The purpose of the due diligence plan should be to define the approach to ensure that the prescribed information is included in the prospectus, to review the information provided by the issuer and to verify important material items. The proposed guidelines contain a list of contextual issues that must be considered in the development of a due diligence plan. Records that must be retained should also be reviewed in order to submit due diligence and compliance with the insurer`s own policies and procedures, IIROC requirements and applicable securities legislation. IIROC expects insurers to have written policies and procedures related to the underwriting process, including due diligence. These policies and procedures should recognize the contextual nature of diligence. In addition, the IIROC Dealer Member Rules requires insurers to have a comprehensive and effective supervisory and compliance framework to ensure compliance with guidelines and procedures, IIROC requirements and applicable securities legislation. The supervisory function should be provided by a senior member of the insurer`s investment banking department. Despite the general nature of the proposed guidelines, several practical considerations are agreed in the IIROC proposal. Perhaps the most important practical effect of the proposed guidelines is that complainants` guidelines can be used in cases of misrepresentation of prospectuses or by securities regulators as a standard for assessing the insurer`s duty of care. The proposed guidelines remind insurers that union members are subject to the same liability as the lead insurer for any misrepresentation under securities legislation (subject to legal caps for the amount underwritten). While IIROC recognizes that the proposed guidelines are not intended to duplicate the duty of care between the senior officer and a union member, such a union member should ensure that the chief officer conducted the type of due diligence investigation that the Union member would have conducted on his own behalf as Lead Underwriter. It is recognized that lead underwriter can withstand additional reputational and regulatory risk. It would be reasonable to spend some time before or shortly after the implementation of an offer plan, the volume of due diligence required given the specific characteristics of the issuer and the supply and delineation of the roles of insurers and legal advisors.
It would be unreasonable to rely on standardized checklists to advance the due diligence process. IIROC advises insurers to clearly understand and communicate the line between due diligence and due diligence to ensure that issues that should be considered by insurers are not delegated to the insurer`s advisor. A subpayer should perform the entity`s due diligence in order to understand the issuer`s activities and the key internal and external factors affecting the issuer`s business and to apply its professional judgment to determine which essential facts are independently verified (in accordance with “tipping” restrictions), depending on the circumstances of the offer. It would be reasonable for insurers to review the qualifications of presumed experts based on the expertise, experience, independence and reputation of the expert, and for each union member to receive copies of all letters, opinions or memorandums relating to the insurers` due diligence investigation and invite all union members to participate in Q-A meetings and give them the opportunity to grant them. It would not be reasonable to rely blindly on the work of experts, other third parties or insurers responsible to union members.