Canada: OSC Provides Guidance On Forward-Looking Information Disclosure

On June 13, 2013, the Ontario Securities Commission (the "OSC") published Staff Notice 51-721 - Forward-Looking Information Disclosure (the "Notice"). The Notice summarizes the results of the OSC's review of reporting issuer compliance with forward-looking information ("FLI") disclosure requirements. The Notice provides guidance and assists reporting issuers in preparing FLI.

FLI is disclosure about possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action. FLI also typically includes: (i) key performance indicators (e.g., customer retention, capital expenditures, and same store sales), (ii) future oriented financial information, and (iii) financial outlook. When prepared properly, FLI helps to enhance transparency and increases investors' understanding of a reporting issuer's business and future prospects.

Requirements for Disclosure

Disclosure of FLI is not mandatory. However, many reporting issuers include FLI in continuous disclosure documents, news releases and on their websites. Since FLI is based on management's best judgment on how future trends will impact business, it is likely to be less reliable than historical information. Consequently, FLI must be clearly identified as such so that investors understand its limitations. National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") governs the disclosure of FLI. These rules apply irrespective of the type of document in which FLI is disclosed.

Review of Ontario Reporting Issuers

The OSC reviewed the compliance with FLI disclosure requirements of 60 Ontario reporting issuers, and identified four common areas for improvement: (i) clear identification of FLI, (ii) disclosure of material factors and assumptions, (iii) disclosure of updates to previously disclosed FLI, and (iv) comparisons of actual results with previously disclosed FLI.

Identification of FLI

NI 51-102 requires reporting issuers to clearly identify material FLI. Of the 60 reporting issuers reviewed, all but one included cautionary language identifying the use of FLI in their financial reporting. However, only 47% of the reporting issuers clearly identified entity-specific FLI, which points out the specific area of the document and manner in which FLI is being used.

Material Factors and Assumptions

For investors to understand how actual results may vary from FLI, reporting issuers must disclose relevant material factors or underlying assumptions forming the basis of FLI. Material factors and assumptions must be reasonable, supportable, entity-specific, tied to the FLI, and disclosed. Disclosing, for example, that "total sales are expected to increase by 5.0%" without any background to the projection, denies investors the opportunity to evaluate the likelihood of the company achieving the forecasted result. Of the issuers reviewed, 69% did not provide all assumptions in specific detail, and 24% provided no assumptions at all.

Updating Previously Disclosed FLI

Reporting issuers are required under NI 51-102 to disclose events and circumstances that are reasonably likely to cause actual results to differ materially from previously disclosed FLI. These events and circumstances could include economic and market changes, additional hiring, and changes in capital expenditures. Issuers must also disclose the details of the expected differences in the results. Of the 60 reporting issuers reviewed, only 36% provided a quantified discussion of events and circumstances that are reasonably likely to cause actual results to differ materially from previously reported FLI.

Comparing Actual Results to Previously Disclosed FLI

The comparison of actual results to previously disclosed FLI is important for investors to assess the effectiveness of management and the current and future performance of the issuer. Under NI 51-102, reporting issuers must provide this comparison in the MD&A if actual amounts differ materially from previously disclosed forward-looking financial projections. Only 33% of the reporting issuers reviewed provided this comparison.

Practice Points

The Notice provides a list of practice points to assist issuers and their advisors in promoting clear, transparent disclosure for FLI. Included in the list are:

  • Timely Updating of Ongoing Progress: In their ongoing progress updates, issuers should provide comparisons to past projections so investors could more accurately assess the issuers' performance.
  • Separate Presentation: Separating FLI from historical information within a document allows investors to easily identify information that constitutes material FLI.
  • Review by Audit Committee and Board of Directors: The audit committee and board of directors of a reporting issuer should review and approve all FLI disclosure before it is publicly disclosed, including the assumptions used to develop the FLI.


The Notice confirms that Ontario reporting issuers need to improve the quality of the FLI they disclose. The OSC stated that it will continue to help Ontario issuers improve and will take corrective action against reporting issuers that do not comply with FLI disclosure requirements.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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