Issuers foreseeing inability to meet deadlines for financial statements can apply for MCTOs
Given the COVID-19 pandemic, issuers may be unable to file annual or interim financial statements on or before the deadline. In light of this, the Canadian Securities Administrators (CSA) suggested that such issuers consider applying for a management cease-trade order (MCTO).
An MCTO may be issued by a regulator instead of a failure-to-file cease-trade order, with the MCTO effectively preventing securities trading by certain officers and directors of the reporting issuer. The MCTO also requires the issuer to follow alternative information guidelines until the necessary documents have been filed.
The criteria for an MCTO to be issued can be found in National Policy 12-203 Management Cease Trade Orders (NP 12-203).
According to the CSA, an MCTO issued under these special circumstances will not be considered required disclosure in future documents. Moreover, while the issuer is normally given a two-week period before the deadline for the required filings to apply for an MCTO, in light of COVID-19, the CSA will try to give leeway for shorter periods, if needed.
The CSA also recommended that issuers contact their principal regulators if they have other concerns in relation to expected changes following the COVID-19 outbreak.
B.C. Securities Act amendments
Over in B.C., unprecedented amendments to the Securities Act, RSBC 1996, c 418 are scheduled to take effect on Mar. 27.
Introducing over a hundred changes to the legislation, it enhances and expands the British Columbia Securities Commission (BCSC)’s enforcement and collection powers, which will now include “mandatory minimum jail sentences for certain types of fraud, increased penalties for certain types of misconduct, new prohibitions on false or misleading statements and tighter rules around promotional activities.”
These extensive amendments aim to equip the BCSC with the powers needed to safeguard investors, as well as to modernize the securities regime and harmonize it with other jurisdictions in the country. The changes will also enable the BCSC to regulate more types of misconduct, to go after more wrongdoers and to more effectively freeze assets and collect financial sanctions.
“These changes give us powerful new tools to help us collect money from wrongdoers and return funds to victims,” said Brenda Leong, chairperson and chief executive officer of the BCSC.
“With the new powers for the B.C. Securities Commission coming into effect, people can feel confident knowing that B.C.’s investment markets are protected by the strongest enforcement powers in Canada,” said Carole James, Minister of Finance of British Columbia.