Canadian securities regulators have decided not to go ahead with a proposed separate set of disclosure and governance requirements for venture issuers.
The Canadian Securities Administrators (CSA) said Thursday it will not be pursuing implementation of a proposed National Instrument 51-103 Ongoing Governance and Disclosure Requirements for Venture Issuers (NI 51-103) that would have created a new parallel regulatory regime for venture issuers, in an effort to streamline the disclosure and governance requirements of smaller firms.
The CSA says that it decided against adopting the new regime after reviewing the comments on its proposals, noting that while those comments supported aspects of the proposals, they also “raised significant concerns about the burden that transitioning to a new regime and having a mandatory annual report would place on venture issuers.”
Investor advocates were also concerned that the new regime would compromise investor protection, and there were concerns that creating a two-tier regime could have perverse effects, such discouraging firms from graduating out of venture status, and exacerbating the perception that venture firms are riskier.
The new regime was first proposed back in 2011, following consultation that were carried out the previous year, which put forth ideas such as scrapping interim financial report requirements, streamlining annual requirements, and doing away with business acquisition reports, while also enhancing material change reporting and introducing new corporate governance requirements. The CSA issued a revised proposal last year in response to the first round of comments on its plans, backing away from the proposal to eliminate interim financials, among other revisions to its original vision.
The CSA notes that it is considering implementing some of the elements of its proposal as part of the existing regime for venture issuers. Any amendments would first have to be published for comment.