A new national policy dealing with income trusts takes effect immediately, the Canadian Securities Administrators said Friday.
The CSA said it has adopted National Policy 41-201, which provides guidance to market players about income trusts and other indirect offering structures.
“The CSA wants to ensure that everyone investing in income trust offerings has access to sufficient information to make an informed investment decision,” the association said.
“We believe that it is beneficial to express our view about how the existing regulatory framework applies to non-corporate issuers (such as income trusts) and to indirect offerings, in order to minimize inconsistent interpretations and better ensure that the intent of the regulatory requirements is preserved,” it says.
The policy was published for comment in October 2003 and received 24 comment letters. Some changes were made as a result, but not enough to warrant republishing the policy for a further comment period. The CSA plans to revisit the policy in about two years.
Among the changes:
- language has been added to clarify that the policy is not intended to apply to issuers of asset-backed securities or capital trust securities;
- a new section reminding issuers to disclose relevant risk factors in the prospectus;
- a recommendation about the risk factor relating to the potential inapplicability of insolvency and restructuring legislation to trusts;
- removed the recommendation for issuers to include disclosure about the absence of a stability rating, and the reasons for not obtaining one; and,
- a new section relating to MD&A, specifically about recommendations relating to MD&A disclosure about risks and uncertainties, and about distributed cash.
The regulators note that legislative changes in Alberta relating to the concepts of insider and control, as well as unitholder liability, clarify the framework for income trusts in Alberta. Similar legislation is being considered in Ontario and B.C.