CANADA: Capital Markets Modernization Taskforce Final Report 

Friday February 12 2021

In February 2020, the Ontario government created the Capital Markets Modernization Taskforce to review and modernize Ontario’s capital markets regulatory framework. After extensive stakeholder consultations, the Taskforce finalized its report and delivered it to the Minister of Finance.

The Taskforce submitted its final report to the Minister of Finance, which includes 74 policy recommendations. These recommendations are intended to modernize Ontario’s capital markets and drive innovation, competition and diversity, resulting in job and wealth creation.

The final report contains recommendations on:

• improving regulatory structure to enhance governance
• improving competitiveness through regulatory measures
• ensuring a level playing field between large and small market players
• improving the proxy system, corporate governance and the process of mergers and acquisitions
• fostering innovation
• modernizing enforcement and enhancing investor protection

Amongst the recommendations are decreasing the ownership threshold for early-warning reporting disclosure from 10 to 5 per cent for non-passive investors.

The Taskforce recommends decreasing the shareholder reporting threshold in Ontario from 10 per cent to 5 per cent for non-passive investors. Accordingly, disclosure of significant holdings starting at the 5 per cent level would apply if an investor intends to make a take-over bid, proposes a transaction that would result in the investor gaining control of an issuer, or solicits proxies against any director nominees or corporate actions proposed by the management of an issuer.

These non-passive shareholders who cross the 5 per cent ownership level, or who become non-passive when owning 5 per cent or more of an issuer’s shares, should be required to file a news release and early-warning report disclosing their ownership but not be subject to a moratorium on further acquisitions following the disclosure of their ownership until their ownership increases to the 10 per cent level.

Click on the above link for further information.