OSC Publishes Guide for Issuers Operating in Emerging Markets and provides update on Emerging Markets Review Recommendations

TORONTO – The Ontario Securities Commission today published an Issuer Guide (Staff Notice 51-720), which outlines eight key areas that should be considered by companies operating in emerging markets. The Issuer Guide sets out Staff’s expectations for the directors and management of issuers operating in emerging markets and is designed to highlight areas of risk that require particular focus to address the challenges faced when operating in emerging markets.

The Issuer Guide highlights several areas of risk that may warrant further scrutiny and sets out questions that directors and management should consider. It is intended to clarify existing continuous disclosure requirements and should be considered by companies and boards in assessing risk and complying with securities law.

“We have high expectations for issuers, regardless of where they are located, and look to directors and management to discharge their responsibilities fully,” said Howard I. Wetston, Q.C., Chair and CEO of the Ontario Securities Commission. “This Guide clearly articulates our expectations regarding compliance and we will continue to monitor this area closely in order to protect the integrity of our markets.”

In March 2012, the OSC published Staff Notice 51-719 Emerging Markets Issuer Review, following a review of Ontario reporting issuers listed on Canadian exchanges with significant business operations in emerging markets.

The OSC is working with its regulatory partners in responding to the recommendations in Staff Notice 51-719. Specific next steps include the development of standards for underwriters, improvements to the audit function and enhanced listing processes to address the unique concerns raised by emerging market issuers.

In the coming months, the OSC will continue to work with the Investment Industry Regulatory Organization of Canada as it reviews underwriting due diligence standards to promote industry best practices and standards in this area.

The OSC is working closely with the Canadian Public Accountability Board (CPAB) on issues of common interest, including the opportunity to share information permitted by legislation, and has held discussions with the audit community, CPAB and international securities regulators to address concerns about the use, access and reliance on foreign component auditors work products.

Toronto Stock Exchange and TSX Venture Exchange are currently finalizing additional guidance to address risks associated with listing emerging market issuers, including clarification of the expectations of issuers and the advisory community. The Exchanges expect to publish the new requirements for comment in November.

The OSC is the regulatory body responsible for overseeing Ontario’s capital markets. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.

 

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