The Canadian Securities Administrators (CSA) have published the results of their most recent annual review of continuous disclosure documents filed by Canadian public companies. There are approximately 4,200 active reporting issuers (public companies) in Canada (excluding investment funds). For the fiscal year ended March 31, 2013, CSA members conducted 1,336 continuous disclosure reviews, consisting of 368 ‘full' reviews and 968 ‘issue-oriented' reviews. This represents a 7% increase compared to the 1,248 continuous disclosure reviews completed during fiscal 2012, reflecting a greater emphasis on issue-oriented reviews due to certain CSA jurisdictions examining technical disclosure (both for mineral projects and oil and gas activities) and IFRS specific topics on a larger sample of companies. In 47% of the review outcomes, companies were required to take action to improve their disclosure, including:
- 26% of the reviews resulted in ‘prospective changes', requiring companies to make enhancements to their disclosure in future filings;
- 14% of the reviews resulted in companies being required to amend or re-file certain continuous disclosure documents;
- 5% of the companies were either ceased-traded, placed on a default list or referred to enforcement; and
- 2% of the reviews resulted in companies receiving a letter alerting them to certain disclosure enhancements that should be considered in their next filings.
In 53% of the reviews, companies were not required to make any changes or additional filings.
In 2004, the CSA (the umbrella group of the securities regulators of Canada's provinces and territories), established a harmonized program for continuous disclosure reviews, the goal of which is to improve the completeness, quality and timeliness of continuous disclosure of public companies in Canada. Under this program, the CSA uses a risk-based approach to select companies for review, taking into account the potential harm to Canadian capital markets if a company fails to provide complete, accurate and timely disclosure about its business and affairs.
The CSA conducts either a ‘full' review or an ‘issue-oriented' review of a selected company. A full review is broad in scope and covers the company's most recent annual and interim financial statements and MD&A, AIF, annual report, information circular, press releases, material change reports, business acquisition reports, website, CEO and CFO certifications, material contracts and technical disclosure (for an oil and gas or mining company). An issue-oriented review is an in-depth review focusing on a specific accounting, legal or regulatory issue the CSA believes warrants regulatory scrutiny.
Detailed examples of common deficiencies identified during the CSA's most recent review, and practical guidance and suggestions for improving disclosure can be found in CSA Staff Notice 51-339 Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2013.