The British Columbia Securities Commission has released for comment Proposed BCI 51-519 Promotional Activity Disclosure Requirements which sets out a framework for required disclosure relating to promotional activities. The proposals stem from problematic promotional activities by certain issuers that were identified by the CSA back in 2018, including campaigns that provided unbalanced or unsubstantiated material claims about reporting issuers. Other concerns expressed related to the lack of disclosure about compensation paid to others for promotional activities, the absence of conflict of interest disclosure, as well as inadequate oversight of promotional activities on behalf of issuers. The proposals would require issuers to include specified information about promotional activities when they are undertaken, such as a description of the compensation paid to third parties, any interest in any security or derivative that is the subject of the promotional activity, and each platform or medium through which the activity is being conducted. Certain of such information must also be provided in response to an inquiry relating to promotional activities when a third party is retained or compensated to conduct promotions. Venture issuers would have additional obligations, such as a requirement to include specific information about promotional expenses in their MD&A if total expenditures on promotional activities exceed 10% of the issuer’s total operating expenses in any annual or interim period. Venture issuers would also have to issue and file a news release that includes specified information if they retain or compensate a person to engage in promotional activity. Certain activities would be excluded from the application of the instrument, including promotional activity conducted by directors, officers and employees (who identify themselves as such), registrants when conducting registerable activities, and activities of investment funds or persons engaged in promotional activity in respect of such funds. If you wish to comment on the proposals, please contact your usual lawyer at AUM Law prior to the deadline of July 26.
May 31, 2021