Advisory panel offers comments on reduced burden for issuers

The panel reminded regulators to make sure investors are still informed and protected

Advisory panel offers comments on reduced burden for issuers
In a letter to the Canadian Securities Administrators (CSA), the Ontario Securities Commission’s Investor Advisory Panel has offered its comments on Consultation Paper 51-404 considering reduced regulatory burdens for non-investment fund reporting issuers.

“[W]e generally support a reduced regulatory burden insofar as it makes the system more efficient and more attractive for small companies to issue securities and if it ensures continued market efficiency,” Letty Dewar, the panel’s newest board chair, said in the letter. “However, this cannot be done at the cost of transparency and investor protection.”

Responding to the possibility of distinguishing reporting issuers based on size rather than by exchange listing, Dewar said the distinction between reporting requirements for larger and smaller issuers should be made clear to investors, along with any potential risks.

The consultation paper also asked whether the required business acquisition report (BAR) actually provides relevant timely and relevant information for investors’ decisions. In response, Dewar said the BAR requirement and disclosure should be kept “in cases where the acquisition is material in terms of dollars or overall impact on the business.”

“The BAR provides relevant information but it must be made in clear language,” she said. “BAR should explain the cost of the acquisition, how it fits with the current business, why the company was purchased and what value-added it will bring, as well as potential effect on current share value.”

The panel supported possible streamlining measures such as semi-annual rather than quarterly reporting, consolidation of the annual information form (AIF) and management’s discussion and analysis (MD&A) into one form.

With regards to allowing issuers to make disclosure materials publicly available in electronic form, the panel agreed with the idea of making that the default delivery option, but clarified that investors should be provided “with the option to receive hard copies if desired.”

“Issuers should always communicate with investors using plain language and a readable, clear font,” Dewar added with regards to legislation of electronic document delivery. “All communication should be meaningful and have sufficient context and clarity to make it useful for investors. It should also be easily accessible to investors.”

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