On March 23, 2020, the Canadian Securities Administrators (CSA) and the Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) published temporary blanket relief measures in response to the ongoing COVID-19 pandemic.
The CSA temporary blanket relief (the "CSA Blanket Relief") was previously announced in a news release issued on March 18, 2020 and was followed by a notice published by the Canadian Securities Exchange (CSE) on March 20, 2020 providing related guidance to CSE issuers.
The CSA Blanket Relief grants a 45-day extension to the filing deadlines for certain periodic filings required to be made between March 23, 2020 and June 1, 2020 by reporting issuers, investment funds, registrants, certain regulated entities and designated rating organizations. The blanket relief has been implemented in each Canadian province and territory through a set of substantially harmonized local blanket orders (the "Blanket Orders"), in each jurisdiction consisting of the following:
- Temporary Exemption from Certain Corporate Finance Requirements (the "Corporate Finance Relief Order");
- Temporary Exemption from Certain Financial Statement and Information Delivery Requirements for Registrants and Unregistered Capital Markets Participants (the "Registration Relief Order");
- Extension of Certain Filing, Sending, Delivery and Prospectus Renewal Requirements of Investment Funds (the "Investment Fund Relief Order"); and
- Temporary Exemption from Certain Reporting Requirements for Regulated Entities (the "Regulated Entity Relief Order").
In order to rely on the 45-day filing deadline extension, market participants must comply with the conditions set out in the applicable Blanket Order.
In order to align their rules and policies with the Blanket Orders and provide certain additional relief to issuers, the TSX published Bulletin 2020-0002, the TSXV issued its own Notice to Issuers and the CSE issued Notice 2020-004 (the "Exchange Blanket Relief")
The key provisions and requirements under the CSA Blanket Relief and Exchange Blanket Relief are summarized below.
CSA Blanket Relief
1. Corporate Finance Relief Order
The Corporate Finance Relief Order grants a 45-day extension of the deadlines for the following filings and deliveries required to be made between March 23, 2020 and June 1, 2020:
- annual and interim financial statements
- management's discussion & analysis
- annual information form
- executive compensation disclosure
- annual request forms required under subsection 4.6(1) of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102")
- delivery of annual financial statements required by subsections 4.6(3) and (5) of NI 51-102 and management's discussion & analysis required by subsections 5.6(1) and (3) of NI 51-102
- statement of reserves data and other information under National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities
- technical reports under National Instrument 43-101 Standards of Disclosure for Mineral Projects
- change of auditor reporting package
- notice of change in year end
- business acquisition report
- notice of change in corporate structure
- notice of use of proceeds on Form 45-106F16
- annual disclosure of use of proceeds required under Multilateral Instrument 45-108 Crowdfunding
- annual filing of a designated rating organization on Form 25-101F1 and any amendment thereto
- the lapse date for a final base shelf prospectus referred to in paragraph 2.2(3)(a), 2.3(3)(a), 2.4(3)(a), 2.5(3)(a), 2.6(3)(a) or section 2.7 of National Instrument 44-102 Shelf Distributions
The specific conditions to rely on the 45-day extension vary among the different types of filings and deliveries, but in most cases require the issuance, and filing on the System for Electronic Document Analysis and Retrieval (SEDAR), of a news release, as soon as reasonably practicable and in advance of the filing deadline, disclosing each applicable requirement in respect of which the exemptive relief is being relied upon. Certain filings also require that the news release include the following additional disclosure:
- that management and other insiders of the filer are subject to an insider trading black-out policy that reflects the principles in section 9 of National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions;
- the estimated date by which the required disclosure is expected to be filed or the required document is expected to be sent or delivered, and
- the following information about the
filer:
- an update of any material business developments since the date of the last annual financial statements or interim financial reports that were filed, or
- confirmation that there have been no material business developments since that date.
Additionally, for certain filings, issuers must issue and file on SEDAR subsequent news releases that disclose the following information no later than 30 days after the first day of the extension period and, thereafter, following each additional 30-day period:
- an update of any material business developments since the date of the last news release required by the Corporate Finance Relief Order, or
- confirmation that there have been no material business developments since that date.
A filer that is relying on the Corporate Finance Relief Order for one or more documents may not file a preliminary prospectus or a final prospectus for an offering of securities until it has filed all documents for which it is relying on the exemptive relief.
2. Registration Relief Order
The Registration Relief Order grants registered dealers, registered advisers, registered investment fund managers and unregistered capital market participants a 45-day extension of the deadlines for the following filings, among others under certain local exemptions, that are required to be made between March 23, 2020 and June 1, 2020 under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations:
- Registered dealers:
- Annual and interim financial statements
- Form 31-103F1 Calculation of Excess Working Capital
- Registered advisers:
- Annual financial statements
- Form 31-103F1 Calculation of Excess Working Capital
- Registered investment fund managers:
- Annual and interim financial statements
- Form 31-103F1 Calculation of Excess Working Capital
- Form 31-103F4 Net Asset Value Adjustments
- Registered mutual fund dealers that
are members of the Mutual Fund Dealers Association (MFDA) and
registered investment dealers that are members of Investment
Industry Regulatory Organization of Canada (IIROC):
- MFDA Questionnaire and Report
- Joint Regulatory Financial Questionnaire and Report.
3. Investment Fund Relief Order
The Investment Fund Relief Order grants investment funds a 45-day extension of the deadlines for the following filings and deliveries required to be made between March 23, 2020 and June 1, 2020 under the following National Instruments and legislation:
- National Instrument 41-101
General Prospectus Requirements
- custodian compliance reports
- National Instrument 81-102
Investment Funds
- custodian compliance reports
- compliance report
- National Instrument 81-106
Investment Fund Continuous Disclosure
- annual and interim financial statements
- notice to the regulator of a reliance on the section 2.11 exemption to file financial statements by a non-reporting issuer
- annual and interim management report of fund
- annual information form
- delivery of annual financial statements, interim financial statements and the related management report on fund performance
- delivery of request form used to instruct the investment fund as to which documents a securityholder wishes to receive and delivery of such documents
- independent valuation required to be filed by labour sponsored and venture capital funds concurrently with the filing of its annual financial statements
- National Instrument 81-107
Independent Review Committee for Investment Funds
- report to securityholders describing the independent review committee and its activities for the financial year
Additionally, the Investment Fund Relief Order grants a 45-day extension of any investment fund prospectus lapse date occurring between March 23, 2020 and June 1, 2020. An investment fund will have an additional 45 days after the lapse date of its prospectus to file and obtain a receipt for a new prospectus in order to continue distribution of the investment fund's securities for a further 12 months after the lapse date.
An investment fund relying on the Investment Fund Relief Order must, as soon as reasonably practicable and in advance of its filing or delivery deadline:
- provide notice to the Director of the Investment Funds and Structured Products Branch at the Ontario Securities Commission by email at IFSPDirector@osc.gov.on.ca stating that the investment fund is relying on the order and listing each applicable requirement for which it is relying on the order; and
- post a statement on its public website or the public website of its fund manager, stating that the investment fund is relying on the order and listing each applicable requirement for which it is relying on the order.
4. Regulated Entity Relief Order
The Regulated Entity Relief Order grants clearing agencies, marketplaces, trade repositories, designated information processors and commodity futures exchanges (the "Regulated Entities") a 45-day extension of the deadlines for various filings that are required to be made between March 23, 2020 and June 1, 2020, including, among others, annual and interim financial statements, risk assessments and various reports.
Regulated Entities relying on the Regulated Entity Relief Order must disclose to each applicable securities regulatory authority when it provides a document or other information that it is relying on the order and state the reasons why it could not submit the document or other information by the original due date.
Exchange Blanket Relief
In parallel with the CSA Blanket Relief, the TSX, the TSXV, and the CSE have announced the following temporary relief measures to issuers in response to the COVID-19 pandemic:
1. Toronto Stock Exchange
The TSX is providing temporary blanket relief from the following requirements of the TSX Company Manual (the "Manual"):
- Financial Statements: Issuers will not need to notify the TSX if they require an extension of time to file their annual or interim financial statements.
- Annual Meetings: Issuers are relieved of the requirement to hold an annual meeting of securityholders within six months of the end of the issuer's fiscal year. The TSX will permit issuers to hold their 2020 annual meeting at any time during 2020, up to and including December 31, 2020.
- Security Based Compensation Arrangements: A TSX issuer with security based compensation arrangement (e.g., a stock option plan or other similar plan) which does not have a fixed maximum number of securities that may be reserved for issuance thereunder (e.g., a 10% "rolling" stock option plan) may continue to make grants under such a plan until the earlier of its 2020 annual meeting and December 31, 2020. Additionally, any security based compensation granted during this period may be exercised without ratification by securityholders.
- Normal Course Issuer Bid (NCIB) Daily Limits: TSX issuers conducting an NCIB are now able to purchase up to 50% of the average daily trading volume of the listed securities of the class subject to the NCIB, instead of the typical limit of the greater of 25% average trading daily volume and 1,000 securities. The relief is effective until June 30, 2020 and applies to any NCIB currently in effect as well as to NCIBs renewed or launched until June 30, 2020.
- Delisting Criteria Respecting Market Value: The TSX is providing exemptive relief from the delisting criteria under Sections 712(a) and 712(b) of the Manual that provide that the TSX may delist an issuer if the market value of the issuer's securities is less than C$3-million or if the market value of its freely-tradeable, publicly-held securities is less than C$2-million, in either case over any period of 30 consecutive trading days. All other delisting criteria are unaffected by the relief, including the rule that permits the TSX to delist an issuer if it is questionable whether the issuer will be able to continue as a going concern.
- "Market Price" Definition: On a case-by-case basis, the TSX will use a shorter time period for the determination of market price for the purposes of pricing securities (including warrants) for private placements.
The temporary blanket relief provided by the TSX is automatic. TSX issuers are not required to apply for or make any filings in order to rely on the TSX blanket relief.
2. TSX Venture Exchange
The TSXV is providing the following temporary blanket relief:
- Annual Meetings: Issuers are relieved of the requirement to hold an annual meeting of securityholders not more than 15 months after its last annual meeting. The TSXV will permit issuers to hold their 2020 annual meeting at any time during 2020, up to and including December 31, 2020; however, the TSXV expects issuers to comply with applicable corporate legislation regarding the timing of their 2020 annual meeting.
- Stock Option Plans: The TSXV has extended the timeframe within which issuers must obtain securityholder approval of a "rolling" stock option plan. The TSXV will permit an issuer to obtain annual securityholder approval at its 2020 annual meeting, which may be held on any date in 2020, up to an including December 31, 2020, subject to compliance with applicable legislation.
The temporary blanket relief provided by the TSXV is also automatic. TSXV issuers are not required to apply for or make any filings in order to rely on the TSXV blanket relief.
3. Canadian Securities Exchange
The CSE has also issued a notice clarifying CSE filing requirements in support of the CSA Blanket Relief. CSE issuers are required to file their interim and annual financial statements and the related CSE forms with the CSE at the time such documents are filed on SEDAR or in accordance with applicable securities laws. Consequently, any relief granted by the CSA, including the CSA Blanket Relief, applies to such filings required by the CSE.
The CSE also reminded CSE issuers of their obligation under CSE Policy 5 to make timely public disclosure of all material information resulting from the COVID-19 outbreak and of the obligation to file a Monthly Progress Report (Form 7). The CSE advises that it is likely that every CSE issuer's Form 7 filing should contain an updated discussion of the impact of the COVID-19 pandemic, even if the anticipated impact is relatively minimal, and that such discussion should be initially disclosed by way of a news release.
Reporting issuers planning to rely on the CSA Blanket Relief or Exchange Blanket Relief will need to consider how doing so might impact their related obligations discussed in our previous article, including, the prescribed deadline to call an annual meeting of shareholders under the issuer's applicable corporate legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
