Canada: CSA Provides Guidance On Continuous Disclosure Obligations Related To Current Economic Conditions

Copyright 2009, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Securities Regulation, January 2009

The global economic downturn of the past few months has led to increased scrutiny of public disclosure by reporting issuers, as investors seek to understand and quantify the effects of the current economic conditions. An issuer preparing its annual continuous disclosure filings for the 2009 meeting season should be aware that Canadian disclosure requirements will require partic-ular focus in light of the troubled markets. Thoughtful and accurate disclosure on these issues will not only satisfy relevant securities law requirements, it may also help mitigate investor anxiety and pre-empt surprises.

On January 8, 2009, the Canadian Securities Administrators (CSA) issued Staff Notice 51-328 – Continuous Disclosure Considerations Related to Current Economic Conditions (the Notice) to highlight specific items of disclosure in issuers' management's discussion & analysis (MD&A) that the CSA believe are likely important to helping investors understand the risks and circumstances facing issuers. In the Notice, the CSA indicate they will focus on these areas during continuous disclosure reviews to ensure issuers have clearly identified the impacts of current market conditions on operations, financial condition, liquidity and future prospects.

The following summarizes the CSA's more noteworthy views on MD&A disclosure contained in the Notice.

MD&A Generally

According to the CSA, MD&A should identify and evaluate information that would give investors an accurate understanding of the issuer's current and prospective financial position and operating results. This would include the potential effects of known trends, commitments and uncertainties that have arisen due to the current market conditions.

Overall Performance and Results of Operations

The discussion of overall performance and results of operations should include details of the specific economic factors currently affecting or anticipated to affect the issuer's industry and performance. Disclosure should provide a qualitative and quantitative discussion of how market conditions have affected the issuer's performance, taking into account information available up to the date of the MD&A.

To the extent actual results are different from forecasted results in prior forward-looking information, issuers are required to disclose the events and circumstances that lead to such difference.

Liquidity and Capital Resources

The liquidity and capital resources sections of MD&A require an analysis of the issuer's ability to generate sufficient cash and to access financial resources to meet operating needs in the current market environment. "Boilerplate" statements are not sufficient. Disclosure should include and quantify, among other items, the cash necessary to fund current operations, the ability to satisfy obligations (including debt maturities), commitments or planned expenditures to meet growth objectives and performance targets, future cash require-ments associated with known trends and uncertainties due to current market conditions, liquidity risks associated with financial instruments that have declining trading volumes and risks of default. Income trust issuers are required to provide disclosure that compares cash distributions paid to cash flow from operating activities and net income, including a discussion of how any shortfall will be funded and whether cash distributions will be suspended in the near future.

Critical Accounting Estimates

Current market conditions may require an issuer to disclose additional critical accounting estimates from the prior year. MD&Ashould discuss the impact of market conditions on critical accounting estimates, including insightful information on the rationale for any changes made to critical accounting estimates during the period, the issuer's assessment of trends, events or uncertainties that may affect the methods and assumptions used to determine critical accounting estimates going forward, the sensitivity of estimates, and the likelihood of any changes to estimates based on evolving economic conditions.

Going Concern

An issuer should carefully assess and disclose in its financial statements, in accordance with the CICA Handbook, the material uncertainties that may put into question its ability to continue as a going concern. Examples of material uncertainties include continued and expected operating losses, negative operating cash flows, a failure to obtain or renew financing, a significant decline in the demand for the issuer's products, declining prices, substantial refinancing requirements and an inability to make scheduled debt payments.

If an issuer faces material uncertainties about its ability to continue as a going concern, the MD&A should provide further insight into management's reasons for determining that the company will be able to continue as a going concern and any planned strategies or known events that may mitigate the uncertainties.

Other Financial Matters

If an issuer incurs an impairment charge relating to goodwill, intangible assets or long-lived assets, its MD&A should not only discuss the financial impact of the charge but also provide meaningful insight into the reasons and business circumstances surrounding the impairment. Impairment indicators include a significant decrease in the issuer's share price, a significant adverse change in the issuer's industry, operating or cash flow losses and the accumulation of costs significantly in excess of the amount originally expected for an acquisition or construction.

Adequate disclosure regarding financial instruments is required to help investors understand the significance, impact and risks of financial instruments to the issuer's financial position, operations and cash flow. Financial instrument disclosure should include, among other things, a detailed discussion of the credit, liquidity and market risks associated with the instruments, financial assets that are past due (but not treated as impaired) and the methodology and assumptions used to determine fair market value.

Additional areas noted by the CSA in the Notice as requiring particular focus include capital disclosures, impacts on defined benefit pension plans and the use of non-GAAP financial measures. The CSA also identify additional considerations for junior resource companies, including asset impairments and specific oil and gas disclosures.

The CSA note that the topics covered in the Notice do not include all accounting and disclosure issues and instruct each issuer to consider the accounting and disclosure issues specific to its own circumstances in the current economic environment when preparing its continuous disclosure filings.


  • CSA Notice highlights MD&A disclosure to help investors understand effects of the current economic conditions
  • Requires qualitative and quantitative discussion of impact on performance
  • Disclose issuer's ability to generate cash and access financing sufficient to meet needs
  • Address issuer's ability to continue as a going concern

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.

Events from this Firm
13 Dec 2017, Seminar, Toronto, Canada

Class actions across Canada continue to grow in volume and complexity, triggering significant policy and financial implications for businesses in Canada. With the Law Commission of Ontario’s recent announcement that it is reactivating its comprehensive review of class actions in Ontario, we may see important law reform on the horizon to evolve with the changing landscape.

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
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 you may opt out by clicking here

    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.

    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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.

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