COVID-19: Canadian capital markets & securities considerations

March 20, 2020 | Lawrence D. Wilder, Rory Godinho, Jonathan Tong, Abid Ahmed


On January 30, 2020, the World Health Organization (“WHO”) declared the COVID-19 strain of coronaviruses (“COVID-19”) a public health emergency. The outbreak was officially classified as a pandemic by the WHO on March 11, 2020. Given the significant impact of COVID-19 on the global economy, reporting issuers in Canada are urged to be mindful of their ongoing corporate governance requirements and continuous disclosure obligations.

A. Disclosure

On March 18, 2020, the Canadian Securities Administrators (“CSA”) announced temporary relief for certain regulatory filings required to be made on or before June 1, 2020, providing issuers with a 45-day extension for their periodic filings. An exhaustive list has not yet been provided by the CSA, but filings subject to relief include financial statements, management’s discussion and analysis (“MD&A”), management reports of fund performance, annual information forms (“AIF”), technical reports and certain other filings. Issuers relying on this exemption will not need to file applications for management cease trade orders, subject to their compliance with the conditions of the CSA’s relief.

While the CSA’s announcement is certainly welcome news, issuers must consider the impact of the macroeconomic risks posed by COVID-19 on their continuous disclosure. In Canada, pursuant to National Instrument 51-102 (“NI 51-102”), continuous disclosure requirements fall into one of two broad categories: (1) periodic disclosure; and (2) event-driven disclosure.

1. Periodic Disclosure

Forward Looking Information & Future-Oriented Financial Information

Issuers are required to disclose both forward-looking information (“FLI”) and future-oriented financial information. As an example, an issuer’s MD&A should disclose trends and risks reasonably likely to affect the issuer’s financial statements in the future. Similarly, an issuer’s AIF discloses material information about an issuer, as well as the historical performance and possible future developments of its business.

Given that any FLI disclosed to the public must have a reasonable basis, issuers are urged to assess the impact COVID-19 may have on their business and financial information. If material FLI disclosed in a previous MD&A (or similar disclosure document) was based upon certain assumptions that no longer apply, an issuer may withdraw its former statements. In doing so, the issuer must discuss the events and circumstances that led to the decision to withdraw the material FLI.

In light of recent developments related to COVID-19, issuers should consider re-evaluating key assumptions in their disclosure relating to, among other things, the below listed factors and to withdraw or amend previously disclosed FLI as applicable:

  • Loss of Liquidity. Issuers may encounter liquidity issues due to market trends that may undermine previously disclosed forward-looking statements. This may further adversely affect plans for upcoming acquisitions.
  • Disruption of Supply Chains. Issuers that rely on suppliers in COVID-19 impacted countries may experience disruptions in the supply of inventory, equipment or services. Moreover, possible trade restrictions may affect an issuer’s inventory supply or key capital assets, and consequently alter its projected growth.
  • Reduced Demand. Issuers operating in the travel and hospitality industries have seen significant drops in revenue as a result of COVID-19 and related travel bans.

Risk Factors

Disclosure documents such as MD&As and AIFs require issuers to disclose risks that the issuer reasonably believes will materially affect the issuer’s performance. A significant number of issuers have already begun including COVID-19 as a risk factor. Issuers that have not already done so should consider whether the risk factors contained in their respective continuing disclosure documents properly address the risks facing their business due to the pandemic. To date, examples of risks disclosed by issuers include the following:

  • Quarantine Measures. As an employer, issuers have statutory obligations relating to the health and safety of their employees. In fulfilling these obligations, many companies have implemented quarantine measures to limit their employees’ exposure to the virus. Such measures may have a significant impact on business performance.
  • Material Contracts. Termination and/or changes to material contracts due to market instability or the triggering of a force majeure clause. Miller Thomson’s discussion of this particular risk can be accessed here: “Coronavirus (COVID-19): Implications on performance under commercial contracts
  • Consumer Confidence. Consumer confidence may be lowered due to the assets of an issuer being located in an area directly affected by COVID-19. Such a loss in confidence may negatively affect revenue as well as certain intangibles like brand value.
  • Interest Rates. Interest rates may fluctuate as a result of market instability. This may pose a risk for issuers that are significantly leveraged or seeking to refinance.

If a significant risk is identified, issuers should consider filing a Form 51-102F3 Material Change Report (“MCR”).

2. Event-Driven Disclosure

Material Change Reports

Reporting issuers are required to disclose any material change in their business immediately. While a bright-line test has not been prescribed, a material change under Canadian securities law is generally considered to include any change in the business, operations or capital of the issuer that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the issuer. For example, American Hotel Income Properties REIT LP (“AHIP”) filed a MCR on March 12, 2020, rationalizing the 29.6% reduction in AHIP’s monthly US dollar cash distribution as a means of retaining US$15M in capital in order to, among other things, mitigate the potential impacts of COVID-19.

However, an exception to the standard material change disclosure requirements is an external event of a political and/or macroeconomic scale that affect most issuers in a particular industry.[6] Therefore, issuers should assess whether changes related to COVID-19 have any unique effect on the issuer or can reasonably be deemed to have equal or similar effects on other industry participants.

B. Electronic / Virtual Securityholder Meetings

In light of the social distancing measures and travel restrictions that have been implemented to combat COVID-19, many issuers have begun contemplating holding their securityholder meetings (“Meetings”) remotely through electronic means.

Conducting Meetings by means of electronic or telephonic means is permissible for companies incorporated in Ontario, while companies incorporated federally or in Alberta may require express permission in their by-laws to do so. In British Columbia, Meetings need to be set in a physical location; however, if all securityholders and proxyholders are able to communicate by telephone or electronically, the Meeting is deemed to be held at the location specified in the notice of the Meeting. Furthermore, non-incorporated issuers, such as real estate investment trusts, are advised to review their declarations of trust to determine whether they are permitted to hold Meetings remotely through electronic means.

Moreover, Canadian corporate statutes diverge in terms of what level of participation is necessary to deem a securityholder present at an electronic Meeting. While in Ontario, securityholders merely need to have an ability to vote at a Meeting or to establish a “communication link” to the Meeting,[7] federal law requires more. The Canada Business Corporations Act (the “CBCA”) explicitly requires that the electronic means of communication (such as Zoom) must permit all participants to communicate adequately with each other during the Meeting.[8] Issuers should take appropriate measures to ensure such capabilities are available, as the inability of a securityholder to participate electronically may lead to grounds for an oppression action or the annulment of the Meeting.[9]

Any board of directors that wishes to convene an electronic meeting is advised to consult with their legal counsel and review their issuer’s by-laws to determine whether or not such a meeting is permissible. If an issuer’s by-laws do not permit an electronic meeting, accommodation may be sought by way of a court order.[10] However, issuers should be mindful that such an order may prove difficult to obtain in short order given the recent suspension of court operations in a number of jurisdictions, such as Ontario. As such, issuers are advised to practically assess the risk of proceeding with an uncontested electronic or virtual Meeting when their incorporating documents (or declaration of trusts) are silent or vague on the matter.

Lastly, issuers contemplating holding a virtual meeting are cautioned to inform their transfer agent as soon as possible should they decide to do so. Broadridge Financial Solutions and Lumi Global, the two technology providers of virtual meetings services in Canada, have advised of increasing demand for their services. Issuers that have already filed their Meeting materials may also be required to reprint them, adding to the myriad of considerations arising from the COVID-19 outbreak.

Procedural Considerations

On March 20, 2020, the CSA provided further guidance to issuers looking to change the date, time or location of an in-person Meeting, as well as issuers planning to conduct virtual or electronic Meetings.

The CSA advised that any issuer looking to change either the date, time or location of its in-person Meeting as a result of COVID-19 should consider disclosing the possibility of such changes in its Meeting materials. Issuers that have already sent and filed such materials can notify securityholders of the change without sending updated materials subject to the issuer:

  • issuing a news release announcing the change(s);
  • filing the news release on SEDAR; and
  • taking all reasonable steps to inform all parties involved in the proxy voting infrastructure of the change (i.e. intermediaries, transfer agents and proxy service providers).

The CSA further advised that it expects issuers planning to conduct virtual or electronic Meetings to:

  • provide timely notice of such plans to securityholders, the parties involved in the proxy voting infrastructure and other market participants; and
  • disclose the logistical details of the Meeting, including clear directions on how securityholders can remotely access, participate in, and vote at the Meeting.

If an issuer has not yet sent and filed its Meeting materials, the foregoing disclosure should be included. However, if the issuer has already sent and filed its materials, the issuer does not need to provide additional materials or update its existing materials solely for the purpose of switching to a virtual or electronic Meeting, as long as the issuer follows the above-listed steps for announcing a change in the date, time or location of the Meeting.

Finally, the CSA cautioned that issuers involved in proxy contests, holding special Meetings for merger and acquisition transactions, or obtaining securityholder approval for transactions under Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions should contact their principal regulator to discuss what steps would be appropriate in those circumstances.


This publication is intended to be a summary of the applicable legal considerations and not legal advice for any specific issuer. Issuers are encouraged to contact a member of Miller Thomson’s Capital Markets and Securities Group for specific advice.

Miller Thomson is closely monitoring the situation around the COVID-19 pandemic to ensure that we provide our clients with the appropriate support in this rapidly changing environment. For additional information, please see our COVID-19 resources page.


This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

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