Summary of Securities Regulatory Relief for Issuers
The Canadian Securities Administrators (the “CSA”) published temporary blanket relief for market participants, granting a 45-day extension for certain periodic regulatory filings as a result of COVID-19. The 45-day extension applies to certain filings that are normally required to be made on or before June 1, 2020, by issuers, registrants, investment funds and certain regulated entities. The filing relief was issued through harmonized blanket orders by securities commissions in each of the provinces and territories of Canada.
To take advantage of the filing relief, market participants must meet the requirements set out in the blanket orders. A summary of the blanket orders issued by the Manitoba Securities Commission (the “MSC”) follows.
Corporate Finance Relief
Blanket Order 52-502: Temporary Exemption from Certain Corporate Finance Requirements (“Blanket Order 52-502”)
Blanket Order 52-502 provides a wider range of filing relief to issuers, including relief from filing annual financial statements as well as filings pursuant to National Instrument 51-102, Continuous Disclosure Obligations. The requirements that must be met in order to take advantage of the relief vary depending on the type of regulatory filing that the issuer is seeking an exemption for. The most rigorous requirements are placed on financial statements, management’s discussion and analysis, and annual information forms. With respect to these filings, issuers must:
1. As soon as reasonably practicable, issue and file a news release on SEDAR in advance of the filing deadline that discloses:
a. the filing requirement(s) that it is seeking an exemption for;
b. that its management and other insiders are subject to an insider trading black-out policy that reflects the principles set out in section 9 of National Policy 11-207, Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions;
c. the estimated date by which the regulatory filing is expected to be filed and/or delivered;
d. an update on any material business developments since the date the most recent financial statements were filed (or an affirmative statement that no material developments have taken place since that date); and
2. Within 30 days following the first day of the extension period and every 30 days thereafter, issue and file on SEDAR a news release that contains an update on any material business developments since the date of the last news release disseminated pursuant to the exemption (or an affirmative statement that no material developments have taken place since that date).
If an issuer is relying on exemptive relief under Blanket Order 52-502, it cannot file a preliminary prospectus or a final prospectus for an offering of securities until the filings it has sought an exemption for are up to date.
On April 3, 2020, the CSA published CSA Staff Notice 51-360, Frequently Asked Questions Regarding Filing Extension Relief Granted by Way of a Blanket Order in Response to Covid-19 (“Staff Notice 51-360”), which contains the CSA staff’s views on frequently asked questions about the exemptions provided under Blanket Order 52-502.
Relief for Registrants
Under Blanket Order 31-518, registered dealers, advisers and investment fund managers are temporarily exempt from delivering certain documents that are specified in the provisions of National Instrument 31-103, Registration Requirements, Exemptions and Ongoing Registrant Obligations (“NI 31-103”), including financial statements and Form 31-103F1 Calculation of Excess Working Capital, where the delivery deadline for such document falls during the period of March 23, 2020, to June 1, 2020. In order to avail themselves of the relief provided under Blanket Order 31-518, registrants must deliver the documents to the MSC no later than 45 days after the delivery deadline for the document.
Blanket Order 31-519 – Temporary Exemption from Certain Client Focused Reforms Relationship Disclosure Information Provisions of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (“Blanket Order 31-519”)
On October 3, 2019, the MSC adopted MSC Rule No. 2019-2 (“Rule 2019-2”), which amends NI 31-103. The purpose of Rule No. 2019-2 was to implement reforms to enhance the client-registrant relationship and, in particular, reforms related to conflicts of interest and associated relationship disclosure information provisions. The amendments were to take effect on December 31, 2020.
The MSC is of the view that COVID-19 may present challenges to a registrant’s ability to implement the Rule 2019-2 client-focused reforms. As a result, the MSC has issued Blanket Order 31-519, which provides an exemption to registrants from compliance with the amendments to NI 31-103. The registrant can take advantage of the relief as long as it complies with certain requirements of NI 31-103, as more particularly detailed in the blanket order. Blanket Order 31-519 comes into effect on December 31, 2020.
Relief for Investment Funds
Pursuant to Blanket Order 81-503, an investment fund is exempt from meeting certain filing and/or delivery requirements prescribed under National Instrument 81-106, Investment Fund Continuous Disclosure, including filing annual financial statements and annual custodian compliance reports, during the period from March 23, 2020, to June 1, 2020, as long as the terms and conditions listed in the blanket order are met. Similar to the blanket orders discussed above, an investment fund will have an additional 45 days from the deadline otherwise applicable to make the filing or to send or deliver the document.
In addition, an investment fund distributing securities under a prospectus with a lapse date that occurs during the period from March 23, 2020, to June 1, 2020, may add an additional 45 days to that lapse date in fulfilling the prospectus renewal requirement, subject to the terms and conditions listed in the blanket order.
An investment fund relying on relief under Blanket Order 81-503 must as soon as reasonably practicable and in advance of its filing or delivery deadline, notify the MSC by email of the order requirement(s) it is relying on to extend the filing deadline and post a statement to that effect on its website, or the website of its investment fund manager.
Relief for Marketplaces, Clearing Agencies, Designated Trade Repositories, Designated Information Processors and Commodities Futures Exchanges
Under Blanket Order 25-501, marketplaces, clearing agencies, designated trade repositories, designated information processors and commodities futures exchanges that would be required to provide the MSC with certain documents or other information, including annual financial statements and annual compliance reports, between March 23, 2020, and June 1, 2020, have an additional 45 days from the deadline otherwise applicable to provide the documents, subject to the conditions described in the blanket order.
We are Available.
Fillmore Riley’s securities practice can assist with any questions you may have as to the scope of the relief provided under any of the aforementioned blanket orders or its implications to your business. The key contacts are:
Resource posted on April 21, 2020, with a report from Donald Baker.