The areas covered by the review include deficiencies in
financial statements and MD&A as well as related party
transactions among other areas. In addition, the CSA provided
guidance on mining issuers' continuous disclosure which we discussed in detail on
The following notable areas were highlighted by the CSA as being
common sources of disclosure deficiencies:
Disclosure: CSA staff highlighted situations where there
were inconsistencies between the conclusions in certificates about
the effectiveness of internal controls over financial reporting
(ICFR) and the corresponding disclosure in an issuer's
MD&A. CSA staff also found that some issuers identified the
same material weakness in the design or operations of ICFR for
several consecutive years and during that time period grew their
operations significantly. Though National Instrument 52-109Certification of Disclosure in Issuers' Annual
and Interim Filings does not require that
issuers remediate material weaknesses, according to CSA staff,
MD&A disclosure will be useful to investors if it discusses
whether the issuer has a plan to remediate an identified material
weakness and whether there are any mitigating procedures to reduce
the risks that arise from the unaddressed material weakness.
CSA staff remind issuers that they must file material contracts by
the time that they file their Annual Information Forms. Examples of
material contracts cited by CSA staff include a financing or credit
agreement with terms that relate directly to anticipated cash
distributions or a contract on which the issuer's business is
Reports: CSA staff remind issuers that a material change
report must be filed as soon as practicable after the date of a
material change, or within 10 days of such date. Specific examples
of material changes cited by CSA staff that must be reported
include the elimination or significant reduction of dividend
payments or the issuer experiencing a significant increase or
decrease in near term earnings prospects.
Disclosure: Selective disclosure, being the provision of
material non-public information to some persons and not broadly to
the investing public, should be avoided. Specifically, as per National Policy 51-201Disclosure Standards, when
issuers hold private meetings with analysts or attend industry
conferences, they must ensure that selective disclosure is not
provided at these venues. CSA staff suggest that keeping detailed
notes or transcripts is useful to determine if unintentional
selective disclosure has occurred. If such disclosure has occurred,
CSA staff note that issuers must make a public announcement and
contact the relevant stock exchange to have trading halted.
News Releases: CSA
staff note that certain issuers failed to issue and file a news
release on a timely basis after deciding to refile a continuous
disclosure document or restate financial information in financial
statements. Section 11.5 of National Instrument 51-102Continuous Disclosure
Obligations provides that if an issuer
decides to refile a document which differs materially from
information originally filed, the issuer must immediately issue and
file a news release disclosing the change.
For further information, please consult CSA Staff Notice
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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