Canadian securities regulators provide blanket relief for market participants due to COVID-19

19 March 2020

As the current situation with respect to COVID-19 continues to evolve and businesses work to address the impact this will have, the Canadian Securities Administrators (CSA) are exploring measures to assist with some of the regulatory burden imposed on market participants.

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Recognizing that adherence to the existing compliance regime may prove challenging to market participants that are already dealing with various issues associated with COVID-19, such as office closures, remote working, layoffs and inability to meet contractual obligations, the CSA has announced that it will provide blanket relief extending filing deadlines by 45 days.  This current relief emulates the relief provided by the U.S. Securities and Exchange Commission (SEC) south of the border. Market participants wishing to take advantage of the extension provided by the CSA must comply with the conditions of the relief which are expected to be published soon.

Conditional Temporary Regulatory Relief

The CSA has released an update advising that it is providing blanket relief by way of a 45-day extension for periodic filings normally required to be made by issuers, investment funds, registrants, certain regulated entities and designated rating organizations on or before June 1, 2020. The relief pertains to various filings, including financial statements, management's discussion and analysis, management reports of fund performance, annual information forms, technical reports and certain other filings.

Issuers choosing to rely on this blanket exemption do not need to file an application seeking a management cease trade order, as had been recommended in the previously issued CSA press release dated March 16, 2020, as issuers will not be noted in default. Issuers must comply with the conditions of the blanket relief throughout the period in which they propose to rely on such relief. Further details regarding the blanket relief are expected to be published shortly.

Cross-Border Comparison

Canadian issuers should view this as equivalent comfort compared to the regulatory relief offered by the SEC, which on March 4, 2020, issued an exemptive order that provided issuers an additional 45 days to make various filings that would have otherwise been due between March 1 and April 30, 2020, subject to meeting certain conditions.

Conditions for reliance on the SEC order by an issuer that is unable to meet a deadline as a result of COVID-19 include the requirement to furnish a Form 8-K or Form 6-K that includes a summary of why such relief is required in the issuer's particular circumstances.  It would be reasonable to expect a similar approach to be implemented by the CSA.

Additional Guidance and Updates

The CSA has also acknowledged that some issuers are considering virtual security holder meetings as a response to "social distancing" recommendations. The CSA has expressed support for such measures and has advised that it plans to publish guidance on making changes to annual general meetings as soon as possible.

Additionally, a 45-day extension has been provided on all CSA proposals currently out for comment.

Managing Your Business and Ensuring Compliance

Global reaction to COVID-19 has been remarkable but the situation is evolving daily and regulators face the challenge of having to quickly develop new responses to a unique threat. It is a reality that many issuers acting on the recommendation of government and health advisors will close offices and provide that staff work from home. Transitioning to a remote work environment will challenge most organizations and there are bound to be delays as technical systems are perfected and new work procedures adopted. An extension on filing deadlines will allow issuers more time to ensure that systems of oversight and review are properly applied to new remote work environments. Undoubtedly the rapid decline in share values and commodity prices coupled with the global interruption of business will result in issuers facing enormous challenges in the weeks and months to come beyond timely filing. As the current situation continues to evolve, we expect the CSA, acting with other government agencies, will provide further guidance and perhaps offer more significant relief for market participants.

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.

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