The Ontario Securities Commission issued OSC Staff Notice 51-721
– Forward-Looking Information Disclosure providing
recommendations arising from a targeted review of forward-looking
information (FLI) disclosure in public documents.
The review follows Canadian Securities Administrators Staff
Notice 51-330 – Guidance Regarding the Application of
Forward-looking Information Requirements under NI 51-102 Continuous
Disclosure Obligations issued in 2009.
The OSC staff identified four areas for improvement of FLI
Clear identification of FLI
Identifying the material factors and assumptions used in
Updating previously disclosed FLI
Comparing actual results to previously disclosed FLI.
What is 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 provides investors with
insight about a company's business and how that company intends
to achieve its targets and objectives. FLI includes future-oriented
financial information (FOFI) and financial outlook. Both FOFI and
financial outlook are FLI regarding a company's future
financial performance, financial position or cash flows; however,
FOFI is presented as a historical financial statement.
FLI Requirements and Exceptions
FLI is subject to the requirements of National Instrument 51-102
– Continuous Disclosure Obligations (NI 51-102)
whether disclosed in a news release, management's discussion
and analysis, website, or other disclosure document.
FLI requirements relate to the initial disclosure of FLI and
require companies to continuously update FLI, compare actual
results to FLI and, where appropriate, withdraw previously
While the FLI rules do not apply to FLI presented orally,
transcribed oral statements are subject to the requirements under
NI 51-102. In addition, section 138.3(2) of the Securities
Act (Ontario) attaches liability for misrepresentations made
in secondary market disclosure (including public oral statements
made by a company) that contains FLI, unless the cautionary
language of section 138.4(9) of the OSA is provided. Certain
requirements of NI 51-102 do not apply to the disclosure of FLI
that is subject to National Instrument 51-101 – Standards
of Disclosure for Oil and Gas Activities or National
Instrument 43-101 – Standards of Disclosure for Mineral
OSC Staff's Findings
The OSC staff's review of FLI of Ontario reporting issuers
across industries identified the following deficiencies:
47% clearly identified FLI
31% provided detailed assumptions specific to FLI
36% updated previously disclosed FLI with updated quantified
33% provided comparisons of actual results to previously
The Notice makes clear that general boilerplate disclosure
concerning FLI does not satisfy the FLI requirements. To help
companies improve disclosure, the Notice provides examples of
frequently identified non-compliant disclosure as well as
suggestions to improve disclosure and examples of entity-specific
The Notice provides the following practice points to assist
issuers and their advisors in complying with FLI requirements:
Assumptions should be reasonable and specific to a reporting
issuer, providing both qualitative and quantitative
Updating ongoing progress and comparing to previously disclosed
FLI enables investors to assess corporate performance. Examples
provided by OSC staff include affirmation of targets, disclosure of
actual and expected material differences, and updates on trends
reasonably likely to affect future performance.
Including key performance indicators conveys to investors how
well a company is progressing toward its objectives.
Providing a standalone FLI section in disclosure documents
allows investors to easily identify FLI and separates it from
A company's board of directors and audit committee both
play a key role in the oversight of FLI and should consider
reviewing and approving all FLI disclosure, determining whether
updates are required, questioning management on the assumptions
being used to develop FLI, and approving the targets before they
are disclosed publicly.
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.
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