registrant spending time in responding to
issues that have been resolved or were
changed months ago. We believe requiring
OSC service standards for compliance
reviews would allow a better understanding
of timing.
Electronic Document Filing
The OSC should consider expanding the
electronic portal to allow registrants to file
documents requested by the OSC for
compliance reviews and sweeps. This would
allow a more secure and efficient method of
providing documents requested by OSC
staff.
Registrant Relationship Model
The OSC may want to consider implementing a relationship model whereby registered firms have a dedicated OSC staff
member that is assigned as a resource for
the registrant. Among other things, the
staff member can help coordinate reviews
including those from other jurisdictions.
This model already exists in other jurisdictions and is used by IIROC.
2. Are there ways in which we can provide
greater certainty regarding regulatory
requirements or outcomes to market
participants?
Definition of Significant Deficiency
Defining “significant deficiency” in the
context of compliance reviews would
provide registrants with some certainty.
While the PCMA advocates a materiality
filter, when nine of ten deficiencies are
deemed a significant deficiency, it is hard
to determine how the term is being applied
by OSC staff.
Publishing Registration Exemptions
Exemptions from proficiency are granted
in registration applications on a regular
basis but these decisions are not publicly
available. Publishing the types of
proficiency exemptions that have been
granted would be helpful.
Consistency
24 THE PRIVATE INVESTOR | FALL+ WIN TER 2019
PCMA members have reported recent
conflicts between an OSC staff notice and a
registrant outreach presentation on
whether coaching recreational sport teams
is an OBA that needs to reported.
PCMA members raise concerns about
consistency in compliance field reviews
where it appears different examiners have
different standards. As a result, a practice
which was previously reviewed and
accepted is now is labelled a deficiency or
significant deficiency. This leads to
uncertainty and could have cost implications. Having an OSC relationship contact
staff member as noted under the response
to question 1, may help reduce inconsistencies registrants experience and improve
regulatory outcomes.
Reconstituting the OSC’s Exempt
Market Advisory Committee
We found the Exempt Market Advisory
Committee was helpful and useful to both
industry and the OSC. We note the Alberta
Securities Commission also established an
Exempt Market Dealer Advisory Committee
and it has been operating for a number of
years.
A significant amount of capital is raised by
EMDs across Canada and it is a unique
registration category. The OSC and CSA
members are interested in increasing
compliance and achieving desired regulatory outcomes in relation to the exempt
market. We recommend the OSC reconstitute EMAC as a means to achieve these
objectives. The Registrant Advisory
Committee is too broad to adequately
address the unique issues in the private
capital markets.
3. Are there forms and filings that issuers,
registrants or other market participants
are required to submit that should be
streamlined or required less frequently?
Annual Filing for Certain Changes
An annual filing for Form 45-106F1 –
Report of Exempt Distribution for all types
of exempt securities should be considered.
The CSA currently allows investment funds
distributed under prospectus exemptions
to file annually but all other exempt
distributions have to be filed within 10
calendar days and depending on the
jurisdiction of distribution, this may need
to be filed three different ways. This is
costly and time consuming. We understand
that this would be a CSA effort and not
solely the OSC.
NIL Flings
NIL filings for anti-money laundering and
terrorist financing forms should be
eliminated or reduced to an annual filing.
We realize this is a Ministry of Finance
requirement.
4. Are there particular filings with the
OSC that are unnecessary or unduly
burdensome?
We have noted some of these burdensome
filings in questions 1 and 3 above, and
believe that a materiality filter would be
useful.
Report of Exempt Distribution
The Form 45-106F1 is highly burdensome
as noted under question 3 and made more
so as it does not cross reference the
exemption definitions in the Ontario
Securities Act. We have members that have
had many calls to resolve these issues with
the OSC.
Opening Audited Financial
Statements
Requiring audited financial statements for
issuers that have just started to raise
capital (such as private equity funds) and
offer securities under the Offering Memorandum Exemption, section 2.9 of NI
45-106, is unduly burdensome from both a
time and cost perspective. For issuers that
have just commenced operations and are
starting to raise capital, the cost of
preparing and auditing essentially seed
capital does not provide any protection or
benefit to potential investors and adds
costs the issuer which ultimately affects
investors returns. We recommend the OSC
