We use cookies on this site to enable your digital experience. By continuing to use this site, you are agreeing to our cookie policy. close
Focus On
NEW In-House Counsel | Insurance | Intellectual Property | Immigration | Natural Resources | Real Estate | Tax

Securities regulators provide guidance on conflicts of interest

Friday, August 04, 2017 @ 12:32 PM | By Paula Kulig


The securities regulatory authorities in Ontario, Quebec, Alberta, Manitoba and New Brunswick have published guidance on conflict-of-interest transactions.

The guidance, announced by the Canadian Securities Administrators (CSA) on July 27, is contained in Multilateral CSA Staff Notice 61-302, titled “Staff Review and Commentary on Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions."

The notice outlines the approach used to review material conflict-of-interest transactions, including insider bids, issuer bids, business combinations and related party transactions that give rise to concerns regarding the protection of minority security holders, according to a news release issued by the CSA. It also advises market participants of the participating jurisdictions’ views on special committees of independent directors and enhanced disclosure requirements.

"Our regulatory framework for conflict-of-interest transactions is designed to protect minority security holders when a related party of the issuer, who may have superior access to information or significant influence, is involved in such a transaction,” Louis Morisset, CSA chair, and president and CEO of the Autorité des marchés financiers, Quebec’s securities regulator, said in the news release.

The notice describes how staff review conflict-of-interest transactions to assess compliance with Multilateral Instrument 61-101, “Protection of Minority Security Holders in Special Transactions,” including the timing and scope of such reviews, the information gathering process and potential remedies in the event of non-compliance.

It also contains a discussion of staff's views on special committees of independent directors and enhanced disclosure requirements based on the requirements of MI 61-101 and associated guidance, decisions of securities regulatory authorities and issues identified in reviews of material conflict-of-interest transactions. The discussion addresses the role, composition and mandate of special committees, as well as disclosure regarding the background, approval process and fairness opinions for conflict-of-interest transactions.

The CSA, which includes securities regulators from each of Canada’s 10 provinces and three territories, harmonizes regulation for the country’s capital markets and protects investors from unfair, improper or fraudulent practices.