Written by Linda Misetich Dann, Andrew Disipio and Jamie Rooney
As of May 1, 2020, Canadian public companies can take advantage of additional relief measures provided by the Canadian Securities Administrators (CSA). Such temporary blanket relief may be helpful for companies that have delayed their annual general meetings (AGMs) and require additional time to prepare their disclosure documents. Due to the ongoing COVID-19 pandemic, public companies are exempt from certain filing and delivery requirements associated with AGMs. In particular, companies are granted relief with respect to filing executive compensation disclosure and providing investors with copies of their financial statements and management's discussion and analysis (MD&A).
Background to Additional Relief Measures
The CSA has previously issued guidance for public companies conducting AGMs during the COVID-19 pandemic. On March 20, 2020, the CSA sought to assist companies by providing guidance on changing the date of in-person AGMs and conducting virtual or hybrid AGMs. An overview of this guidance can be found in COVID-19 and Annual Shareholder Meetings: Update, which includes a summary of statements from corporate regulators and certain disclosure considerations.
In the ordinary course of business, public companies are required under securities law to meet certain deadlines in providing investors with a management information circular for their AGMs. For non-venture companies, such requirements include filing executive compensation disclosure within 140 days of their year-end. For venture companies, it's 180 days. Additionally, public companies are required to send copies of their annual or interim financial statements and MD&A to investors on request.
Summary of Additional Relief Measures
National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) imposes certain requirements on public companies, including executive compensation disclosure requirements, annual request form requirements and send-on-request requirements. As a result of the CSA's announcement on May 1, 2020, public companies can take advantage of exemptions from NI 51-102, including an exemption from filing their executive compensation disclosure until December 31, 2020. A company must issue a news release in order to rely on this exemption. This relief measure does not set aside the general expectation of the Canadian securities regulators that companies provide investors with adequate time to review executive compensation disclosure before an AGM.
Companies can also rely on the relief measures for flexibility in the delivery requirements set out in NI 51-102, including with respect to requests from investors for certain disclosure documents. Pubic companies are exempt from requirements to send, or send upon the request of an investor, copies of their annual or interim financial statements and MD&A within certain time periods. This flexibility may be relevant for the numerous public companies that have postponed, or may be considering postponing, their AGMs as a result of the COVID-19 pandemic. Notwithstanding this relief measure, investors will still benefit from the same level of disclosure as they would normally receive prior to an AGM.
Public companies must comply with certain conditions in order to rely on these relief measures. The exemptions and conditions are set out in local blanket orders, which are substantially harmonized in jurisdictions across Canada. The Ontario Securities Commission, for example, has made Ontario Instrument 51-504 in order to provide these temporary exemptions from certain requirements of Ontario securities law.
Issuers can view the CSA announcement and are encouraged to contact their principal regulator with any questions. Companies seeking more information on addressing the complex legal issues resulting from the COVID-19 pandemic are encouraged to visit the Bennett Jones COVID-19 Resource Centre.