The CSA’s proposed rules were intended to streamline venture issuer disclosure to reflect the needs and expectations of issuer investors, it said, adding that it was also intended to make disclosure requirements more suitable and manageable for venture issuers.
Hopkins says it failed on both counts.
“What is happening now is you have regulation for regulation sake and what has been forgotten in this is what the investor wants,” he said. “The investor wants is to be able to access information that they can read in a fairly short time and understand, and get to the guts of what a company is about.
"They can’t do that now because you get an annual report or an information circular and these things are like ‘War and Peace,’ they are of no use for a retail investor.”
Although market participants supported many aspects of the proposed rules, they raised significant concerns about the burden of transitioning to a new regime and issuing annual reports, the CSA said.
Venture issuers typically list securities on junior exchanges such as the TSX Venture Exchange, Canadian Quotation and Trading System or the US OTC Bulletin Board. As they are smaller companies, they are given a longer time period to prepare their financial statements.
The CSA reopened the proposed rules for comments from September to December 2012. After reviewing feedback, the CSA said it had determined not to pursue implementation. Regulators said they are still considering implementing some of the proposals, but these will again be published for comment, as necessary.