Simplifying Interim Reporting For Venture Issuers

January 26, 2016

In response to calls for better balance between quality regulatory reporting and fiscal practicalities for early stage companies, the Canadian securities commissions implemented a number of regulatory changes during 2015 that streamlined or otherwise simplified securities regulatory compliance for venture issuers. One of the major changes was in providing the option for venture issuers to file a Quarterly Highlights report for interim periods rather than the traditional Management Discussion & Analysis (MD&A).

To date, few issuers have taken advantage of this option, which came into effect for year ends beginning on July 1, 2015 or later, although I expect to see more companies adopt this approach when the first quarterly reports for calendar year end issuers come due in 2016. To assist companies in determining whether the Quarterly Highlights option is right for them, I've assembled this post summarizing salient aspects to consider.

What Is The Quarterly Highlights Report?

This report is an optional report that may be filed by a venture issuer without significant revenue in lieu of a full interim MD&A, providing a more concise presentation of the issuer's activity for the period. The availability of this option reflects regulators' sentiment that issuers may be in the best position to understand the needs of their investors and thus enabling issuers to meet those needs while managing regulatory compliance costs.

The content of the Quarterly Highlights should include commentary regarding the issuer's operations, liquidity and capital resources, including the following:

  • An analysis of the company's financial condition, financial performance and cash flows and significant factors that have caused variations in those measures from prior periods;
  • Known trends, risks or demands;
  • Major operating milestones;
  • Commitments, expected or unexpected events or uncertainties that have, or are reasonably likely to have, a material affect on the company's operations, liquidity and capital resources;
  • Significant changes from previous disclosures regarding the company's use of financing proceeds, including an explanation of those variances; and
  • Significant related party transactions that occurred during the period.

Full content requirements can be accessed in section 2.2.1 of Form 51-102F1 Management's Discussion & Analysis.

Which Companies Qualify To Apply The Quarterly Highlights?

This option is available to all venture issuers, which is defined by section 1.1 of NI 51-102 Continuous Disclosure Obligations as a reporting issuer that does not have any of its securities listed or quoted on any of the following:

  • The Toronto Stock Exchange;
  • Aequitas NEO Exchange Inc.;
  • An exchange registered as a “national securities exchange” under section 6 of the 1934 Act in the US;
  • The Nasdaq Stock Market; or
  • A marketplace outside of Canada and the US, except:
    • The Alternative Investment Market of the London Stock Exchange;
    • The PLUS markets operated by PLUS Markets Group plc; and
    • Certain other exchanges identified in exemptive relief orders.

Although the Quarterly Highlights option is available to all venture issuers, larger venture issuers, including those with significant revenue, may decide to continue to file a full interim MD&A as an abbreviated report may not meet the needs of their investors.

What Best Practices Apply To Quarterly Highlights?

It's important that a company's interim and annual reporting contain relevant, timely and understandable information. Best practices to that end apply to the Quarterly Highlights as well as the full MD&A. Key items to consider when preparing these reports may include the following:

  • Present information from management's perspective: this is a fundamental principle in the regulations, the objective of which is to provide the reader with insight into management's decision processes, including the information available to management. A balance must be struck, of course, to avoid revealing strategically sensitive information while still accomplishing this objective.
  • Avoid boilerplate disclosures: it's tempting to simply update the report filed during the last quarter, however this approach seldom results in robust presentation. It's important to report on progress toward plans and objectives disclosed in previous reports and to provide insight into management's plans and strategy for future periods, balancing confidentiality with transparency.
  • Complement and supplement the financial statements: opting to file Quarterly Highlights doesn't preclude a company from filing interim financial statements and it's important that this report complements and supplements those financial statements by providing prospective and contextual details not typically available in a company's financial statements.
  • Focus on material items: there has been much attention recently toward the elimination of immaterial or redundant information in financial reporting and the Quarterly Highlights is an ideal opportunity to eliminate unnecessary information. The philosophy behind this approach is that the elimination of superfluous information allows the reader to better focus on and understand management's message.

About Bryndon Kydd:

As the National Leader of BDO Canada's Mining Sector Group, Bryndon provides practical, customized solutions tailored to fit the needs of each company he works with. His core practice focuses on Canadian and US-listed mining companies with either international or domestic operations. Bryndon currently serves as BDO Canada's representative on the CPA Canada Mining Industry Task Force on IFRS and as Vice-Chair of the Canadian Institute of Mining, Metallurgy and Petroleum's Vancouver Branch.

Bryndon can be reached at our Vancouver office at 604 443 4713. If you would like to receive these publications directly in the future, please email Bryndon at or follow him on LinkedIn. Recharge your batteries and your business at PDAC 2016. Visit to learn more.

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