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
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

In association with
Related Topics
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