Rule 91-506, Derivatives: Product Determination, and OSC Rule 91-507, Trade Repositories and Derivatives Data Reporting.
In summary
Overview These are the first set of harmonized derivatives rules which intend to bring greater transparency to the OTC derivatives market and pave the way for future rules. Per the OSC, this marks one of the most important elements of OTC derivatives reform. The reporting of derivatives transactions to trade repositories will give the OSC access to data that will facilitate market surveillance and shed light on the nature and key characteristics of the Canadian derivatives market. This information will assist the OSC in developing a strong derivatives oversight regime.
Available resources and links • OSC Amended Rule 91-507 (February 2015) • OSC Amended Rule 91-507 (June 2014) • OSC Press Release (June 2014) • OSC Press Release (April 2014) • OSC Amended Rule 91-507 (April 2014)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 15
• OSC Press Release (November 2013) • OSC Rules 91-5-6 and 91-507 November 2013)
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Proposed standards
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 17
Proposed standards
Securities
Canadian Regulators Seek Comment on Further Expansion of the Passport System NEW Comment period ends: June 15, 2015
Proposed standard:
Amendments to Multilateral Instrument 11-102, Passport System, for CSA members in passport jurisdictions, as well as the introduction of two new proposed national policies for adoption by all CSA members (National Policy 11-206, Process for Cease to be a Reporting Issuer Applications, and National Policy 11-207, Failure-to-File Cease Trade Orders and Revocations under Passport).
Proposed effective date:
To be determined
Published by: CSA
Last updated: April 2015
Applicable to: Market participants that wish to gain access to markets across Canada by dealing only with their principal regulator and complying with harmonized legislative provisions.
Recent activities On April 16, 2015, the CSA published proposals to further expand the passport system to two new areas: (i) applications to cease to be a reporting issuer and (ii) cease trade orders resulting from the failure to file continuous disclosure documents.
In summary
Overview The proposals streamline processes in these two areas and include amendments to Multilateral Instrument 11-102, Passport System, for CSA members in passport jurisdictions, as well as the introduction of two new proposed national policies for adoption by all CSA members Under the passport system, market participants can generally gain access to markets across Canada by dealing only with their principal regulator and complying with harmonized legislative provisions. Since the Ontario government has not adopted the passport rule, streamlined interfaces have been developed to ensure that the passport system is as effective as possible for all market participants.
Available resources and links • CSA Press Release (April 2015) • Proposed Amendments to the Passport System (April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 18
Proposed standards
Securities
CSA Notice of Proposed Amendments to Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and National Policy 62-203 Take-Over Bids and Issuer Bids Comment period ends: June 29, 2015
Proposed standard:
CSA Notice of Proposed Amendments to Multilateral Instrument 62-104, Take-Over Bids and Issuer Bids, and National Policy 62-203, Take-Over Bids and Issuer Bids
Proposed effective date:
To be determined
Published by: CSA
Last updated: March 2015
Applicable to: All registrants
Recent activities On March 31, 2015, the CSA published for comment proposed amendments to the Canadian take-over bid regime set out in Multilateral Instrument 62-104, Take-Over Bids and Issuer Bids, and National Policy 62-203, Take-Over Bids and Issuer Bids.
In summary
Overview The proposed amendments are the result of a harmonized CSA policy initiative designed to enhance the quality and integrity of the take-over bid regime and would require that all non-exempt take-over bids:
(i) meet a minimum tender requirement where bidders must receive tenders of more than 50 per cent of the outstanding securities that are subject to the bid (excluding securities owned by the bidder itself or its joint actors);
(ii) be extended for an additional 10 days after the minimum tender requirement is met and all other terms and conditions of the bid have been complied with or waived; and
(iii) remain open for a minimum deposit period of 120 days unless the target board states in a news release an acceptable shorter deposit period of not less than 35 days, in which case the shorter period would apply to all concurrent take-over bids.
Under the current regime, non-exempt take-over bids must remain open for 35 days and are not subject to any minimum tender requirement or an extension requirement once the bidder has taken up deposited securities.
Available resources and links • CSA Press Release (March 2015) • CSA Details of the Proposed Amendments (March 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 19
Proposed standards
Securities
CSA National Instrument 94-101, Mandatory Central Counterparty Clearing of Derivatives Comment period ends on May 13, 2015
Proposed standard:
National Instrument 94-101, Mandatory Central Counterparty Clearing of Derivatives
Proposed effective date:
Not indicated
Published by: CSA
Last updated: February 2015
Applicable to: All reporting issuers
Recent activities On February 12, 2015, the CSA issued for public comment proposed National Instrument 94-101, Mandatory Central Counterparty Clearing of Derivatives (the Clearing Rule). On December 19, 2013, the CSA issued for public comment its Staff Notice 91-303 - Proposed Model Provincial Rule on Mandatory Central Counterparty Clearing of Derivatives (the “Proposed Model Rule”)
In summary
Overview The Clearing Rule describes requirements for central counterparty clearing of over-the-counter derivatives transactions, and is intended to improve transparency in the derivatives market while enhancing systemic risk mitigation. The Clearing Rule is divided into two rule-making areas: (i) the determination of derivatives (each a mandatory clearable derivative) that will be subject to the requirement to submit for central counterparty clearing; and (ii) the requirement to submit a transaction in a mandatory clearable derivative to a recognized or exempted central counterparty for clearing (including proposed end-user and intragroup exemptions).
Available resources and links • CSA Press Release (February 2015) • Proposed National Instrument 94-101 (February 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 20
Proposed standards
Securities
OSC Draft Statement of Priorities for 2015-2016 NEW Comment period ends: June 1, 2015
Proposed standard:
OSC Draft Statement of Priorities for 2015-2016
Proposed effective date:
The period from April 1, 2015 to March 31, 2016
Published by: OSC
Last updated: April 2015
Applicable to: OSC registrants
Recent activities On April 2, 2015, the OSC published for comment its Draft Statement of Priorities for 2015-2016.
In summary
Overview The Draft Statement sets out priority areas where the OSC intends to focus key resources and actions for the coming fiscal year, as well as the expected outcomes. The OSC remains strongly committed to delivering on its mandate to protect investors and is proposing various initiatives to enhance investor protection. Effective compliance, supervision and enforcement are the cornerstones of protecting investors and fostering confidence in capital markets and their importance continues to grow as market structures, processes and products evolve. The majority of OSC resources are focused on delivering core regulatory work to maintain high standards of regulation in Ontario’s capital markets. Initiatives often span more than one year due to their nature and complexity, as well as the need to adequately consult with stakeholders. In some instances, specific priorities for a given year are not always carried forward to the following year’s Statement of Priorities, often because the remaining work is operational in nature.
Available resources and links • OSC Press Release (April 2015) • OSC Draft Statement of Priorities for 2015-2016 (April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 21
Proposed standards
Securities
OSC Staff Consultation Paper 15-401, Proposed Framework for an OSC Whistleblower Program Comment period ends: May 4, 2015
Proposed standard:
OSC Staff Consultation Paper 15-401, Proposed Framework for an OSC Whistleblower Program
Proposed effective date:
To be determined
Published by: OSC
Last updated: February 2015
Applicable to: OSC Registrants
Recent activities On February 3, 2015, the OSC released OSC Staff Consultation Paper 15-401, which proposes a new whistleblower program that would encourage the reporting of serious misconduct of Ontario securities law to the OSC.
In summary
Overview Under the program, a whistleblower could be awarded a financial incentive of up to $1.5 million upon the final resolution of an administrative enforcement matter.
Available resources and links • OSC Press Release (February 2015) • OSC Staff Consultation Paper 15-401 (February 2015)
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Proposed standards
Securities
OSC Staff Notice, Prospectus Exemptions Comment period ends on June 18, 2014
Proposed standard:
Amendments to OSC Rule 45-501, Ontario Prospectus and Registration Exemptions, relating to various prospectus exemptions
Proposed effective date:
Not indicated
Published by: OSC
Last updated: February 2015
Applicable to: Both reporting and non-reporting issuers
Recent activities On February 19, 2015, the OSC issued its Amendments to OSC Rule 45-501, Ontario Prospectus and Registration Exemptions: Family, Friends and Business Associates Exemption. See separate item. The OSC also issued an update on the two remaining exemptions – a crowdfunding exemption and an offering memorandum exemption. On November 27, 2014, the OSC issued its Amendments to OSC Rule 45-501, Ontario Prospectus and Registration Exemptions: Existing Security Holder. See separate item. On March 20, 2014, the OSC published for public comment proposals for four prospectus exemptions.
In summary
Overview The four proposed exemptions are: (i) an offering memorandum exemption that would allow businesses to raise capital based on a comprehensive disclosure document being made available to investors; (ii) a family, friends and business associates exemption that is intended to enable start-ups and early stage businesses to raise capital from investors within the personal networks of the principals of the business; (iii) an existing security holder exemption that would allow public companies listed on the Toronto Stock Exchange, TSX Venture Exchange or Canadian Securities Exchange to raise capital from their existing security holders based on their public disclosure record; (iv) a crowdfunding exemption that would allow businesses, particularly start-ups and early stage businesses, to raise capital from a potentially large number of investors through an online platform registered with the securities regulators. The publication of these proposals follows a comprehensive review by the OSC of the exempt market. In developing these proposals, OSC Staff have coordinated their efforts to achieve substantial harmonization with the current initiatives and existing exemptions of other members of the CSA.
Available resources and links • OSC Press Release (March 2014) • OSC Proposed Prospectus Exemptions (March 2014) • OSC Update (February 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 23
Proposed standards
Securities
Securities Regulators in British Columbia, New Brunswick and Saskatchewan Propose New Investment Dealer Prospectus Exemption NEW Comment period ends: June 15, 2015
Proposed standard:
Notice 45-315, Proposed Prospectus Exemption for Certain Distributions through an Investment Dealer
Proposed effective date:
To be determined
Published by: Securities Regulators in British Columbia, New Brunswick and Saskatchewan
Last updated: April 2015
Applicable to: Registrants regulated by the Securities Regulators of British Columbia, New Brunswick and Saskatchewan
Recent activities On April 16, 2015, the securities regulatory authorities in British Columbia, New Brunswick and Saskatchewan published for comment a proposed prospectus exemption that would, subject to certain conditions, allow issuers listed on a Canadian exchange to raise money by distributing securities to investors who have obtained advice about the suitability of the investment from an investment dealer.
In summary
Overview Under the proposed exemption, the investor would have to obtain advice regarding the suitability of the investment from an investment dealer. This is a key condition for investor protection, as the investment dealer must meet their know-your-client and know-your-product obligations when determining the suitability of the investment. The exemption would not be available if the dealer is a restricted dealer or an exempt market dealer. The exemption would also not be available to dealers that have received exemptive relief from providing suitability advice, such as discount brokers.
Available resources and links • Press Release (April 2015) • Notice 45-315, Proposed Prospectus Exemption for Certain Distributions through an
Investment Dealer (April 2015)
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Abbreviations, a list of most commonly used acronyms AASB Auditing and Assurance Standards Board AASOC Auditing and Assurance Standards Oversight Council AcSOC Accounting Standards Oversight Council AcSB Accounting Standards Board ASC Alberta Securities Commission AMF Autorité des marchés financiers BCSC British Columbia Securities Commission CAS Canadian Auditing Standard CPAB Canadian Public Accountability Board CPRB Canadian Performance Reporting Board CSA Canadian Securities Administrators DP Discussion Paper DTI Deposit-taking Institution ED Exposure Draft EIC Emerging Issues Committee FAQ Frequently Asked Questions FRE Federally Regulated Entities FRFI Federally Regulated Financial Institution OSC Ontario Securities Commission OSFI Office of the Superintendent of Financial Institutions Canada IAS International Accounting Standard IASB International Accounting Standards Board IAASB International Auditing and Assurance Standards Board IESBA International Ethics Standards Board for Accountants IFAC International Federation of Accountants IFRIC International Financial Reporting Interpretations Committee IFRS International Financial Reporting Standard IIROC Investment Industry Regulatory Organization of Canada IPSAS International Public Sector Accounting Standard IPSASB International Public Sector Accounting Standards Board ISA International Standard on Auditing ITC Invitation to Comment NFPO Not-for-profit Organization PSAB Public Sector Accounting Board RFI Request for Information SOP Statement of Principles
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Additional resources The following Deloitte resources will assist you in maintaining your financial literacy throughout the year. To obtain more information about any of these resources, please communicate with your Deloitte partner or one of our contacts listed at the end of the publication. Thought Leadership Centre for Corporate Governance This Web site is specifically designed to help board members with their responsibilities. It provides the latest information on regulatory and legislative developments, accounting and financial reporting, board roles and responsibilities, and best practices. (www.CorpGov.Deloitte.ca) Financial Reporting Assessment Tools Comprehensive assessment tools to help management and Directors determine whether or not their organizations’ financial statements and other financial filings meet all of the continuous disclosure obligations. (http://www.corpgov.deloitte.com/site/CanEng/self-assessments-tools-and-other-resources/financial-reporting-tools/)
Clearly IFRS guides A series of practical guides for adopting and implementing IFRS. (http://www.iasplus.com/en/tag-types/member-firms/canada/clearly-ifrs)
Financial reporting insights A bi-weekly communication covering all financial reporting frameworks used in Canada. (http://www.corpgov.deloitte.com/site/CanEng/deloitte-periodicals/financial-reporting-insights)
Deloitte Update Our new live webcast series featuring our professionals discussing critical issues that affect your business. (http://www.corpgov.deloitte.com/site/CanEng/financial-reporting/deloitte-update/)
Acknowledgement This Digest is the result of the efforts of the following team of Deloitte professionals: Editor: Chantal Rassart, CPA, CA, CPA (Illinois)
Contributing Editor: Michael Morrow, CPA, CA
Technical Editors: Anthony Bonanno, CPA, CA Nicole Deschamps, CPA, CA Elaine Hultzer, CPA, CA Kiran Kullar, CA Julia Suk, CPA, CA Nura Taef, CPA, CA
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Contacts, our experts network is available for your questions
National Karen Higgins 416-601-6238 [email protected]
Andrew Macartney 416-874-3645 [email protected]
David Gurnham (Ottawa) 613-751-6689 [email protected]
Saskatchewan Leigh Derksen 306-343-4431 [email protected]
Digests are available at www.deloitte.com/ca/standards. Click here to subscribe to our publication alerts. This document serves merely as a summary; for more detailed information, readers should consult the original document. No measures should be taken without prior consultation with your professional advisor. Publication date April 30, 2015. This page does not reflect changes made by standard-setting bodies after this date. We would like your opinion on this publication. Please take a few minutes to complete this online survey and share your feedback with us.
Québec Ginette Nantel (Montréal) 514-393-7118 [email protected]
Alberta Paul Borrett (Edmonton) 780-421-3655 [email protected].
Mélanie Leduc (Quebec Centre and Regions) 514-393-7293 [email protected]
Ontario Elizabeth M. Abraham (GTA) 416-643-8008 [email protected]
Don Newell (Calgary) 403-298-5948 [email protected]
British Columbia Albert Kokuryo 604-640-3232
Allan Faux (GTA Private company services) 416-643-8758 [email protected]
Mark Morrison (SWO) 519-967-7713 [email protected]
Lynn Pratt (Ottawa) 613-751-5344 [email protected]
Shirley Wolff 604-640-3022 [email protected]
Atlantic Brian Groves 709-758-5225 [email protected]
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