CSA Staff Notice 55-317 Automatic Securities Disposition Plans
Part 1 Introduction

Purpose of this Notice*

The purpose of this notice is to set out practices recommended by staff (Staff or we) of the Canadian Securities Administrators (CSA) for issuers and insiders in relation to the establishment, administration and disclosure of Automatic Securities Disposition Plans (ASDPs or plans). Typically, an ASDP is an arrangement between an insider and a dealer or a plan administrator that involves the sale of securities of an issuer over a predetermined period and in accordance with a predetermined set of instructions.

Important concerns with respect to ASDPs have recently been raised, both in terms of good corporate governance and public confidence in the fairness of our capital markets. Insiders generally control the timing of the adoption of ASDPs, which can raise questions about whether the plans are made in good faith and whether insiders are in possession of material non-public information (MNPI) at the time the plans are adopted. Insiders may also generally amend, suspend or terminate plans, which could make it possible to misuse plans.

Staff is providing guidance relating to ASDPs to reduce the potential for improper insider trades under these plans. This guidance can also assist issuers and insiders in managing market perception of insider trades under ASDPs.

This notice does not modify any existing legal requirements or create new ones. Staff notes that there is an insider trading defense or exemption available under securities legislation, where the trade in securities is made under an “automatic plan” entered into prior to the insider acquiring knowledge of MNPI (Legal Defense). Some of the recommended practices outlined in this guidance may be relevant for insiders when considering whether they can rely on the Legal Defense. In addition, in the view of Staff, the processes outlined in this guidance are consistent with the principles of good corporate governance and transparency in connection with the establishment and use of ASDPs and the reporting of trades under the plans.

*This title is provided by Lexata; it is not part of the notice.