Canada: 2008 Annual Public Company Filings – New Developments

Last Updated: February 8 2008
Article by Trevor R. Scott and Brooke Harley

Originally published January 2008

This article outlines recent changes in securities laws that public companies should be aware of as they prepare their 2008 annual filings.

New Requirements for Forward-Looking Information

On December 31, 2007, the Canadian Securities Administrators amended the instrument governing the continuous disclosure obligations of public companies (National Instrument 51-102) to create new disclosure requirements for forward looking information and financial forecasts. Related new requirements were also created for MD&A.

Forward Looking Information

"Forward looking information" refers to statements made about current expectations and views of future events. The new requirements extend to all publicly disclosed forward looking information, other than forward looking information contained in oral statements. These new requirements will effect the preparation of this year's AIFs, management information circulars, annual reports and MD&A, as well as all news releases and material change reports. In addition to materials filed with securities regulatory authorities, the requirements also govern forward looking information in a public company's promotional materials and on its website.

Under the new requirements, a public company is prohibited from disclosing forward looking information unless it has a "reasonable basis" for the forward looking information. Also, all "material" forward looking information must be accompanied by disclosure that:

  • indentifies forward looking information as such;
  • cautions that actual results may vary from the forward looking information;
  • identifies material risk factors that could cause actual results to differ materially from the forward looking information;
  • states material factors or assumptions used to develop the forward looking information; and
  • describes the public company's policy for updating forward looking information (to the extent it includes procedures in addition to the requirements described below under the heading "MD&A Update Requirements").

These elements are consistent, in part, with the elements required for a defence to civil liability under certain provincial laws for misrepresentations in secondary market disclosures.

Disclosure of Financial Outlooks

Additional new requirements exist for disclosure of financial outlooks, such as guidance on earnings, financial position or cash flows. In preparing a financial outlook, a public company must:

  • use assumptions that are reasonable in the circumstances;
  • limit the period covered by the financial outlook to a period for which the information in the financial outlook can be reasonably estimated (the Canadian Securities Administrators believe, in many cases, that period will not extend beyond the end of the next fiscal year);
  • use the accounting policies the public company expects to use to prepare its historical financial statements for the period covered by the financial outlook;
  • state the date management approved the financial outlook (if the document containing the financial outlook is undated); and
  • explain the purpose of the financial outlook and caution readers that the information may not be appropriate for other purposes.

Similar requirements apply where future oriented financial information (FOFI) is presented in the form of financial statements. The historical requirement that FOFI be accompanied by an auditor's report has been removed.

The Canadian Securities Administrators recommend that a financial outlook and FOFI be reviewed by the board and audit committee prior to its public release.

MD&A Update Requirements

Public companies must discuss in their MD&A events and circumstances that occurred during the MD&A period that are reasonably likely to cause actual results to differ materially from previously disclosed "material" forward-looking information for a period which is not yet complete, as well as discussing the expected differences. Material differences between actual results and any previously disclosed FOFI or financial outlooks for the periods to which the MD&A relates must also be disclosed.

If a decision was made during the MD&A period to withdraw previously disclosed "material" forward-looking information, then a public company must disclose this fact in its MD&A and discuss the events which led to such decision, including any underlying assumptions which are no longer valid.

Forward-looking information will generally be "material" if a reasonable investor's decision whether or not to buy, sell or hold securities of the public company would be influenced or changed if the information is misstated. FOFI and most financial outlooks will be considered material forward looking information.

Changes to CEO and CFO Certifications

Proposed changes to the instrument governing certification of disclosure in annual and interim filings (National Instrument 52-109) have been delayed and further amendments to the instrument have been proposed.

Relief for Venture Issuers

Pursuant to the currently proposed amendments, "venture issuers" (public companies whose securities are not listed on the Toronto Stock Exchange, a U.S. exchange or an exchange outside Canada and the U.S. other than London's AIM market) will no longer be required to certify as to the design and evaluation of disclosure controls and procedures or internal control over financial reporting. In anticipation of these changes, certain Canadian Securities Administrators will permit venture issuers to file the abbreviated form of certificate for the financial year ended December 31, 2007 (and related interim periods). This certification will contain an explanation for investors of how it differs from the full certificate required to be filed by public companies other than venture issuers. Newfoundland & Labrador, Prince Edward Island and the territories have not yet adopted a temporary exemption order to permit venture issuers to file the abbreviated certification in these jurisdictions, but are expected to do so. A public company may be able to file an election under the Canadian Securities Administrators' passport system (National Instrument 11-101) so as to not have to comply with the requirements of the jurisdictions that have not yet adopted an exemption order.

Anticipated Amendments to Certification Requirements

Currently proposed changes will require CEOs and CFOs, in addition to the current certifications required in the annual certificate, to further certify:

  • that they have evaluated the effectiveness of the public company's internal controls over financial reporting and that the public company has disclosed in its annual MD&A: (i) their conclusions respecting the effectiveness of internal controls over financial reporting; (ii) a description of the process used to evaluate such internal controls over financial reporting; (iii) a description of any reportable deficiency relating to the operation of internal controls over financial reporting; and (iv) the issuer's plans, if any, to remediate any reportable deficiency;
  • that the public company has included in its MD&A a statement identifying the control framework used to design internal controls over financial reporting or a statement that a framework was not used, as applicable; and
  • based on the evaluation of internal controls over financial reporting, they have disclosed to the auditors, the board, and the audit committee any fraud that involves management or other employees who have significant roles in internal controls over financial reporting.

The proposed new requirements mean that a public company's board and audit committee will have to consider and approve disclosure with regard to the effectiveness of internal controls over financial reporting as part of its overall approval of the public company's MD&A. The amendments proposed for interim certificates will also expand the certifications in respect of internal controls over financial reporting.

Changes to Executive Compensation Disclosure

The CSA proposed, but has recently postponed, the implementation of amendments to disclosure requirements for executive compensation. We expect to see some of the following significant new requirements:

  • Compensation Discussion & Analysis:A new narrative compensation discussion and analysis section will be required to explain the rationale for specific compensation programs for executives. The following six key principles regarding the compensation awarded are expected to be required to be addressed in the discussion:
  • objectives of the compensation program;
  • what the program is designed to reward;
  • each element of compensation;
  • why the public company chooses to pay each element;
  • how the public company determines the amount and formula for each element; and
  • how each element and related decisions fit into the issuer's overall compensation objectives.
  • Total Compensation: The summary compensation table will include a new column showing the total compensation, expressed in dollars, provided to each named executive officer. A narrative description of any material factors that are necessary to understand the information in the table is also expected to be required.
  • Director Compensation: Expanded disclosure of director compensation is expected to be required, including a summary table and equity disclosure similar to what is required for named executive officers.

Changes Relating to Material Contracts

The Canadian Securities Administrators amended the instrument governing continuous disclosure obligations of public companies (National Instrument 51-102) to add, effective March 17, 2008, additional requirements relating to material contracts.

Additional Material Contracts Need to be Filed

Public companies are currently required to file with the Canadian Securities Administrators contracts, other than those entered into in the ordinary course of business, that are material to the public company and that were entered into within the last financial year or prior to the last financial year but are still in effect. Under the new requirements, in addition to filing material contracts which are "outside" the ordinary course of business, public companies must now file material contracts which are "in" the ordinary course of business, where the material contract is:

  • one to which directors, officers, or promoters are parties, other than a contract of employment;
  • a continuing contract to sell the majority of the public company's products or services or to purchase the majority of the public company's requirements of goods, services, or raw materials;
  • a franchise or licence or other agreement to use a patent, formula, trade secret, process or trade name;
  • a financing or credit agreement with terms that have a direct correlation with anticipated cash distributions;
  • an external management or external administration agreement; or
  • a contract on which the public company's business is "substantially dependent"

The Canadian Securities Administrators are of the view that for a public company business to be "substantially dependant" on a contract, the contract needs to be so significant that the public company's business depends on the continuance of it. Examples of such contracts include:

  • a financing or credit agreement providing a majority of the public company's capital requirements for which alternative financing is not readily available at comparable terms;
  • a contract calling for the acquisition or sale of substantially all of the public company's property, plant and equipment, long-lived assets, or total assets; and
  • an option, joint venture, purchase or other agreement relating to a mining or oil and gas property that represents a majority of the public company's business.

All schedules, exhibits and side letters relating to a material contract must also be filed. Ad discussed below non-public personal information protected by privacy legislation can and should be redacted.

Total Compensation: The summary compensation table will include a new column showing the total compensation, expressed in dollars, provided to each named executive officer. A narrative description of any material factors that are necessary to understand the information in the table is also expected to be required.

Director Compensation: Expanded disclosure of director compensation is expected to be required, including a summary table and equity disclosure similar to what is required for named executive officers.

Redactions of Material Contracts has been Limited

A provision in a material contract may be omitted or redacted if an executive officer of the public company reasonably believes that disclosure of that provision would be seriously prejudicial to the interests of the public company or would violate confidentiality provisions. If a provision is omitted or redacted, a description of the type of information that has been omitted or redacted must be included in the copy of the contract which is filed. Despite the foregoing, a public company may not omit or redact a provision of a material contract which relates to: (i) debt covenants and ratios in financing or credit agreements; (ii) events of default or other terms relating to the termination of the material contract; or (iii) other terms necessary for understanding the impact of the material contract on the business of the public company.

According to the Canadian Securities Administrators, disclosure of information in violation of applicable Canadian privacy legislation may be considered seriously prejudicial to the interests of the public company, and as a result, may be redacted, provided that such privacy legislation has not provided an exemption for such disclosure. Generally, disclosure of information that a public company or other party has already publicly disclosed will not be considered seriously prejudicial to the interests of the public company.

Disclosure of Material Contracts in AIF

Commencing March 17, 2008, public companies are required to list and describe in their AIF the particulars of all of the material contracts it files, which includes the dates of, parties to, consideration provided for in, and general nature and key terms of, the contract.

Other Changes to Annual Filings

The Canadian Securities Administrators also made changes to the disclosure requirements for AIFs and management information circulars. Public companies should take care to amend the language in those documents, and any director and officer questionnaires used in relation thereto, to reflect the changes.


In addition to securities subject to escrow arrangements, public companies are required, commencing March 17, 2008, to disclose in their AIF the number and class of securities which are subject to contractual restrictions on transfer, such as lock-up agreements, and the percentage of the class such securities represent.

Disclosure of Cease Trade Orders

Public companies are no longer required to disclose in their AIF or information circular whether any significant shareholder is or was a director or executive officer of a company that was subject to a cease trade or similar order. Also, disclosure in respect of cease trade and similar orders now applies only where a director or executive officer of the public company was a director, "chief executive officer" or "chief financial officer" of a company subject to a cease trade or similar order, rather than if they were an "executive officer" of such a company, thus reducing the scope of the disclosure required.

Beneficial Ownership and Control

Effective March 17, 2008, in AIFs and management information circulars, the phrase "beneficially owned, directly or indirectly, or over which control or direction is exercised" and similar such phrases have been replaced with the phrase "beneficially owned, or controlled and directed, directly or indirectly".

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.

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.