Canada: CSA Announces Results Of Continuous Disclosure Review For Fiscal Years 2017 And 2018

On July 19, 2018, the Canadian Securities Administrators (CSA) published Staff Notice 51-355 (the "Staff Notice"), summarizing the results of its Continuous Disclosure Review Program (the "CD Review Program") for fiscal years ending March 31, 2017 and March 31, 2018. As previously announced in July 2017, the CSA is now publishing the results of the CD Review Program on a biennial basis.

During fiscal years 2018 and 2017, 840 and 1,104 issuers were selected for the CD Review Program respectively. Approximately half of these reviews resulted in the issuer being required to take some type of remedial action (including refiling historical documents or improving disclosure on a prospective basis) or the issuer being referred to enforcement, cease traded or placed on the default list.

In the Staff Notice, the CSA categorized deficiencies as relating to: (i) financial statements; (ii) management's discussion and analysis (MD&A); or (iii) "other regulatory requirements," including: executive compensation disclosure, climate change, social media disclosure and mining technical reports. Of note, the Staff Notice reflects the CSA's continued focus on the disclosure relating to non-GAAP financial measures ("NGMs") and forward-looking information ("FLI").

Financial Statements

Statement of Cash Flows. The CSA noted some issuers incorrectly classified their cash flows as investing or financing activities, when they should have been operating activities. Cash flows predominantly derived from the issuer's main revenue-producing activities (e.g., cash advances or loans for financial institutions; payments to acquire assets held for rental and the cash receipts from rents for rental companies) should be classified as cash flows from operating activities. The CSA also observed that some issuers reclassified items on their statement of cash flows without explaining such reclassification.

Fair Value Measurements. The CSA found some issuers did not sufficiently disclose their valuation techniques, processes and policies used in the fair value measurements under IFRS.  The CSA also noted some issuers did not provide sufficient quantitative information about the significant unobservable inputs used in the fair value assessments.

Adoption of New Accounting Policies. Some issuers only provided general disclosure about the new IFRS standard being implemented without discussing specifics about how the standard will impact the issuer. The CSA remarked there should be more qualitative and quantitative information on how the initial adoption of IFRS standards would impact the issuer's financial statements during the period of initial application.


Investments at Fair Value. The CSA observed some investment entities and non-investment entities only provided records of their investments at fair value without sufficient qualitative and quantitative information about their investments. The CSA noted that, at minimum, issuers should disclose summary financial information about a material investee company in the issuer's MD&A including a discussion of those results.

Non-GAAP Financial Measures for the Real Estate Industry. In the CSA's view, several real estate issuers' disclosures did not contain enough transparency about the various adjustments made in arriving at their NGMs, such as adjusted funds from operations, especially when such adjustments are estimates from management (e.g., those relating to maintenance capital expenditures). In addition, the CSA raised concerns in situations where real estate issuers with equity-accounted joint ventures include a full set of non-GAAP financial statements in the MD&A, creating a NGM for each financial statement line item, and then focus their MD&A discussion on these non-GAAP pro-rata financial results with little to no discussion of the comparable GAAP results.

Discussion of Operations - Disclosure of Capital Spending & Milestones. The CSA continues to see issuers (particularly those who have had a change of business and/or are in emerging industries) disclose or announce significant projects that are in the early stages of development, but fail to disclose sufficient information about the project.

Related Party Transactions. The CSA expressed continued concern with disclosures pertaining to related party transactions. In particular, the CSA noted many issuers do not identify the related person or entity (e.g., naming a director and/or officer), and do not discuss the business purpose of the transaction.

Other Regulatory Disclosure Deficiencies

Forward-Looking Information. The CSA expressed continued concern with disclosure of FLI in news releases, MD&A, prospectus filings, marketing materials, investor presentations or on their website. The CSA noted that issuers continue to disclose forward-looking information for a period beyond the issuer's next fiscal year-end without providing reasonable and sufficient assumptions to support such information. In the CSA's view, forward-looking information must be limited to the period over which the information can be reasonably estimated, which, in many cases, will not surpass the issuer's next fiscal year. Where FLI is presented for multiple years and is not sufficiently supported by reasonable qualitative and quantitative assumptions, the CSA may ask issuers to limit the disclosure of FLI to a shorter period (for example, one or two years), for which reasonable support exists. For investors to assess whether the assumptions underlying the issuer's FLI are reasonable, the issuer should disclose those assumptions, both quantitative and qualitative. For example, an issuer projecting aggressive growth targets without the benefit of historical experience should be able to show (i) a reasonable basis for those targets, including the key drivers behind the projected growth with reference to specific plans and objectives that support the projected growth, and (ii) why management believes that each of the targets are reasonable.

Non-GAAP Financial Measures (Generally). The CSA found many issuers giving "excessive prominence" to NGMs in their corporate presentations, investor fact sheets, news releases and social media materials. The CSA also noted that issuers must explain the purpose of the NGM and why it provides useful information to investors. The disclosure should be entity-specific and clearly align with the nature and type of adjustments that are being included or excluded in the calculation of the NGM. The CSA reminded issuers to abide by the guidance provided in CSA's Staff Notice 52-306 (Non-GAAP Financial Measures).

Statement of Executive Compensation. If an issuer has an external management company provide executive management services, the compensation paid to such executives should be disclosed in the issuer's summary compensation table. In addition, some issuers failed to file the disclosure of executive compensation within the required filing deadline, which is 140 days after the end of the issuer's most recently completed financial year, or 180 days for venture issuers.

Social Media. The CSA observed some issuers disclosed material information on social media before it is disseminated more widely to all investors, which could constitute selective or early disclosure. Issuers should consider implementing a thorough social media governance policy outlining who is authorized to post what type of information on which social media channels.

Climate Change-Related Disclosure. The CSA noted that issuers' annual information forms must disclose climate change risk factors specific to the issuer, which must consider a wide range of risks including physical, regulatory, reputational and business model risks. In general, issuers tended to discuss climate change-related risks in an overly general manner that does not consider the issuer and its operations.

Disclosure of Material Relationships. In its review, the CSA found when some issuers entered into transactions with a party with whom there is a familial or other close relationship, they did not disclose such relationship.

Change of Auditor Reporting Package. The CSA noted when an auditor change occurs, issuers should file the letter from the predecessor auditor in the form required under securities laws, rather than a resignation letter or other communication intended for the issuer only.

Common Deficiencies Related to Standards of Disclosure for Mineral Projects

In addition to the regulatory requirements discussed above, the CSA outlined common deficiencies specifically related to public disclosure of scientific and technical information about an issuer's mining and mineral exploration projects governed by National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101), including:

Technical Reports. The CSA found that some technical reports required under NI 43-101 did not include adequate disclosure of important criteria that the Qualified Person (as defined in NI 43-101) used in the report to determine that the resource has demonstrated reasonable prospects for eventual economic extraction, such as mining method, metallurgical recovery factors, metal prices and cut-off grade (among other things). Moreover, the CSA noted authors of certain technical reports improperly relied on the work of other qualified persons (or failed to describe the procedures used to verify the work of other qualified persons) and too broadly disclaimed responsibility of other experts for legal, political, environmental and tax matters.

Preliminary Economic Assessments. "Preliminary economic assessment" ("PEA") is a defined term under NI 43-101. The CSA noted disclosing PEAs after mineral reserves have been determined on a property can be potentially misleading to investors if the results have the effect of adding, combining, or integrating the PEA outcomes with the economic analysis, cash flows, production schedules, or mine life based on a pre-feasibility, feasibility study, or life of mine plan. If mineral reserves have been determined on the property, the results of a PEA must be reported as a separate analysis that is separate and distinct from a pre-feasibility or feasibility study.

Disclosure of Historical Estimates. When disclosing historical estimates on their websites or in investor presentations and marketing materials, some issuers did not provide information related to the estimate's original source and date, and failed to include the required cautionary statements required under section 2.4 of NI 43-101.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific 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.

Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions