Canada's main equities watchdog will unveil new accounting rules at the end of next week that will require executives to sign off on financial reports and outline who can sit on audit committees, Ontario Securities Commission chairman David Brown said on Wednesday.
“The rules are as robust as Sarbanes-Oxley, but address unique Canadian concerns,” Brown said in a speech to the national press club in Ottawa. “They have near-unanimous national backing, with 12 of our 13 provincial and territorial securities regulators joining in support.”
A lack of audit controls was widely blamed for the collapse of U.S. energy trader Enron Corp., which blindsided markets and spurred major accountancy reforms in North America and Europe, including last year's passage of the sweeping U.S. corporate governance reform act known as Sarbanes-Oxley.
British Columbia's regulator wants some of the rules to be voluntary rather than mandatory, Brown said, because of a government edict to cut the regulatory burden in that province by a third.
The Ontario Securities Commission, which oversees the Toronto Stock Exchange, the country's largest equities market, will publish the rules on executive certification of company results, composition of audit committees and means to add “more teeth” to the newly formed Canadian Public Accountability Board — an auditor supervisory agency — for comment on June 27.
The consultation period will last three months, unless major objections requiring revisions are made. The rules then go to Ontario's finance minister for approval.
The new regulations should be implemented between the spring and fall of next year, Brown said, adding that the British Columbia regulator's hesitancy to join was not insurmountable.
“I'm hoping very much that it's solvable… We certainly left the door open for them,” Brown said. “There are virtually no public companies in Canada that won't be covered by this scheme, even if B.C. decides to stay out.”
Ontario's initiative will cover most stocks in Canada because the Vancouver-based Venture Exchange is jointly regulated by the Alberta securities regulator, Brown added.
The TSX and the Venture Exchange, which are both owned by TSX Group, account for about 99 percent of publicly traded companies, a TSX Group official said.