By Danica Bennewies
Another week is coming to a close, which means its time for another installment of Friday Finds. For our new readers, this is the weekly series on the CBLB where we round up five of the top corporate and securities law news stories from the past week that were making headlines. Keep reading to find out what stories grabbed our attention this week.
First up, we have some legislative updates. Starting in 2020, public corporations governed by the Canadian Business Corporations Act (CBCA) will be subject to new diversity disclosure requirements at their annual meetings. The federal government has been taking steps to increase diversity on the boards of Canadian companies. In line with these efforts, beginning on January 1, 2020, the CBCA will require certain corporations to disclose to shareholders the number and percentage of women, visible minorities, Indigenous peoples and people with disabilities on the corporation’s board and in its senior management. Additionally, each CBCA corporation will have to disclose whether or not it has adopted a written diversity policy and provide a summary of this policy along with an update on its progress in achieving the policy’s objectives. These reforms align the CBCA with existing Canadian securities laws that require disclosure about women on boards and in senior manager positions. However, the CBCA reforms go even further by including the other three designated groups and by not granting exemptions for venture issuers.
Speaking of annual meetings, in industry news, a group of unhappy shareholders are requesting a re-do of their annual general meeting (AGM). This week, shareholders at Aimia Inc. have been expressing their displeasure with how last month’s AGM was run. The group, which is being referred to as the Aimia Shareholders for Accountability, say that the company’s AGM was “plagued with irregularities” and “outrageous conduct”. This apparently included the chairman refusing to conduct votes or take questions and the forcible removal of one shareholder that attempted to speak out. In an email response to the shareholders’ displeasure, Aimia insisted that the meeting was run in accordance with the relevant rules and called the idea of re-do “redundant”. Members of the shareholder group were not placated by this response. One shareholder, Charles Frischer, says that he plans to call for a special meeting in 21 days if Aimia declines to formally respond to his request for a do-over AGM.
In enforcement news, on Wednesday the Ontario Securities Commission (OSC) dismissed an appeal from a former rep regarding sanctions imposed against him by the Investment Industry Regulatory Organization of Canada (IIROC). Andrew Paul Rudensky was formerly a rep with the wealth management firm Richardson GMP. In 2018, IIROC found that Rudensky took part in “personal financial dealings” with a client and mislead the firm, violating IIROC’s rules. As a result, Rudensky was suspended for two years and was also given monetary sanctions. On appeal, Rudensky argued that IIROC erred in both its findings and the size of the penalties imposed. Despite these arguments, the OSC panel ultimately reached the same conclusion as IIROC and found that there was no reason for interfering with the original panel’s ruling.
Over in the United States, the Securities and Exchange Commission (SEC) approved its first Regulation A+ digital token offering. On Wednesday, Blockstack received approval from the SEC to make a US$28-million public offering. While this sounds similar to an IPO, there are some key differences between the two types of public offerings. RegA+ offerings are smaller, capped at US$50-million for a 12-month period, and have fewer disclosure requirements compared to IPOs. Additionally, investors in Blockstack don’t get an ownership stake in the company. Instead, what they purchase are utility tokens that can be used as currency on the Blockstack platform. Blockstack’s digital token offering was the first of its kind and may give other young cryptocurrency companies a new approach to fundraising. In fact, another crypto-based startup called YouNow Inc. also filed for a RegA+ offering this week, suggesting that we may see more of this type of fundraising in the future, particularly since the SEC has been cracking down on ICOs, claiming that they violate investor protection laws.
In contrast, Facebook’s cryptocurrency, Libra, had a tough week. On Thursday, Jerome Powell, Chairman of the US Federal Reserve, expressed a number of concerns with Libra and urged Facebook to stop the project until they are addressed. Issues surrounding privacy, money laundering, consumer protection and financial stability were among the concerns that Powell highlighted for the US House of Representatives Financial Services Committee. Following his testimony to the Committee, the stock prices of major cryptocurrencies, including Bitcoin and Ethereum, all took a hit. Powell isn’t the only one with concerns about Libra. The cryptocurrency has drawn the scrutiny of policymakers and financial regulators around the world, who have raised similar worries to Powell. We’ll have to wait and see whether Facebook addresses these issues and pushes ahead with its project, or if this is the beginning of the end for Libra.
That wraps up this week’s Friday Finds! Thanks for getting caught up with us on the CBLB. We’ll be back again next week with more of the biggest corporate and securities law news stories.