Continuous Disclosure
The intent of the new continuous disclosure rules is to:
- Harmonize continuous disclosure (CD) requirements among Canadian jurisdictions;
- Replace most existing local CD requirements;
- Enhance the consistency of disclosure in the primary and secondary securities markets; and
- Facilitate capital-raising initiatives such as an integrated disclosure system.
The rules set out the obligations of reporting issuers, other than investment funds, with respect to financial statements, annual information forms (AIFs), management's discussion and analysis (MD&A), material change reporting, information circulars, proxies and proxy solicitation, restricted share disclosure, and certain other CD-related matters.
Key Changes
We've summarized for you some of the Key Changes:
- The definition of a Venture issuer as an issuer that is not listed on the Toronto Stock Exchange, a US marketplace or a marketplace outside of Canada and the United States;
- The requirement of the following with respect to financial statement information:
- Annual filing deadlines are 90 days after year end for issuers and 120 days for Venture issuers (or for all issuers, the date of filing in a foreign jurisdiction, if earlier);
- Interim filing deadlines are 45 days after the quarter end date for issuers and 60 days for Venture issuers (or for all issuers, the date of filing in a foreign jurisdiction, if earlier);
- Audit Committees are required to review both annual and interim financial statements and the Board of Directors must approve them before they are filed; and
- Issuers are required to disclose either in their interim financial statements or their interim MD&A if their auditors have not reviewed their financial statements.
- The elimination of the mandatory delivery of financial statements and MD&A. Issuers are required to send an annual request form to the registered holders and beneficial owners of its securities in which they can request a copy of the reporting issuer's annual financial statements and MD&A. The issuer is only required to deliver financial information to security holders that request them;
- The requirement of Annual Information Forms (AIFs) for all issuers except for Venture issuers. The definition of an AIF has been expanded to include a 10-KSB filed under the U.S. Securities rules;
- The requirement of the following with respect to Management Discussion and Analysis (MD&A):
- Issuers are required to file both annual and interim MD&As subject to the same filing deadlines as for financial statements, the MD&A must be dated and written in plain language;
- Venture issuers that have not had significant revenue from operations in either of the last two years are required to provide a breakdown of material components of exploration and development expenses, research and development expenses, administration expenses, any other material expenses and additions to deferred expenditures;
- Audit Committees are required to review both annual and interim MD&As and the Board of Directors must approve them before they are filed;
- Expanded disclosure of the following:
- Any forward looking information disclosed in prior MD&A, if, in light of interviewing events and without that discussion, the earlier disclosure could be misleading
Off balance-sheet transactions, if reasonably likely to have an effect on results of operations or financial condition
- Transactions involving "related parties"
- Critical accounting policies (Note Venture issuers are excluded).
- New accounting policies
- Presentation of contractual obligations in a summary, tabular form (Note Venture issuers are excluded)
- Venture issuers that have not had significant revenue from operations in either of the last two years are required to provide a breakdown of material certain costs whether capitalized, deferred or expensed, unless the information is already provided in the financial statement.
- The requirement of Issuers to file documents sent to security holders (where the documents have been sent to greater than 50% of the holders of a class of securities that are held by more than 50 security holders) or filed with the SEC.
For more details, see the Corporate Governance area of our website.
