Canada: CSA Publishes Results Of Annual Continuous Disclosure Reviews

The Canadian Securities Administrators (CSA) recently published CSA Staff Notice 51-346 – Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2016 (Staff Notice) which summarizes the results of the CSA’s annual continuous disclosure (CD) review of reporting issuers, highlights common disclosure deficiencies and suggests best practices to help reporting issuers comply with their CD obligations.

Review Scope and Outcomes

During the fiscal year ended March 31, 2016, the CSA conducted 902 CD reviews, of which 62 per cent uncovered deficiencies that either required issuers to take action to improve and/or amend their disclosure, or resulted in the issuer being referred to enforcement, cease traded or placed on the default list. This represents a slight increase from 59 per cent of the 1,058 CD reviews conducted during fiscal 2015.

The CD reviews identified several financial statement, MD&A and other regulatory deficiencies that resulted in issuers enhancing their disclosure and/or refilling their CD documents. The Staff Notice highlights the following particular areas, among others, where common disclosure deficiencies were noted and provides guidance and considerations to help issuers better understand and comply with their CD obligations.

Common Deficiencies

MD&A Deficiencies

Liquidity and Capital Resources. The CSA observed that some issuers failed to provide sufficient analysis of liquidity and capital resources. Issuers are cautioned to avoid the use boilerplate discussion of liquidity and capital resources, or to merely reproduce amounts from their statements of cash flows without providing any analysis. This section of the MD&A should discuss an issuer's ability to generate sufficient financial resources in the short term and the long term, to maintain its capacity, to meet its planned growth or to fund development activities.

Forward Looking Information (FLI). The CSA observed that some issuers fail to update disclosure relating to FLI. Issuers are reminded that they must discuss the events and circumstances that occurred during the period that are reasonably likely to cause actual results to differ materially from material FLI that has been previously disclosed to the public and the expected differences. In addition, if issuers decide to withdraw previously disclosed material FLI, they must disclose this in their MD&A.

Overall Performance (Discussion of Operating Segments). The CSA observed that some issuers identify segments in their MD&A that are inconsistent with those identified in their financial statements.  The discussion of operating segments should be based on the operating segments as disclosed in the issuer’s financial statements.

Investment Entities. The CSA observed that some issuers relying on the investment entity definition in IFRS 10 Consolidated Financial Statements do not provide sufficient information, both qualitative and quantitative, for their material investments and related investment and operating activities. Issuers should note that except in limited circumstances, an investment entity must measure its investments at fair value through profit and loss, including its investments in subsidiaries.

Other Regulatory Disclosure Deficiencies

Material Contracts. The CSA noted prohibited redactions, failure to provide a description of the type of information redacted and failure to file all material contracts listed in the Annual Information Form (AIF) on SEDAR. Issuers are reminded that they cannot make certain redactions in material agreements, such as redactions of debt covenants and ratios in financing or credit agreements, or key terms necessary for an understanding of the impact of the contract on the business. While some redactions may be permitted (e.g. to preserve confidentiality provisions and to avoid disclosure that would be seriously prejudicial to the interest of the issuer), the issuer ought to be able to explain the basis for why such disclosure would be seriously prejudicial. Issuers are also reminded that if the issuer's business is substantially dependent on a contract, then the issuer does not meet the ordinary course exemption and must file the material contract on SEDAR.

Audit Committee Composition – Venture Issuers. The CSA observed that some venture issuers have not met audit committee composition requirements. Effective for financial years beginning on or after January 1, 2016, a venture issuer’s audit committee must be composed of at least three members, each of whom must be a director. The majority of such members cannot be executive officers, employees, control persons or affiliates of the venture issuer, with some limited exceptions.

Management Information Circular. The CD reviews identified a common failure to provide prospectus-level disclosure in management information circulars prepared in a situation of restructuring under which securities are to be changed, exchanged, issued or distributed. Issuers are reminded that management information circulars prepared in such situations must provide disclosure described in the form of prospectus (i.e. NI 41-101F1 – Information Required in a Prospectus or NI 44-101F – Short Form Prospectus Distributions).

Annual Information Form. The CD reviews identified a common failure among AIF filers to provide sufficient description of the business or applicable risk factors in the AIF. The AIF should describe the issuer’s business and its operating segments that are reportable segments and disclose various aspects of the business, including: production and services, specialized skills and knowledge, competitive conditions, new products, any economic dependence, and changes to contracts. The AIF must also provide a detailed discussion of risk factors that affect the issuer.

Moving Forward

To illustrate some of the common deficiencies set out above, the Staff Notice provides examples of deficient disclosure contrasted against more robust entity-specific disclosure or a more in-depth explanation of the matters observed by the CSA. Issuers are encouraged to review their own disclosure practices and to use the CSA’s guidance and findings to strengthen their compliance with their CD obligations.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2016

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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.