NATIONAL POLICY 12-202
REVOCATION OF A COMPLIANCE-RELATED CEASE TRADE ORDER
Part 1 Introduction
This policy provides guidance for issuers that are subject to a CTO (as defined below) issued as a result of failing to comply with continuous disclosure requirements.
This policy explains what an issuer should do to apply for a partial or full revocation of a CTO. It describes what the issuer should file, the general type of review that the securities regulatory authorities (or "we") will perform, and explains some of the factors that we will consider when determining whether to grant a full or partial revocation of the CTO.
Although this policy provides guidance to issuers applying for a revocation order, the policy also applies, where the context permits, to a securityholder or other party applying for a revocation order.
Part 2 Definitions
In this policy:
"annual meeting requirement" means the requirement in applicable corporate legislation or any equivalent non-corporate requirement to hold an annual meeting of securityholders;
"application" means an application for a partial or full revocation of a CTO submitted to the applicable jurisdictions (see Appendix A for section references); in British Columbia, if the CTO has been in effect for 90 days or less, the filing of the required continuous disclosure documents constitutes the application;
"CTO" means a cease trade order issued against an issuer or its management or insiders prohibiting trading in the securities of the issuer as a result of a failure to comply with continuous disclosure requirements;
"MD&A" means management's discussion and analysis as defined in National Instrument 51-102 Continuous Disclosure Obligations;
"MI 52-109" means Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings;
"MRFP" means management's report on fund performance as defined in National Instrument 81-106 Investment Fund Continuous Disclosure; and
"partial revocation order" means an order that permits one or more issuers or individuals to conduct specific trades when a CTO is in effect.
In Quebec, "trade" is not defined in the Securities Act ("QSA"). This policy covers all securities transactions that may be the object of an order provided for in paragraph 3 of section 265 QSA.
Terms defined in National Instrument 14-101 Definitions have the same meaning in this policy.
Part 3 Qualification and Criteria for Revocation
3.1 Full revocations
(1) Filing requirements
Generally, we will not exercise our discretion to grant a full revocation order, subject to subsections 3.1(2) and 3.1(3), unless the issuer has filed all of its outstanding continuous disclosure. The most common deficiencies relate to disclosure required under:
(a) National Instrument 51-102 Continuous Disclosure Obligations;
(b) Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings;
(c) National Instrument 81-106 Investment Fund Continuous Disclosure;
(d) National Instrument 43-101 Standards of Disclosure for Mineral Projects;
(e) National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities;
(f) Multilateral Instrument 52-110 Audit Committees or BC Instrument 52-509 Audit Committees, as applicable; and
(g) National Instrument 58-101 Disclosure of Corporate Governance Practices.
(2) Exceptions to interim filing requirements
In exercising our discretion to revoke a CTO, we may elect not to require the issuer to file certain outstanding interim financial statements, interim MD&A, interim MRFP or interim certificates under MI 52-109, subject to subsection 3.1(3), if the issuer has filed:
(a) all outstanding audited annual financial statements, annual MD&A, annual MRFP and annual certificates under MI 52-109 required to be filed under applicable securities legislation;
(b) all outstanding annual information forms, information circulars and material change reports required to be filed under applicable securities legislation; and
(c) all outstanding interim financial statements (which include the applicable comparatives from the prior fiscal year), interim MD&A, interim MRFP and interim certificates under MI 52-109 for all interim periods in the current fiscal year required to be filed under applicable securities legislation.
(3) Exceptions to annual filing requirements
In certain cases, an issuer seeking a revocation order may consider that the length of time that has elapsed since the date of the CTO may make the preparation and filing of all outstanding disclosure impractical, or of limited use to investors. This may particularly apply to disclosure for periods that ended more than three years before the date of the application, or periods prior to a significant change in the issuer's business. An issuer seeking a revocation order in these circumstances should make detailed submissions explaining its position. In appropriate cases, we will consider whether the filing of certain outstanding disclosure might not be necessary as a precondition of a revocation order. The factors we may consider include:
(a) age of information to be contained in the continuous disclosure filing -- information from older periods may be less relevant than information from more recent periods;
(b) access to records -- lack of access to records may hinder compliance with some filing requirements;
(c) activity during the period -- if an issuer was inactive or changed its business at any time while it was cease-traded, disclosure of information from or prior to this time may be less relevant;
(d) length of time the CTO has been in effect; and
(e) whether the historical disclosure relates to significant transactions or litigation.
We generally consider that disclosure for periods within the most recent three financial years of the issuer provides useful information for investors. We generally do not consider the time and cost required to prepare disclosure to be a compelling factor in our determination of the disclosure to be provided in connection with an application to revoke a CTO.
