Canada: 2013 Disclosure Update

Last Updated: January 23 2013
Article by David Surat, Stephen P. Robertson, Paul G. Findlay and Dolores Di Felice

Most Read Contributor in Canada, November 2017


Each year we are asked what has changed to the continuous disclosure requirements for Canadian public companies.

Significant developments for 2013 include:

  • amendments to the TSX Company Manual requirements for director elections;
  • the adoption of the notice-and-access concept for the materials for meetings of security holders;
  • changes in the voting policies of proxy advisors.

In addition, the Canadian Securities Administrators (the CSA) have provided guidance regarding the results of their continuous disclosure reviews. Although this guidance does not change the continuous disclosure requirements, it does elaborate on the expectations of the regulators and/or the interpretation of the requirements. A summary of the common deficiencies identified is included below.

TSX Director Election Requirements

Amendments to the TSX Company Manual, which came into force on December 31, 2012, require all TSX-listed issuers to:

  • elect directors individually and not as part of a slate;
  • hold annual elections for all directors, which precludes the use of staggered terms1;
  • disclose annually in its management information circular:
    • whether they have adopted a majority voting policy2 for uncontested meetings, which requires a director who receives a majority of withhold votes to tender his or her resignation; and
    • if not, to explain:
      • its practices for electing directors; and
      • why it has not adopted a majority voting policy;
  • advise the TSX if a director receives a majority of "withhold" votes (if a majority voting policy has not been adopted); and
  • promptly issue a news release providing detailed disclosure of the voting results for the election of directors.A majority voting policy addresses the fact that corporate law in a number of jurisdictions allows issuers to use plurality voting, where security holders may only vote "for" or "withhold" for each director or a slate of directors, which may result in the election of directors with minimal favourable votes. Such a policy would require any nominee for director who received more "withhold" votes then "for" votes to submit his or her resignation.

The requirement to elect directors individually is consistent with the rules of the TSX Venture Exchange (TSXV), which prohibit mechanisms that may entrench current management, such as slate voting, unless the issuer's security holders are permitted to choose whether to elect the board as a slate or to elect directors individually.


On November 29, 2012, the CSA published the final form of amendments to National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (NI 54-101) and National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). The major focus of these amendments is to enable reporting issuers, other than investment funds, to use notice-and-access for meetings of security holders after March 1, 2013. Under notice-and-access, a reporting issuer can deliver proxy-related materials by posting the relevant information circular and proxy-related materials on a website (other than SEDAR) and sending a notice informing shareholders that the proxy-related materials have been posted and explaining how to access them.

The major advantage of notice-and-access is the reduction in the size of the package that must be mailed to the issuer's security holders, which is expected to reduce the costs of the meeting. However, security holders are still entitled to receive a paper copy of the materials on request.

Notice-and-access could potentially affect the level of security holder participation in meetings, since additional action on the part of the security holder will be required to obtain a copy of the information circular.

The amendments to NI 54-101 and NI 51-102 allow for the use of notice-and-access for both beneficial and registered security holders under securities legislation. However, issuers may also be subject to requirements under corporate or other legislation that may affect their ability to take advantage of these amendments, particularly for registered security holders.

Issuers that are regulated by the Securities and Exchange Commission may be able to rely on an exemption to use the US version of notice-and-access, depending on the extent of their connection to Canada.

Content of the Notice

Issuers that elect to use notice-and-access must include the following in the package that is mailed to shareholders:

  • the date, time and location of the meeting;
  • a description of the matters to be voted on at the meeting;
  • the website address for SEDAR and a non-SEDAR website where the information circular and other proxy-related materials are available;
  • a reminder to review the information circular before voting;
  • a plain language explanation of the notice-and-access process;
  • a form of proxy or voting instruction form;
  • a toll-free telephone number for the security holder to request a paper copy of the information circular; and
  • if the issuer is sending paper copies of the information circular to certain shareholders, a list of the types of security holders receiving paper copies.

Timing Implications of Notice-and-Access

The use of notice-and-access is subject to different timing requirements from a traditional mailing:

  • Record date – the record date is required to be at least 40 (instead of 30) days prior to the meeting date.
  • Notice of first time adoption – the first time that an issuer uses notice-and-access, it must file on SEDAR the notification of the meeting and record dates at least 25 days prior to the record date;
  • Mailing – the notice must be sent at least 30 days prior to the meeting.

As a result of these requirements, at least 65 days' notice prior to the meeting date is required for the initial implementation of notice-and-access by an issuer.

Other Changes to NI 54-101

NI 54-101 will also be amended in other respects, including a simplified process regarding the appointment of the beneficial owner of securities as the proxy holder of the securities and enhanced disclosure requirements regarding the voting process. This may affect the disclosure in a reporting issuer's information circular relating to the process for voting by beneficial shareholders.

The requirements and forms for requesting information regarding an issuer's beneficial ownership will also be modified.

Updates to Proxy Advisor Policies

In mid-November 2012, both Institutional Shareholder Services Inc. (ISS) and Glass Lewis, & Co., LLC (Glass Lewis), two of the leading proxy advisory firms in Canada, published their updated guidelines for the 2013 proxy season. Generally speaking, these new guidelines are in effect for shareholder meetings taking place on or after February 1, 2013. The following is a list of the material updates to the ISS and Glass Lewis guidelines:

Advance Notice Policies (ISS and Glass Lewis)

Both ISS and Glass Lewis support issuers adopting, either as a corporate policy or as part of the issuer's constating documents, a policy which would require shareholders to notify the issuer a reasonable amount of time before a shareholder meeting (being between 30-65 days prior to the meeting) if they intend to nominate any new directors to the board. ISS and Glass Lewis support these advance notice policies in order to ensure that all shareholders receive sufficient notice of director nominations.

Slate Voting (ISS and Glass Lewis)

While nominating and voting on directors has generally been heading in this direction in recent years, both ISS and Glass Lewis have come out again against slate voting. ISS will not support a slate for nomination in any case, for any issuer (they had previously taken a more lenient approach for TSXV-listed issuers). Glass Lewis will continue to review TSXV slates on a case-by-case basis, but will recommend against the entire slate if they have concerns with respect to one nominee. For other issuers, Glass Lewis will recommend voting against the slate of directors.

Each of ISS and Glass Lewis will take a case-by-case approach with respect to slate voting for an issuer which has a majority shareholder.

Board Responsiveness to Significant Shareholder Vote (Glass Lewis)

Glass Lewis believes there is a concern that certain issuers may not be properly addressing concerns raised by their shareholders at shareholder meetings. Where any matter at a meeting receives less than 75% approval, Glass Lewis believes that shareholders are sending a message to the issuer, and expects the issuer to respond. While receiving below this level of shareholder support on a matter will not automatically result in Glass Lewis issuing a negative recommendation for matters put forward by management in future years, it will be taken into consideration for all future matters put forward by management (including director nominations, amendments to constating documents and votes on executive compensation). Glass Lewis will be less inclined to provide a negative recommendation on a future management proposal if they feel that the board has taken steps to address the concern made apparent by the lack of shareholder support on an earlier vote.

Majority Voting Policy (Glass Lewis)

As a result of the amendments to the TSX Company Manual described above, certain TSX-listed issuers will be required to either adopt a majority voting policy or explain in their meeting materials why the issuer has not adopted a majority voting policy. Glass Lewis is in favour of issuers adopting majority voting policies, and has been suggesting this for a few years. Accordingly, for issuers in the S&P/TSX composite index that do not adopt a majority voting party but rather elect to explain the lack of one, Glass Lewis will recommend that shareholders withhold their votes with respect to the election of all members of the issuer's governance committee.

New Executive Compensation Calculation (ISS)

Say-on-pay votes, while not required in Canada, have been voluntarily introduced by many issuers over the past five years. As a result of these votes having been established for a number of years, ISS has reviewed its formula for analyzing executive compensation and determined that its previous formula was not as effective as it should be. ISS therefore has adopted a new formula, which is based on making recommendations to vote against any say-on-pay resolution where there is a significant long-term misalignment between CEO compensation and company performance. The formula involves a two-step process. The first step is quantitative, and is in three parts: (i) a comparison of the total shareholder return rank of the issuer against the CEO compensation rank, over a one and three year period, against a peer group determined by ISS; (ii) a comparison of the CEO's compensation in the last reported fiscal year to the median CEO compensation within the peer group; and (iii) a comparison between the CEO's compensation and the issuer's total shareholder return over the previous five years. If there is a potential long-term misalignment based on the quantitative analysis, ISS will then conduct the second step, a qualitative assessment based on its own internal criteria. If after the qualitative assessment ISS determines a long-term misalignment is present, ISS will recommend voting against the say-on-pay resolution.

Alternate Directors (ISS)

ISS believes that all directors, and each person taking on the role of a director, should be elected and accountable to the shareholders of an issuer. Where a director is permitted to appoint an alternate director to fill their position on the board, that alternate director may not have been elected by the shareholders and their appointment will not have been ratified by the shareholders. Accordingly, ISS will recommend voting against any proposal to adopt or amend an issuer's constating documents where those constating documents include the ability for a director to appoint an alternate director.


CSA Staff Notice 51–337 Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2012 (the CSA Notice3 ) includes guidance on common deficiencies identified through the CSA's continuous disclosure reviews. Separate reports by the Alberta Securities Commission4 (the Alberta Report) and the Autorité des Marché Financiers5 (the AMF Report) provide additional guidance.

Financial Statements

  • First-time adoption of IFRS – omitting the required reconciliations♦♣, failing to adequately explain material adjustments and the application of judgment♦♠, providing insufficient or unclear descriptions of the effect of the transition and note disclosure♠♣, failing to change all of accounting policies♦, providing boilerplate accounting policy disclosure♦♠, and failing to develop and apply accounting policies where applicable IFRS standards do not exist.♠
  • Statement of changes in equity – failing to include a statement of changes of equity for comparative interim periods.♦
  • Current liabilities – failing to classify obligations as current under IFRS, such as obligations for which the issuer does not have the unconditional right to defer settlement of liability for at least 12 months after the reporting period.♦
  • Business combinations – failing to disclose required information separately for each significant business combination or on an aggregate basis for individually immaterial business combinations that are collectively material and omitting required disclosure♦, such as:
    • the amounts of revenue or profit or loss of the acquired entity since the acquisition date included in the consolidated statement of comprehensive income,
    • the revenue and profit or loss of the combined entity as though the acquisition dates had been as of the beginning of the annual reporting period,
    • required information for business combinations completed after the end of the financial period but before the date of the financial statements,
    • the primary reasons for the business combination and a description of how the issuer obtained control,
    • a qualitative description of the factors that make up goodwill,
    • required information for contingent liabilities recognized,
    • the reasons why the transaction resulted in a gain for bargain purchases, and
    • the gross contractual amounts receivable and an estimate of contractual cash flows not expected to be collected for acquired receivables.
  • Flow-through shares – failing to identify the IFRS transition impact for flow-through shares despite the fact that IFRS does not specifically address accounting for flow-through shares and that the accounting under pre-changeover Canadian GAAP can no longer be used. Omitting adjustments resulting from the recognition of deferred tax in respect of the issuance of flow through shares in the comparable period.♣
  • Going concern disclosure – providing boilerplate risk disclosure that does not clearly identify the material uncertainties related to events or conditions that may cast significant doubt on an issuer's ability to continue as a going concern.♠
  • Decommissioning liability disclosure – weak disclosure, including failing to disclose material assumptions used in measuring liabilities and failing to adequately explain material variances from period to period.♠
  • Segment disclosure – inconsistent or inappropriate identification of reportable segments.♠
  • Additional GAAP measures – use of unnamed or inappropriately named subtotals in financial statements.♠
  • Financial covenants – failure to disclose debt covenants or for issuers nearing or anticipating a covenant breach not providing sufficient disclosure to enable readers to appreciate the associated liquidity risks.♠
  • Financial instruments – failing to provide quantitative data regarding exposure to liquidity risks from financial instruments that enables users to evaluate the extent of risks.♠
  • Cash flow statement – inappropriate classification of cash flow items between operating, investing and financing activities.♠
  • Interim reporting – failing to include sufficient explanation in interim statements to allow an understanding of the events and transactions that have resulted in changes in financial position since the end of the last annual reporting period.♠
  • Impairment – inappropriate measurement and timing of impairment analysis, including failing to recognize impairments in interim periods despite indicators of impairment.♠

Management's Discussion & Analysis

  • Boilerplate disclosure – providing boilerplate disclosure that does not change from period to period and failing to provide entity specific disclosure that complements the financial statements, such as: the factors underlying operational changes, known or expected fluctuations in trends in liquidity (particularly for issuers with negative cash flow), and adequate descriptions of operations for issuers in specialized industries.♦♣
  • Accounting principles – failing to clearly identify the accounting principles used when presenting a mix of financial information in accordance with pre-changeover Canadian GAAP and IFRS.♦♣
  • Non- and additional GAAP measures – failure to provide comprehensive discussion of the closest GAAP measure.♣♠
  • Discussion of operations – superficial discussion that does not explain the factors that contributed to material variations in operations.♣♠
  • Related party transactions – omitting the name of the related parties and failing to describe the business purpose of the transaction.♣
  • Working capital – weak disclosure of how issuers can meet working capital obligations as they come due.♠
  • Forward looking information – failing to update previously disclosed forward looking information.♠
  • Significant projects – failing to provide material updates for significant projects.♠
  • Unbalanced and promotional disclosure – potentially unfavourable developments should be disclosed just as promptly, prominently and completely as positive news.♠
  • DC&P and ICFR Disclosure – incomplete or qualified conclusions regarding disclosure controls and procedures and internal controls over financial reporting.♣

Technical Disclosure (for Resource Issuers)

  • Incomplete or inadequate disclosure of preliminary economic assessments, mineral resources and mineral reserves.♦♣
  • Non-compliant or omitted certificates and consents of qualified persons.♦♣
  • Incomplete or inadequate disclosure of historical estimates and exploration targets, including source and date for estimates and comments on relevance and reliability.♦♣
  • Omitting the name of the qualified person from documents containing scientific and technical information.♦
  • Well-flow test results – disclosure of short-term test rates or peak rates without identifying them as such.♠
  • Core and non-core terminology – unclear and inconsistent use of core and non-core in relation to the discussion of properties.♠

Executive Compensation Disclosure

  • Summary compensation table – failing to disclose grant date fair value of share-based awards and option- based awards and the key assumptions and estimates used to calculate fair value.♦♣
  • Compensation discussion and analysis – not fully and accurately explaining significant elements of compensation.♦ Boilerplate disclosure that does not establish a clear link between performance goals and compensation awarded.♣
  • Performance goals – omitting goals used to determine annual bonuses and failure to quantify performance goals.♣
  • Benchmarks – omitting benchmark group and selection criteria.♣

Corporate Governance Disclosure

  • Disclosure – failing to provide meaningful disclosure regarding governance practices, such as the process used to identify new board candidates for board nomination.♦
  • Meetings of independent directors – failing to disclose the number of meetings of independent directors.♣
  • Compliance with code of conduct – not describing how the board ensures compliance and the measures taken to encourage and promote a culture of ethical business conduct.♣
  • Nominations – not describing the process for identifying new board nominees.♣
  • Effectiveness – incomplete descriptions of the process for assessing board and committee effectiveness.♣


  • Principal Security Holders – failing to disclose principal security holders where information is available on SEDI.♣
  • Audit Committee – omitting audit committee charter and incomplete disclosure regarding audit committee.♣

CEO and CFO Certificates

  • Form of certificates – changing the form of certificate by adding or omitting text.♣♠ Using old versions of the forms.♠
  • Dates of financial periods – referring to incorrect financial periods in the certificates.♣

Common deficiencies from the Reports are identified using the following symbols:

CSA Notice ♦
ASC Report ♠
AMF Report ♣


1 If security holder approval is required to implement the amendments because changes are required to the issuer's constating documents, the TSX will not consider the issuer to be in breach of these obligations if the security holders do not approve the amendments. However, the issuer is required to resubmit and recommend the required amendments at an annual meeting within three years.

2 Further proposed amendments, which have been published for comment, would require all TSX listed issuers to adopt a majority voting policy effective January 1, 2014.




About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions