On November 19, 2019, the Ontario Securities Commission announced proposed regulatory changes resulting from its burden reduction task force. The task force had conducted a study of the regulatory environment, with a focus on enhancing competitiveness for Ontario businesses by saving time and money for issuers, registrants, investors and other capital market participants. The task force conducted a stakeholder consultation, and received 69 comment letters and 199 suggestions on how to make things better. Ultimately, these identified 38 underlying concerns that the task force's recommendations are aimed at addressing. BLG's comment letter set out a number of recommendations and we will be reviewing the final report to see how many of our proposals have been picked up. Prema Thiele and Manoj Pundit, both partners in BLG's Securities and Capital Markets Group participated in the roundtable stakeholder consultations.
The task force ultimately arrived at 107 decisions (that the OSC can implement itself) and recommendations (decisions that the OSC recommends other bodies implement). 14 of these affect all market participants, 13 affect companies, 24 affect investment funds, 30 affect registrants, 8 affect markets, trading and clearing agencies, and 18 affect derivatives participants. To the extent the OSC is able to implement the decisions itself, it has indicated the majority will be implemented within about a year.
Some highlights include:
- Small and medium-sized registrants will be able to outsource the chief compliance officer function;
- The OSC will offer a confidential prospectus review process prior to IPOs or other financings;
- Innovative businesses and startups will benefit from a more flexible approach from OSC staff in how it will approach registration, resales in the secondary market and who can invest (e.g. individuals with specialized knowledge);
- When fintech firms are hiring chief compliance officers, Staff will consider their broader business experience and its alignment with the firm's business model;
- Crowdfunding rules will be harmonized with other Canadian jurisdictions;
- Investment fund filing requirements will be reduced in an attempt to eliminate duplication, and routine exemptive relief will be codified;
- Large registrants with multiple business divisions may be able to employ multiple chief compliance officers;
- A process for registering Advising and Associate Advising Representatives as Client Relationship Managers; and
- Public Companies will be able to conduct at-the-market offerings without having to obtain prior exemptive relief.
As discussed in a previous post in this space, these proposed reforms will supplement the Ontario Government's proposed reforms to the Securities Act, including reforms allowing the OSC to issue so-called "blanket orders", which it has been prohibited from doing since receiving rule-making powers in the mid-1990s.
BLG's Securities and Capital Markets Group will publish a review and analysis of these reforms in the coming days, which will be linked here.