Canadian securities regulators provide details on previously announced blanket relief for market participants due to COVID-19

Further to our March 19^th MarketCaps regarding proposed blanket relief for market participants as a result of the COVID-19 pandemic, Canadian securities regulators have now issued temporary blanket relief orders which provide for a 45-day extension to the deadlines for certain regulatory filings and deliveries that fall during the period of March 23 to June 1, 2020.

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In response to COVID-19, the Canadian Securities Administrators (CSA) have provided comprehensive guidance on the blanket relief that was previously announced. The CSA is implementing the relief through local blanket orders that are substantially harmonized across Canada. Although market participants will not need to file applications to obtain this relief, in order to benefit from the extension, each market participant will be required to satisfy the conditions set out in the relevant blanket orders.

Similarly, the Toronto Stock Exchange and TSX Venture Exchange have issued relief from various obligations imposed on listed issuers under their rules. This is discussed in a separate MarketCaps.

Relief for Issuers from Certain Corporate Finance Requirements

Canadian securities regulators have provided a 45-day extension period, from the original due date, for persons or companies required to make certain filings or deliveries between March 23 and June 1, 2020. The affected documents are set out in blanket orders for the respective jurisdictions (each an Issuer Blanket Order)[1].

Annual and Interim Filing and Delivery Requirements

Under the terms of the Issuer Blanket Orders, issuers may delay the filing or delivery of annual financial statements, interim financial statements, management's discussion and analysis (MD&A), annual request forms, annual information forms (AIFs), executive compensation disclosure, reserves data required for oil & gas issuers, technical reports for mining issuers and certain financial statements required upon completion of reverse takeovers. To rely on the applicable Issuer Blanket Order, a person or company must issue, and file as soon as reasonably practicable, a news release in advance of the original filing or delivery deadline that discloses the following information:

• each requirement for which it is relying on the exemptive relief;
• that its management and other insiders are subject to an insider trading black-out policy that reflects the principles of National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions;
• the estimated date by which the required document is expected to be filed, sent or delivered; and
• most significantly, an update of any material business developments since the date of its last annual financial statements or interim financial reports, or confirmation that there have been no material developments since that date.

The Issuer Blanket Orders impose further obligations to issue an updated news release no later than 30 days after the original deadline, and again no later than 30 days thereafter if the documents have not been filed. The news release must provide an update on material business developments, or confirmation that there have been no developments. While relying on this exemptive relief, issuers are not permitted to file a preliminary or final prospectus. Further, issuers relying on an Issuer Blanket Order for an exemption from the deadline for sending the annual request form or annual financial statements must send the annual request form before the record date for the next annual meeting and deliver the annual financial statements before, or with, the management information circular for that meeting.

Other Filings

The Issuer Blanket Orders also provide 45-day relief from filing deadlines for other documents, such as:

• business acquisition reports, notices of change of year end, notices of change of auditor and notices of change of corporate structure; and
• annual financial statements and other filings relating to certain exempt distributions, in those jurisdictions that impose those filing requirements.

To rely on the relief relating to those documents, an issuer must issue, and file as soon as reasonably practicable, a news release in advance of the original filing deadline that discloses each filing requirement for which it is relying on the exemptive relief.

Prospectus Lapse Dates

Finally, lapse dates for base shelf prospectuses have also been extended by 45 days as long as the issuer issues, and files as soon as reasonably practicable, a news release in advance of the lapse date that discloses the specific requirement for which it is relying on the exemptive relief. To rely on this relief, the issuer may not also be relying on the relief relating to annual and interim filing and delivery requirements.

Relief for Registrants and Regulated Entities

In addition to the above, the Canadian securities regulators have concurrently provided a 45-day extension for certain filings that would otherwise be due between March 23 and June 1, 2020 for registrants and regulated entities. Separate blanket orders were issued by the respective jurisdictions providing for such exemptive relief with substantially similar conditions.

A summary of the blanket orders pertaining to registrants (each a Registrant Order)[2] and the blanket orders pertaining to regulated entities (each a Regulated Entity Order)[3] is set out below. Those orders are effective immediately.

The Registrant Order provides relief for registered dealers, registered advisors and registered investment fund managers (i.e. registrants) unable to make certain filings or deliver documents when required under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Requirements. In Quebec, the Registrant Order also applies to registered dealers and registered advisers under the Derivatives Act (Quebec).

The Registrant Order addresses items such as annual and interim financial statements, calculation of excess working capital, and net asset value adjustments. In addition, the Registrant Order in certain jurisdictions provides relief on timing of payment of certain fees. Where the deadline for those fees falls during the period from March 23 to June 1, 2020, the fees can be paid within 45 days after the deadline. The filing relief does not relieve a registrant of its obligation to ensure that the firm is at all times in compliance with the applicable working capital requirements.

Unlike the Regulated Entity Order discussed below, the Registrant Order does not require registrants to provide an explanation to the principal regulator as to why the documents could not be filed by the original deadline.

The Regulated Entity Order pertains to any recognized clearing agency, recognized exchange, or recognized trade repository or any person or company carrying on those businesses under an exemption from being recognized. A regulated entity is exempt from filing requirements between March 23 and June 1, 2020 provided that the regulated entity:

• provides its principal regulator with the filing(s) no later than 45 days after the original due date for each filing; and
• discloses to its principal regulator, when it provides each of the filings, the reasons why it could not submit the filing by the original due date.

Cross-Border Comparison

As was suggested in our March 19^th MarketCaps, the conditions for the provincial blanket orders are similar to the conditions for the equivalent United States Securities and Exchange Commission (SEC) order for U.S. issuers, although the time period for relief under the SEC order is March 1 to April 30, 2020. Issuers that are subject to disclosure obligations in both jurisdictions will need to work carefully through the conditions associated with the exemptive relief but, in most cases, should be able to obtain filing extensions in both jurisdictions.

Managing Your Business and Ensuring Compliance

The insider blackout guidelines referenced in the Issuer Blanket Orders will be familiar to most executives and insiders of reporting issuers as those guidelines reaffirm the principle that persons with material undisclosed information about an issuer should not be active in trading that issuer's securities until the information is disseminated broadly to the market. With the 45-day extension for filing of interim and annual financial information, there is a heightened risk that senior officers, directors and even employees will have more opportunity to become aware of financial performance before such information is publicly released. Similarly, where COVID-19 has affected financial performance, senior officers and directors will have visibility on the degree of impact well before financial results are made publicly available. Accordingly, it is appropriate that issuers be reminded to consider existing insider trading policies and potentially the imposition of blackouts to ensure no trading irregularities occur.

Issuers should also consider that the extension of filing deadlines does not affect the obligation to make timely disclosure of material changes. With the current decline in equity and commodity prices, coupled with slower demand across many sectors of the economy, issuers may become non-compliant with debt covenants or face delays with or the loss of key commercial contracts. These situations must be considered carefully to determine if disclosure is warranted. Issuers should also carefully review loan agreements or other obligations to provide financial information that may be tied to traditional reporting deadlines. The extensions provided by the provincial blanket orders discussed above do not provide relief from disclosure obligations in private agreements and issuers should ensure that they obtain waivers where necessary if disclosure will be delayed in such situations as a result of COVID-19.

Gowling WLG is a full service law firm with offices across Canada, the U.K. and Europe. In response to COVID-19, Gowling WLG has established a multi disciplinary committee to provide material of relevance to our clients.