The Canadian Securities Administrators have issued proposed amendments to their policy dealing with income trusts.
The CSA originally adopted National Policy 41-201 Income Trusts and Other Indirect Offerings in December 2004. It is now proposing amendments, “that would provide additional clarification and guidance on our views about issues relating to income trusts and other indirect offerings,” it says.
Among other things, the proposed amendments, attempt to set out more clearly the regulators’ expectations regarding the reporting of distributable cash, prospectus offerings and continuous disclosure.
It provides more guidance about the presentation of distributable cash reconciliations, noting, “We believe that these proposed presentation guidelines will improve transparency and will allow investors to more easily compare distributable cash reconciliations among income trusts. We also believe that the proposed disclosure will highlight adjustments that are of a more discretionary nature and that this information is useful to investors in analyzing the anticipated distributable cash amounts, particularly the sustainability of such amounts.”
The guidelines also suggest some ways issuers can prepare their disclosure so that it is more easily compared to other income trusts.
The CSA’s amendments also clarify some provisions relating to corporate governance, and the disclosure of differences between corporate law protections and those provided by an issuer’s declaration of trust. It also reminds issuers that they should exercise caution when selecting a name to ensure that it does not inadvertently suggest that the issuer is an investment fund or mutual fund.
The proposed amendments are being published for a 60-day comment period.
The CSA adds that it recognizes that the federal Department of Finance recently announced proposals that would significantly change the tax treatment of income trusts and other indirect offering structures. “We continue to monitor this development and will continue to consider the impact of these changes on income trusts and other indirect offering structures. Issuers should consider how these changes will impact them and clearly communicate the expected impact to their unitholders,” it says.
CSA proposes changes to income trust policy
Amendments set out expectations regarding reporting of distributable cash, continuous disclosure
- By: James Langton
- January 5, 2007 January 5, 2007
- 13:35