Canada: U.S. Securities And Exchange Commission Adopts Rules Requiring Companies To Provide Financial Statement Information In XBRL

Since 2005, the U.S. Securities and Exchange Commission (the "SEC") has permitted companies, on a voluntary basis, to file financial statements in an interactive data format called eXtensible Business Reporting Language ("XBRL"). XBRL allows investors and other third parties to download information from the SEC Web site directly into spreadsheets and to analyze the data using their own software and investment models. On January 30, 2009, the SEC adopted rules that will require companies to provide financial statements in XBRL. These rules will be phased in over a three-year period so as to eventually apply to all reporting companies that prepare their financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and foreign private issuers that prepare their financial statements using International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

The XBRL information is provided in a separate exhibit that does not replace the financial statements that are filed as part of a report or registration statement in the regular electronic format. Large accelerated filers that use U.S. GAAP and have a worldwide public common equity float above US$5 billion1 must provide the new XBRL exhibit with their first Form 10-Q, Form 20-F or 40-F filed for a fiscal period ending on or after June 15, 2009. For all other large accelerated filers using U.S. GAAP, the same obligation will begin for fiscal periods ending on or after June 15, 2010. For the remaining companies that use U.S. GAAP or foreign private issuers that use IFRS as issued by IASB, the obligation will begin for fiscal periods ending on or after June 15, 2011.

Once the XBRL requirement is triggered, all annual reports on Form 10-K, 20-F or 40-F, quarterly reports on Form 10-Q and current reports on Form 8-K that contain financial statements must contain the new interactive exhibit. Except in limited circumstances, the Form 6-K for foreign private issuers will not require an exhibit with XBRL information. In addition, for filers already subject to the XBRL requirement, a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), that contains financial statements must include the XBRL exhibit.

A filer that is required to provide its financial statements in XBRL format must also post those same interactive financial statements on its Web site.

The new rules do not apply to foreign private issuers that do not prepare their financial statements in accordance with U.S. GAAP or IFRS as issued by IASB. Because the EDGAR filing system is not yet set up to accept interactive files that are not prepared in accordance with U.S. GAAP, foreign private issuers preparing financial statements in accordance with IFRS as issued by IASB will not be able to file financial statement information in XBRL early, on a voluntary basis, until the SEC announces that its system is ready to accept these files. For similar reasons, foreign private issuers that do not use U.S. GAAP or IFRS as issued by IASB may not voluntarily provide the XBRL exhibit with their reports filed with the SEC.

Companies that fail to provide the required interactive exhibit on the proper date will not be deemed current in their reporting obligations and therefore will not be eligible to use a Form S-3, F-3 or S-8 registration statement (or to elect under Form S-4 or F-4 to provide information at a level prescribed by Form S-3 or F-3) for the succeeding 12 calendar months. In addition, they will not be deemed to have adequate current public information for the resale safe harbor provided in Rule 144 under the Securities Act.

Interactive data files will be excluded from the officer certification requirements under Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as amended. In addition, during the first 24 months that a company is required to submit interactive data, the data will not be deemed "filed" for purposes of specified liability provisions.

As the process of preparing financial information in XBRL format can be complex, companies are advised to allocate sufficient time to the preparation of the interactive data file to ensure the accuracy and timeliness of their XBRL reporting.


1 Calculated at the end of the second fiscal quarter of the company's most recently completed fiscal year.

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.

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