Canada will emerge from the “crisis” of investor confidence with a regulatory regime that is more robust and better able to ensure markets are fair and aboveboard, says Ontario Securities Commission chair David Brown.

Speaking to the Canadian Society of New York today, Brown said Canadian rules to foster investor confidence will be comparable to those adopted in the U.S.

“Out of this crisis is emerging a regulatory regime that is far more robust, and better able to ensure markets that are fair and aboveboard. In Canada, we are dealing with the same issues that Sarbanes-Oxley and NYSE listing proposals are addressing here. We are doing it in a way that is made-in-Canada and right for the Canadian market.
“And we are doing it in a way that is every bit as robust as it is being done in the United States.”

North American markets are, “too integrated for Canadians to think that we could simply ignore a set of new, robust market standards in the United States, as though our markets have no relationship with each other,” Brown said.

He noted that on June 27, the OSC will introduce three new rules for comment, dealing with: CEO and CFO certification of annual and interim disclosures; the role and composition of audit committees; and support for the work of the Canadian Public Accountability Board in its oversight of auditors of public companies. The certification rules will apply to all firms, regardless of size. But, some parts of the audit committee rules will not apply to smaller issuers.

Brown said the rules will be accompanied by a rigorous cost-benefit analysis, and that they will probably be implemented by fall 2004.

Although he did not name B.C., he said only one of the 13 provincial and territorial regulators is still holding out in opposition to these plans. “Indeed, support for a robust regulatory approach is tremendous across Canada. Canadian market participants want to know that corporate financial statements mean what they appear to mean, that auditors are responsible to shareholders, and that someone is examining the examiners – or in this case the auditors. Canadian listed companies realize that their ability to raise capital – in New York, Europe, or even in Canada – depends largely on the degree of respect earned by Canadian regulation and the Canadian market.

“These three rules satisfy these concerns,” he said. “They are as robust as the rules here in the United States. We believe they will be as effective as the U.S. rules in restoring investor confidence. But they are Canadian rules, with input from Canadian participants, to deal with unique Canadian circumstances.”