The Ontario Securities Commission has issued an FAQ for insiders who wish to establish an “automatic securities disposition plan” (an ASDP) with their broker.

These types of plans typically involve an insider instructing a broker to sell securities from the insider’s holdings in accordance with a pre-arranged set of instructions, it notes. The plans typically contemplate that the broker will continue to sell the securities regardless of whether a “blackout period” established by the issuer may be in effect and regardless of whether the insider may be in possession of material undisclosed information about the issuer at the time of the sale, the OSC explains.

The OSC says that it is issuing this notice in response to a number of enquiries on behalf of insiders who wish to establish an ASDP with their broker. The notice represents OSC staff’s views on the interpretation of certain requirements of Ontario securities law that apply to ASDPs.

The OSC notes that this notice is intended to be temporary, pending the development of a Canadian Securities Administrators Staff Notice in relation to ASDPs and similar plans. The OSC expects that the proposed CSA Staff Notice will also address additional questions, such as the application of certain requirements of Canadian securities legislation to insiders who wish to establish a managed account where full discretionary authority over the securities in the account rests with the manager of the account. Questions relating to managed accounts are beyond the scope of the OSC notice.