The OSC yesterday published guidance intended to assist small
mining issuers in complying with MD&A requirements.
Specifically, the notice includes a review of MD&A by
mining issuers with a market capitalization of less than $100
million and guidance in respect of MD&A disclosure.
In reviewing MD&A disclosure, the OSC ultimately
found that many smaller mining issuers continue to struggle to
provide complete and meaningful MD&A disclosure. The
OSC specifically identified a number of areas needing
improvement, namely in respect of (i) venture issuers without
significant revenue from operations not providing a breakdown of
material components of exploration and evaluation assets or
expenditures; (ii) issuers with exploration projects not discussing
and itemizing exploration expenditures; (iii) issuers with a
working capital deficiency providing only general discussion of
potential sources of financing and how they planned on continuing
operations; (iv) issuers not appropriately disclosing the
identity of the party involved in a related party transaction;
(v) issuers providing either no discussion or a generic,
unquantified discussion of liquidity risks. The report consequently
provides guidance to address the above concerns, including examples
of boilerplate disclosure contrasted with examples of more
Specifically, the notice reminds issuers
that: (i) venture issuers without significant revenues
must disclose a breakdown of the material components of exploration
and evaluation assets or expenditures, general
and administrative expenses and other materials on a
comparative basis, present E&E assets or expenditures on a
property-by-property basis and include a qualitative discussion of
those expenditure; (ii) issuers with significant projects that have
yet to generate revenue must disclose useful information for each
material property or project that is not at the development or
production stage; (iii) issuers with producing mines or mines
under development must include certain useful disclosure on a
property-by-property basis; (iv) to be meaningful, the discussion
of liquidity and capital resources must address in detail all
future cash requirements of an operating and capital nature and how
they will be funded; (v) investors need to understand who are
the specific parties involved in related party transactions,
the business purpose and economic substance of the transaction; and
(vi) to be meaningful, risk disclosure needs to be
entity-specific and updated regularly.
While the guidance provided is specific to the mining issuers
reviewed, the report states that the content and disclosure
examples would benefit all issuers. For more information, see OSC Staff Notice 51-722.
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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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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