On August 18, the OSC's Corporate Finance Branch released clarification
on issues relating to financial disclosure required in a prospectus
arising out of the transition to International Financial Reporting
Standards (IFRS). As we have previously discussed, Canadian
reporting issuers have generally been required to transition to
IFRS effective as of January 1, 2011. Specifically, the Corporate
Finance Branch release provides guidance on the presentation of
IFRS transition information in prospectuses, as well as the use of
GAAP for financial statement disclosure in prospectuses filed in
and after the issuer's transition year.
With respect to the presentation of transition information in
prospectuses, the release outlines the difference in requirements
between an IPO prospectus (which must include an opening statement
of financial position at the date of transition to IFRS, as well as
IFRS 1 reconciliations for the date of transition and the most
recent annual period) and a short form prospectus or a non-IPO long
form prospectus (which are not required to include the above
With respect to an IPO prospectus in the year of transition, the
release clarifies that the annual financial statements required for
the previous three years are not required to be converted into
IFRS. However, the interim financial report for the most recent
interim period, along with the comparative interim financial
statements for the corresponding period in the previous year, would
still have to be prepared in accordance with IFRS.
Finally, in cases where an IPO prospectus is filed in the first
year after transition (2012), an issuer has three options with
respect to the presentation of historical annual financial
statements. Specifically, IFRS may be used for the three most
recently completed years (2009, 2010 and 2011) or IFRS may be used
for 2011 and 2010 and Canadian GAAP used for either 2009
and 2010, or 2008 and 2009. In
either case, the issuer would be including financial disclosure
above and beyond what would normally be required, in that financial
statements for the 2010 financial year would be included twice or a
fourth year back would have to be included.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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