Check the Cooperative System’s Regulation of Prospectus Offerings and Continuous Disclosure: Like It So Far?

The revised consultation draft of the uniform provincial and territorial Capital Markets Act (CMA) and draft initial regulations under the CMA (Initial Regulations and, together with the CMA, the Consultation Drafts) have been published by the regulatory authority (Authority) under the proposed Cooperative Capital Markets Regulatory System (Cooperative System) and are open for comment until December 23, 2015.

The Consultation Drafts have been designed to provide for a smooth transition from the current regulation of prospectus offerings and continuous disclosure, however, some aspects of the proposed governing regime have not yet been determined.

Given the scope of the Consultation Drafts, Blakes is publishing a series of bulletins, which can be accessed here. Also see our December 2014 Blakes Bulletin: Public Offerings and Continuous Disclosure under Cooperative Capital Markets Regulatory System: Tip of the Iceberg.


Since the CMA takes a “platform” approach, many aspects of capital markets regulation that are currently contained in the securities legislation of the participating jurisdictions implementing the Cooperative System (being British Columbia, Ontario, Saskatchewan, New Brunswick, Prince Edward Island, Yukon and Canada, collectively, the Participating Jurisdictions) are addressed in the Initial Regulations, rather than within the CMA itself. Accordingly, when the initial consultation draft of the CMA (then known as the Provincial Capital Markets Act, prior to participation by Yukon) was released in September 2014, commentators were left to wonder if the Cooperative System would constitute a significant departure from the current regulatory regime administered by the Canadian securities regulatory authorities.

While the Consultation Drafts are intended to modernize and harmonize existing legislative frameworks of the Participating Jurisdictions, to “simplify transition to the Cooperative System and provide a strong basis for cooperation with provinces that choose not to participate”, the Initial Regulations (and forms and policies thereunder) concerning the public offerings of securities and the continuous disclosure obligations of reporting issuers have been adapted primarily from existing rules, forms and policies in the Participating Jurisdictions. Generally, changes to such provisions in the existing rules have been proposed in the draft Initial Regulations only as necessary to fit them under the CMA and to eliminate differences in requirements in order to create a single set of regulations that will apply across the Participating Jurisdictions.

If adopted as currently drafted, some notable changes in the Consultation Drafts related to the current regulation of prospectus offerings and continuous disclosure would be that:

  • Recently-added disclosure requirements in Form 58-101F1 – Corporate Governance Disclosure concerning women on boards and in executive officer positions, as well as disclosure items related to director term limits, would apply in all Participating Jurisdictions (currently these are not applicable in British Columbia, Prince Edward Island and Yukon)
  • A potential parallel system for public offerings would be permitted to exist under the CMA which, in lieu of using a prospectus, would permit an offeror of securities to instead file a “prescribed offering document”, however the Authority has noted that “[n]o regulations in this area are currently contemplated”
  • Provisions in Ontario Securities Commission Rule 48-501 – Trading during Distributions, Formal Bids and Share Exchange Transactions, which provide an exemption from the prospectus requirement so that dealers can distribute research reports regarding an issuer during a distribution of securities of that issuer, would be expanded to apply in all the Participating Jurisdictions, however, provisions prohibiting trading by “issuer-restricted persons” during prospectus distributions have not been replicated in the Consultation Drafts
  • Multilateral Instrument 51-105 – Issuers Quoted in the U.S. Over-the-Counter Markets would apply in all Participating Jurisdictions (currently the instrument is not applicable in Ontario)
  • Non-reporting issuers formed or governed under the laws of Canada or a Participating Jurisdiction, whose securities are listed or quoted on foreign marketplaces, will be required to file certain information within ten days after the date of the listing or quotation, carrying forward to all Participating Jurisdictions new requirements based on New Brunswick’s Financial and Consumer Services Commission Local Rule 51-504 – New Brunswick Corporations Listed or Quoted on Certain Marketplaces
  • Capital Markets Regulatory Authority (CMRA) Policy 71-601 – Distribution of Securities to Persons Outside CMR Jurisdictions would apply BC Interpretation Note 72-702 – Distribution of Securities to Persons Outside British Columbia (subject to some key changes) to all Participating Jurisdictions, representing a significant change for Ontario (a forthcoming Blakes Bulletin will discuss this proposed change)

The Authority has also proposed, consistent with “the recommendations of the 2010 Uniform Law Conference”, that section 7 of CMRA Regulation 41-501 – Prospectus Requirements and Exemptions replace all corporate law provisions dealing with trust indenture requirements for public offerings of debt securities to be issued under a trust indenture.


The Initial Regulations reflect instruments, forms and policies and amendments that were effective on, or for which Canadian securities regulatory authorities had published advance notice of implementation before March 2, 2015, and accordingly, do not reflect subsequent amendments, such as the changes made to National Instrument 51-102 – Continuous Disclosure Obligations, National Instrument 41-101 – General Prospectus Requirements, and National Instrument 52-110 – Audit Committees concerning venture issuers that came into force on June 30, 2015. The Consultation Drafts also do not include a harmonized set of prospectus exemptions and provisions that establish an interface with non-Participating Jurisdictions. However, the Authority has indicated that additional draft initial regulations under the CMA will be published for comment in the coming months to cover such developments and matters.

For further information, please contact:

Matthew Merkley        416-863-3328
Eric Moncik                 416-863-2536

or any other member of our Capital Markets group.

Blakes and Blakes Business Class communications are intended for informational purposes only and do not constitute legal advice or an opinion on any issue.

We would be pleased to provide additional details or advice about specific situations if desired.

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