The Canadian Securities Administrators (CSA), together with provincial regulators, have published the conditions required for reporting issuers to benefit from the blanket relief extension in response to the current COVID-19 outbreak. As we published in an alert on March 20, 2020, the CSA had announced issuers would receive a 45-day extension to the date required for filings due on or before June 1, 2020, but did not provide details of the conditions of this relief. The CSA notice published on March 23, 2020, confirms the 45-day extension and advises reporting issuers to review their principal regulator’s harmonized local orders with respect to the specific conditions required to benefit from the blanket relief.
Market participants relying on this exemption are not required to apply for a management cease trade order (MCTO), provided they comply with the conditions of the blanket relief orders. The following conditions shall apply:
- All filings must be made within 45 days of the deadline for delivery.
- All issuers relying on the exemption must advise the appropriate securities regulator that they are relying on the exemption at the time the filing is made.
- In advance of the filing, issuers must issue and file on SEDAR a disclosure that describes:
- the specific requirements that they rely on for the exemption;
- that they have implemented an insider trading policy consistent with the principles in section 9 of National Policy 11-207, Failure-to-File Cease Trade Orders and Revocations on Multiple Jurisdictions;
- the date that the required filing is expected to be delivered; and
- any material business developments since their last annual financial statements or interim reports, or confirmation that no material business developments have occurred.
- Issuers must also file a news release on SEDAR as soon as reasonably practicable and no later than 30 days after the filing was due. Subsequent news releases must be filed within 30 days of the initial news release if the filing has not yet been completed.
- Such news releases must disclose any material business developments since the date of the last news release required by the relief conditions or provide confirmation that no material business developments have occurred.
- Issuers who rely on the blanket relief shall not file a preliminary prospectus or final prospectus until all required filings have been completed.
- If the applicable filing is with respect to an annual request form, such annual request form must be delivered before the record date for the issuer’s next annual meeting of shareholders.
- If the applicable filing is with respect to annual financial statements or management’s discussion and analysis, such documents must be delivered before or concurrently with the delivery of the management information circular for the issuer’s next annual meeting of shareholders.
For issuers with a final base shelf prospectus that has a lapse date from March 23, 2020, to June 1, 2020, a 45-day extension will be applied to such lapse date.
Certain filings required to be made on or before June 1, 2020, shall be subject to an additional 45-day extension, following the original 45-day extension from the date the filing was due. This additional relief shall apply to changes of auditor, notices of change in year-end, business acquisition reports or notices of change in corporate structure.
The increased extension shall also apply to annual financial statements, a notice of use of proceeds, annual disclosure of use of proceeds and an annual filing of a designated rating organization. For issuers to rely on this extension with respect to these filings, the following conditions shall apply:
- In advance of the filing deadline, issuers must circulate, and file on SEDAR if applicable, a news release that describes the specific requirements that it relies on for the exemption.
- In the case of a designated rating organization, a news release shall be issued that describes the specific requirements that the issuer relies on for the exemption, which is not required to be filed on SEDAR and should instead be filed with the applicable principal regulator. Such news releases must include both a discussion of information in the designated rating organization’s last annual filing that has become materially inaccurate, or confirmation that there is no materially inaccurate information.
Issuers with filing deadlines after June 1, 2020, who anticipate delays due to the COVID-19 outbreak, or who expect applicable filings to be delayed beyond the applicable relief period for the same reason, may consider preparing or applying for an MCTO. Issuers with filing deadlines on or prior to June 1, 2020, who expect applicable filings to be delayed beyond the applicable relief period should also consider whether to prepare or apply for an MCTO. Applications for an MCTO, which temporarily restricts management and specific insiders from trading, should ordinarily be filed at least two weeks prior to the required filing due date; however, the CSA has committed to accommodating shorter delays as necessary. An MCTO may be issued by a regulator instead of a failure-to-file cease-trade order.
As per the release, the CSA will continue to monitor the impact of the COVID-19 outbreak and issue further guidance as needed.
If you are an issuer with questions on the CSA blanket relief, preparing an MCTO application or would like more information on other securities law matters, please contact Scott Rozansky, Jessica Ward or any of our other key contacts.
This post was originally published on dentons.com.
