The Ontario Securities Commission (OSC) recently made an Order to exempt reporting issuers that fall under the definition of "federal financial institution" under the Bank Act from the application of National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (NI 52-112) under certain circumstances. Securities regulators in British Columbia, Alberta, Manitoba, Saskatchewan, Nova Scotia, Newfoundland & Labrador, and Prince Edward Island have also made similar orders.
As we discussed in a June post, NI 52-112, which was adopted earlier this year, requires certain reporting and non-reporting issuers that include non-GAAP and certain other financial measures in public disclosure to provide additional information to help investors understand the context of such measures. The requirements are intended to provide investors with transparency while reducing the uncertainty for issuers in regards to disclosure obligations.
Under the OSC's Order, eligible issuers are exempt from NI 52-112 in respect of a disclosure of a specified financial measure pursuant to an OSFI Guideline where: (i) the OSFI Guideline specifies the composition of the measure and the measure was determined in compliance with that OSFI Guideline; and (ii) in proximity to the measure, the eligible issuer discloses the OSFI Guideline under which the measure is disclosed. "Eligible issuer" in the Order is defined to mean a reporting issuer that "is, or that has a subsidiary or an affiliate that is, a federal financial institution subject to OSFI Guidelines". A "federal financial institution" is defined in reference to the Bank Act (Canada), and generally includes banks, cooperative credit associations, trust companies and insurance companies.
The conditions for the exemption mirror the existing exception under section 4(1)(e) NI 52-112 in respect of disclosure of a specified financial measure that is required under law or by an SRO of which the issuer is a member. According to the OSC, the Order is intended to reduce the burden for eligible issuers subject to OSFI Guidelines "since sufficient disclosure exists surrounding these measures."
The Order came into effect on December 2, 2021, and expires on the earlier of June 2, 2023 and the effective date of rules that include an exception to the application of NI 52-112 based on disclosure of a specified financial measure pursuant to an OSFI Guideline.
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