The Ontario Securities Commission (OSC) has published a year-end update on its burden reduction efforts for Ontario capital market participants, Reducing Regulatory Burden in Ontario’s Capital Markets, 2019 (the Update).
In OSC Staff Notice 11-784, Burden Reduction (the Staff Notice), published in January 2019 and which began the process, OSC Staff asked for comments from stakeholders. In the subsequent Update, Staff noted that in response they received 69 comment letters and 199 suggestions for improvement. The regulator then grouped this feedback into 38 underlying concerns, of which the regulatory burden reductions (the burden reductions) will address 34.
OSC Staff expects that the burden reductions will assist capital market participants by generally minimizing regulatory delays and reducing the cost of capital. Overall, these steps include: greater transparency surrounding the OSC’s processes with clearer communication from staff, greater clarity and flexibility surrounding the fulfillment of regulatory requirements, less duplication of requirements and form filings and more manageable timelines for certain filings, along with rules and guidance that are easier to understand easier to find on the regulator’s website.
One of the main commitments coming from the OSC in the Update was the development of a regulatory approach that was geared to the size and type of market participant. For example, the regulator expects small and medium-sized companies and registrants will benefit from:
- expanded and improved service standards, particularly in respect of compliance reviews;
- greater support for companies seeking public financing, through a confidential prospectus review process before announcing an IPO or other financing;
- for small registrants, being able, in appropriate circumstances, to hire a Chief Compliance Officer (CCO) who acts in that role for other, unaffiliated registrant firms; and,
OSC staff believes that innovative businesses and startups will benefit from:
- greater flexibility for new business models from OSC Staff in the registration process, resales in the secondary market, who can invest (e.g. individuals with specialized knowledge), and other regulatory requirements;
- for individuals applying to be a CCO, assessments of their qualifications and experience that consider their broader business experience and its alignment with the firm’s business model; and,
- harmonization of the crowdfunding rules across participating CSA (Canadian Securities Administrators) jurisdictions, for startups seeking financing.
Similarly, the regulator also believes that large businesses and market participants will benefit from:
- reduced instances of duplicative filing requirements for investment fund managers due to investment funds and registration rules;
- proposals to codify routine exemptive relief for investment funds;
- measures to facilitate registration of multiple CCOs for large registrants with multiple business divisions;
- a process for registering of Advising and Associate Advising Representatives as Client Relationship Managers; and,
- the ability for public companies to conduct at-the-market offerings without having to obtain prior exemptive relief.
The regulator expects that most of the burden reductions can be achieved within the next year, however, it notes some changes involving legislative amendments or harmonization with other regulators may take longer.
Reducing Regulatory Burden in Ontario’s Capital Markets, 2019 is available for download from the website of the Ontario Securities Commission.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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