Canada: AMF Provides Summary Of Oversight And Regulatory Activities

The Corporate Finance Division of Quebec's Autorité des marchés financiers (AMF) recently released its annual Summary of Oversight and Regulatory Activities (Report). In addition to providing a snapshot of the Quebec capital markets, the Report identifies a range of deficiencies encountered by the AMF in its ongoing review of various continuous disclosure and financing documents of Quebec issuers and highlights the AMF's issue-oriented reviews currently underway or planned for 2019.


The Report provides the following key takeaways:

  • 724 companies (out of a total of 2,026 reporting issuers in Quebec) had Quebec as their principal regulator. Of those, 58 per cent were venture issuers, principally consisting of issuers listed on the TSX Venture Exchange (TSXV), and 42 per cent were other issuers.
  • Total market capitalization of Quebec companies stood at C$438-billion.
  • Quebec companies listed on the Toronto Stock Exchange (TSX) and the TSXV have a diversified sectoral distribution, including mining, diversified industries, technology, life sciences and communications and media.
  • Quebec companies raised a total of C$13.3-billion during the past year: C$3.0-billion on the public market and C$10.3-billion on the exempt market.
  • The accredited investor exemption is by far the most frequently used prospectus exemption.
  • Quebec companies active in the cannabis industry raised C$261-million.
  • In total, 376 prospectuses were filed in Canada in the last year, 161 of which were filed in every Canadian province (43 per cent) and 104 were filed in every Canadian province excluding Quebec (32 per cent). The remaining 111 prospectuses were filed in only certain Canadian provinces, including Quebec in some cases.
  • Of Quebec companies listed on the TSX, 88 per cent have at least one woman on the board of directors and 29 per cent have at least three women sitting on the board.


As part of its continuous disclosure review program for the fiscal year ended March 31, 2018, the Report identified certain recurring deficiencies encountered in management's discussion and analysis (MD&A), mining technical reports as well as prospectuses and related offering documents.


The AMF noted that, in their MD&A, some issuers:

  • Provided inadequate analysis of material changes in revenue or gross profit in discussing operations
  • Did not analyze short-term and long-term liquidity requirements in discussing liquidity
  • Did not provide conclusions, or provided incomplete conclusions, about the effectiveness of internal control over financial report (ICFR) or did not disclose material weaknesses in ICFR design, despite their annual certification indicating otherwise.

Mineral Projects

The AMF also found the following deficiencies regarding the disclosure of mineral resources made by issuers:

  • Economic analyses based on unrealistic mineral project development scenarios or overly optimistic assumptions
  • Reference to potentially outdated economic analyses without properly describing the current context and including cautionary language.


The Report indicates that:

  • Some issuers provide incomplete disclosure of use of proceeds in prospectuses, particularly if they have negative cash flow from operating activities
  • In their disclosure of adjusted financial measures in marketing materials, issuers often fail to disclose the most directly comparable measures presented in their financial statements.

The Report notes that in many instances, the AMF requested the issuers concerned to correct such disclosure deficiencies, whether prospectively or by way of refiling, or applied enforcement measures.


The Report notes that socially responsible investing, i.e., investing that incorporates environmental, social and governance (ESG) criteria into investment selection and management, is an area of increasing concern by investors. ESG encompasses issues relating to such matters as climate change, diversity and modern slavery.

Given the phenomenon of socially responsible investing, the AMF indicated that it is focusing on the disclosure practices of issuers in this area, including with respect to:

  • Risks and the financial impact associated with climate change and the governance issues related thereto
  • Board composition, including diversity and representation of women
  • Issues related to modern slavery, such as forced labour, human trafficking and child labour.

New Climate Change Disclosure Requirements under Consideration

The Report indicates that the work plans of the Canadian Securities Administrators in this area are expected to include:

  • Considering new disclosure requirements regarding corporate governance in relation to risks, including climate-change related risks, and risk oversight and management
  • Assessing the need for additional disclosure with respect to climate change
  • Determining whether greenhouse gas emissions disclosure is warranted.

Continued Focus on Representation of Women on Boards and Executive Positions

The representation of women on boards and executive officer positions was the subject of a third consecutive annual review conducted by the AMF and other participating jurisdictions. A key takeaway is that the disclosure requirements prescribed by National Instrument 58-101 – Disclosure of Corporate Governance Practices has had a positive impact on the representation of women on boards.

Based on data compiled by the AMF from disclosure provided by TSX-listed Quebec companies, the Report notes that in 2018:

  • 88 per cent of companies had at least one woman on their board (up from 80 per cent in 2015)
  • 29 per cent of companies had at least three women on their board (up from 20 per cent in 2015)
  • 53 per cent of companies have adopted a policy relating to the representation of women on their board (up from 32 per cent in 2015)
  • 29 per cent of companies have adopted targets for the representation of women on their board (up from 16 per cent in 2015).

Guidance on Disclosure Issues Related to Modern Slavery

Modern slavery was the specific subject of an issue-oriented review conducted by the AMF in 2018. In its staff notice, the AMF provided guidance on areas of disclosure that merit the attention of issuers, including:

  • Issuers should determine if their business and their future performance are materially affected by risks related to modern slavery, for example litigation, regulatory, reputational or operational risks
  • Social policies developed by an issuer that are fundamental to its operations should address their impact on material social risks
  • Codes of conduct adopted by an issuer should describe how ethical business conduct is encouraged and promoted by the board of directors
  • Oversight duties of the board of directors, audit committee and certifying officers should critically assess the issuer's disclosure regarding issues related to modern slavery.

We note, however, that issuers should be cautioned that a code of conduct may itself be a source of litigation, insofar as it sets forth standards of conduct intended to govern decision-making and business operations with respect to ESG issues. See our December 2018 Blakes Whitepaper: Codes of Responsible Business Conduct: When Good Intentions Become Binding.


The Report states that during the coming year, the AMF will focus on issue-oriented reviews in the following areas:

  • Technical reports of mining companies, in order to ensure compliance with the requirements for mineral resource estimates and to verify the qualifications of the qualified person responsible for the disclosure of mineral resources
  • Financial statements and MD&A of companies carrying on cannabis-related activities, in order to ensure that these materials comply with IFRS requirements and regulatory provisions
  • Information circulars of TSX-listed companies, to assess the disclosure made regarding the representation of women
  • Financial statements, in order to ensure compliance with the new standards IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

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© 2018 Blake, Cassels & Graydon LLP.

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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