On December 16, 2021, the Canadian Securities Administrators (the CSA) announced that amendments to legislation clarifying “outside activity” (O.A.) the reporting framework and modernization of registration information requirements (the Amendments), have been finalized and will enter into force on June 6, 2022.
Generally, amendments will involve changes to National Instrument 33-109 Registration Information (Regulation 33-109) (and its companion policy and related forms) and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (Regulation 31-103) (and its accompanying policy). The original proposed changes have already been discussed in a AUM Legal Bulletin. Overall, the Amendments are intended to address issues identified by CSA staff and registrants by providing clarity on the submission of registration information that is often incorrect, and to reduce regulatory burden.
With respect to AOs, the amendments replace the term “outside business activities” with “outside activities” and establish a new framework for reporting outside activities to regulators. Appendix C of the Companion Policy to NI 33-109 describes and provides examples for the following 5 categories of activities that are considered RFPs:
- Activities with another registered company
- Activities with an entity that receives compensation from another registrant for the registrant’s registrable activity
- Other securities-related activities
- Provision of financial or finance-related services
- Positions of influence
The guidelines also emphasize that companies are responsible for conflicts of interest resulting from all OA, although they should not be reported to regulators.
Other key takeaways are that guidelines for AOs that may be considered positions of influence will now be codified in section 13.4.3 of NI 31-103, and activities with an affiliate must be disclosed. like OAs.
Currently, registrants are required to file an OBA disclosure within 10 days a new OBA or a change to an existing OBA. The Ontario Securities Commission is extension its moratorium on fees related to late OBA filings until the amendments take effect on June 6, 2022. Filers must still disclose OBA information, but no fees will be charged for late filings while the moratorium is in effect. After June 6, 2022, the amendments state that registrants will be required to file an OA disclosure within 30 days.
Although the amendments will come into effect on June 6, 2022, the CSA clarifies that it does not expect registrants to update their disclosures, such as reporting AOs under the new framework, until there will be no change in the registration information previously provided. . If there has been a change, the registrant will need to review and update all information, to ensure that it complies with the new requirements of the changes.
A non-OA requirement worth mentioning is that companies will now be required to report the trade titles and professional designations used by registrants, which will likely allow regulators to monitor companies’ compliance with new credential requirements.