On April 9, 2015, the Canadian Securities Administrators (CSA) announced the adoption of amendments to continuous disclosure, governance and prospectus disclosure requirements (the Amendments). Most of the Amendments streamline the disclosure requirements for venture issuers and aim to reduce some of the difficulties experienced by smaller issuers that generally have fewer resources available to comply with the requirements associated with public company status. The Amendments have two principal objectives: (i) to reflect the needs and expectations of venture investors by eliminating information that is less valuable to them and (ii) to allow management of venture issuers to focus on the growth of their businesses while maintaining an acceptable level of governance safeguards. In the opinion of the CSA, "the amendments strike an appropriate balance between an investor's need for disclosure and the venture issuer's need for a streamlined and efficient disclosure system."
Some of the Amendments will have an impact on non-venture issuers, including mining issuers.
Highlights of the Amendments
The highlights of the Amendments are set out below:
- Venture issuers will be permitted to file reports in the form of quarterly highlights instead of interim management's discussion & analysis, whether or not they had significant revenues in the most recently completed financial year.
- Venture issuers will be required to file executive compensation disclosure within 180 days of their financial year-end and will be allowed to elect a much simpler form of disclosure for executive and director compensation arrangements.
- The thresholds for venture issuers to prepare a business acquisition report (a BAR) will be increased to 100%, from 40%, and they will no longer be required to prepare pro forma financial statements for inclusion in the BAR.
- Venture issuers will have to form audit committees composed of at least three members, a majority of whom may not be executive officers, employees or control persons, except in certain circumstances.
- Venture issuers conducting an initial public offering (IPO) will only be required to present two-year audited financial statements in their IPO prospectuses.
- Non-venture issuers that are required to send management information circulars will be required to file executive compensation disclosure within 140 days of their financial year-end.
- The form of disclosure required to be included in an annual information form for issuers with mineral projects will be modified.
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