Financial Statements of Cross-Border Issuers: SEC to Require Use of XBRL

The SEC has published a taxonomy so that companies that prepare their financial statements under International Financial Reporting Standards can submit them to the SEC using XBRL (eXtensible Business Reporting Language). XBRL consists of a uniform set of tags attached to items of financial information, enabling investors, analysts and other users of companies’ financial statements to download, analyze and compare data more easily across companies and reporting periods.

U.S. companies have been required to submit their U.S. GAAP financial statements using XBRL for several years. Now that the necessary IFRS taxonomy has been created, the XBRL requirement is being extended to foreign private issuers, including Canadian MJDS issuers.

Annual financial statements will have to be prepared using XBRL and submitted as an additional exhibit to annual reports on Form 40-F or 20-F, beginning with fiscal years ending on or after December 15, 2017. The XBRL financial statements will also have to be posted on companies’ websites.

Voluntary compliance is permitted immediately. By comparison, Canadian securities laws do not require companies to prepare financial statements using XBRL, but they may do so voluntarily. Only a very small proportion of Canadian companies have adopted this practice to date.

The IFRS XBRL taxonomy is available at this link: XBRL Taxonomy for IFRS.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

© 2024 by Torys LLP.

All rights reserved.