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Proposed National Policy 51-201/Disclosure standards for public companies

June-18-2001

Area Corporate Finance and Securities, White Collar Risk Management and Investigations

Summary

The Canadian Securities Administrators (the “CSA”) recently released for comment an important draft policy addressing a practice commonly known as “selective disclosure” whereby a public company shares material information with certain market participants, such as research analysts or institutional investors, without publicly disclosing the information. The proposed National Policy 51-201 (the “Policy”) follows the adoption by the United States Securities and Exchange Commission of Regulation FD (“Fair Disclosure”)* last year. In contrast with Regulation FD, the Policy notes that in Canada existing provincial securities legislation dealing with insider trading and tipping sets out a specific and comprehensive code which prohibits selective disclosure. Accordingly, the Policy does not promulgate any new rules but instead describes the existing timely disclosure requirements; provides interpretative guidance on the existing legislative prohibition against selective disclosure; highlights disclosure with a high degree of risk; describes materiality; and provides various “best disclosure” practices that can be adopted by public companies.

National Policy Statement No. 40 - Timely Disclosure would be rescinded when the Policy comes into force.
 

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