The Ontario Securities Commission (OSC) recently published OSC
Staff Notice 51-727 Corporate Finance Branch 2015-2016 Annual
Report (the "Report"). The Report
offers an updated account of the Corporate Finance Branch's
operational and policy work during fiscal 2016 and seeks to: (i)
encourage compliance with regulatory obligations, (ii) improve
disclosure in regulatory filings, (iii) provide insights on current
trends, (iv) provide guidance on novel issues, and (v) inform
market participants about key policy initiatives.
Continuous Disclosure Review Program
The Report summarizes the results of the OSC's Continuous
Disclosure Review Program ("CD Review
Program") for fiscal 2016. The OSC conducts both full
and issue-oriented reviews of issuers' continuous disclosure
and utilizes risk-based criteria to identify issuers with a higher
risk of disclosure non-compliance. The Report notes that in fiscal
2016, the OSC identified an "outcome" in 94% of full
continuous disclosure reviews and 73% of issue-oriented reviews.
Outcomes included prospective disclosure enhancements in future
continuous disclosure filings, refiling of disclosure documents,
education and awareness and other actions, including enforcement
referrals. Prospective changes made up the bulk of the full
continuous disclosure review outcomes at 57% (28% for
issue-oriented reviews), while refilings accounted for 21% of the
continuous disclosure review outcomes (36% for issueoriented
Areas of focus for the 2016 CD Review Program included
management's discussion & analysis, the presentation and
use of non-GAAP financial measures, and the disclosure of risks and
assumptions related to forward-looking information. Of note, the
Report states that the OSC intends to closely monitor the use of
non-GAAP financial measures over the next year due to concerns with
the prominence being given to non-GAAP measures in comparison to
GAAP measures as well as the large differences sometimes reported
between GAAP and non-GAAP measures.
Public Offering Reviews
In fiscal 2016, the OSC reviewed over 300 prospectuses and
rights offering circulars, 18% of which related to offerings in the
oil & gas industry, followed by the mining sector and the
financial services sector (both at 15%). The Report highlights
several areas in which the OSC regularly finds deficiencies in
prospectus disclosure including (i) description of business and
regulatory environment, (ii) risk factors relating to the business
and/or offering, (iii) MD&A disclosure in a long form
prospectus, and (iv) use of proceeds. The Report also provides
guidance on some common issues that arise during prospectus
offerings including financial statement disclosure and the
application of the significance tests for acquisitions.
The Report concludes with a summary of current initiatives and
issues relating to exemptive relief applications, insider reporting
and exempt market regulatory reform. A new Exempt Market page has
been created on the OSC's website to serve as an additional
resource for this evolving area. For further information on the
Corporate Finance Branch 2015-2016 Annual Report, please consult
OSC Staff Notice 51-727 or contact any member of our Corporate
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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