CSA looks to streamline regulations
Canadian regulators to tackle how to cut regulatory burden for companies
TORONTO — Canadian securities regulators are kicking off a sweeping consultation aimed at reducing the regulatory burden on companies.
The cross-country review comes as the administration of U.S. President Donald Trump seeks to review and possibly repeal a raft of regulations, including those put in place in the United States after the financial crisis of 2008.
The Canadian Securities Administrators said Thursday the purpose of their consultation is “to identify and consider areas of securities legislation that could benefit from a reduction of undue regulatory burden, without compromising investor protection or the efficiency of the capital market.”
The review covers all reporting issuers, other than investment funds. A reporting issuer is any corporation that has issued securities to the public, and is therefore subject to continuous disclosure requirements under securities law.
“As capital markets evolve, our approach to regulation needs to reflect the realities of business for Canadian reporting issuers to remain competitive,” the CSA, an umbrella group for the country’s provincial and territorial market watchdogs, said Thursday in a 22page consultation document.
The review will consider options to reduce the regulatory burdens associated with both capital raising in the public markets, such as prospectus-related requirements, and the ongoing costs of remaining a reporting issuer, including continuous disclosure requirements.
Among the ideas under consideration are ways to streamline public offerings and prospectus filing requirements, and reduce the audited financial statement requirements in IPO prospectus documents. Regulators are also pondering permitting semi-annual reporting and reducing disclosure requirements in annual and interim filings.
Consideration is also being given to whether longer deadlines and exemptions from filing certain documents should be extended to smaller reporting issuers based on the size of their assets, revenue, or market capitalization, rather than whether or not they are listed on a senior securities exchange such as the Toronto Stock Exchange.
“With a median market capitalization of $112 million for reporting issuers listed on the TSX, a number of TSX-listed reporting issuers could likely benefit from reduced reporting requirements if we were to adopt a size-based distinction similar to the criteria for smaller reporting companies under the (U.S.) SEC rules,” the consultation paper says.
It does not promise anything specific, but says regulatory requirements — and the associated compliance costs — should be balanced against the significance of regulatory objectives sought and the value provided to investors.
“We are seeking feedback from market participants and stakeholders to identify specific areas of securities legislation where the regulatory burden on reporting issuers may be out of proportion to the regulatory objectives sought to be achieved,” the CSA said.
While the consultation paper sets out a range of potential options and seeks comments on them, as well as other options that have not been identified by the regulators, the CSA says “no definitive decisions have been made as to whether to move forward on any particular regulatory initiative.”
Comments received in writing by July 7 will be used to determine the scope and timing of any further work to reduce the regulatory burden.
The consultation does not cover boutique broker-dealers, which industry watchers say have been labouring under increasing regulatory requirements. In the consultation document, the CSA says separate consideration is being given to ways to lessen the regulatory burden on investment funds, such as reduced disclosure obligations.