Securities regulation amendments set to be instituted this week could help ease the disclosure burden borne by the more than 2,100 small and medium-sized venture exchange companies in Canada.
But it remains to be seen whether the changes will provide prospective investors with the clarity they need to make informed investment decisions, especially in light of concerns raised last week in Business in Vancouver over many companies listing on the TSX Venture Exchange (TSX-V).
The Canadian Securities Administrators (CSA) changes are aimed at streamlining regulatory obligations for TSX-V and Canadian Securities Exchange listing companies so they can focus more resources on building their businesses and eventually graduate to the Toronto Stock Exchange and other senior markets.
The amendments allow venture companies to file quarterly highlights reports that address market issues relevant to shareholders and prospective investors rather than the far more prescriptive management discussion and analysis reports required now. The changes also reduce the number of company executives who must file compensation disclosure forms. To help improve audit integrity, the CSA amendments require that two of a company’s three-member audit committee be independent. Previously, two of three could be from a company’s executive ranks.
Streamlining listing requirements should help reduce the likelihood of bureaucracy suffocating promising venture companies. That would be good news for B.C., because junior mining companies, most of which are based in this province, make up close to 60% of the TSX-V.
But as revealed in “Bear market mauls venture exchange” (BIV issue 1338; June 23-29), a lot of TSX-V companies have little chance of long-term survival, regardless of how stringent their reporting requirements are.
Many should be delisted.
Therefore, in addition to the CSA amendments, more needs to be done to raise the venture exchange standards bar and eliminate the corporate deadwood undermining the integrity of viable enterprises that need the oxygen of investor money to survive and grow.
