The CSE Proposes Certain Updates Relating to Corporate Governance and Emerging Markets Issuers

On October 20, 2017, the Canadian Securities Exchange (the “CSE”) published for comment certain amendments (the “CSE Notice”) to CSE Policy 4 - Corporate Governance and Miscellaneous Provisions (the “CSE Policy 4”) which would effectively codify existing or common best practice. The new CSE Policy 4 would apply to issuers currently listed on the CSE or those applying to list on the CSE (a “CSE Issuer”).

The new CSE Policy 4 would require CSE Issuers to have a CEO and CFO (with each office held by held by separate individuals), and a corporate secretary, and would also impose a proficiency requirement for CFOs. In addition, directors, officers and management of a CSE Issuer would be required to demonstrate adequate public company experience and relevant experience and expertise in the industry and jurisdiction in which the CSE Issuer operates (including language skills and knowledge of local laws).

In addition, the new CSE Policy 4 would include guidance for CSE Issuers having their principal business operations or operating assets located in certain foreign jurisdictions (regions such as Asia, Africa, South America and Eastern Europe) based on the previously-issued guidance of the Ontario Securities Commission (the “OSC”) with respect to issuers operating in so-called “emerging markets” jurisdictions (the “OSC Guidance”). The new CSE Policy would essentially require such CSE Issuers to review and address certain areas of concern relating to their governance practices and disclosure requirements as set out in the OSC Guidance. A CSE Issuer operating in any such jurisdictions would be required to provide a title opinion or other legal opinion confirming that it holds the licenses, permits, or approvals necessary to operate in the jurisdiction. Risks disclosure in a CSE Listing Statement and steps taken to mitigate such risks would be required addressing the areas of concern as set forth in the OSC Guidance.

For CSE Issuers with an audit committee comprising three members it would be required that all members be “financially literate” (or a majority thereof if more than three members). CSE Issuers would be required to include summary disclosure in the CSE Listing Statement of the steps taken in selecting an external auditor and the procedures in place to ensure the audit committee can effectively evaluate the audit process.

The CSE Notice states that the proposed new CSE Policy 4, expected to come into effect on December 4, 2017, reflects current practice at the CSE and incorporates similar existing requirements of other Canadian exchanges. Any comments to the proposed new CSE Policy 4 should be sent in writing to Mark Faulkner, Vice President, Listings and Regulation at the CSE no later than November 20, 2017, with a copy to the OSC, Market Regulation Branch.

For further information about this Client Bulletin, or questions about CSE Policies, listing requirements of the CSE and/or disclosure obligations, please contact John Carron ( and/or Robert Eberschlag (

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