Securities regulators propose changes to streamline and clarify companies’ continuous disclosure filings

On May 20, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and related consequential amendments to certain rules, policies and forms. They also have requested feedback on a framework that would permit non-SEC venture issuers to report on a semi-annual, rather than quarterly, basis. The comment period expires on September 17.

What you need to know

  • The proposed amendments are intended to result in less but more focused disclosure and enhanced presentation and quality of disclosure.
  • For non-investment fund reporting issuers, the CSA plans to consolidate the annual financial statements, management’s discussion and analysis (MD&A) and annual information statement (AIF), if any, into a single annual disclosure statement (ADS) and consolidate the interim financial statements and interim MD&A into a single interim disclosure statement (IDS).
  • The proposed amendments will also eliminate duplicative or overlapping requirements within these disclosure documents and eliminate certain requirements to disclose information that is readily available elsewhere.
  • The CSA expects to publish the final rule amendments in September 2023. If ministerial approvals are obtained on a timely basis, issuers will have to comply with amended NI 51-102 for the first financial year ending on or after December 15, 2023. There will be a voluntary compliance option permitting issuers to file an IDS or ADS on or after that date.
  • Although the CSA isn’t ready to publish proposed rules yet, it is also seeking feedback on a framework allowing non-SEC venture issuers to file financial statements and MD&A semi-annually, so long as they provide alternative disclosure in a quarterly news release (e.g., to provide updates on the issuer’s operations and disclose material events) for the periods where financial statements and MD&A aren’t filed.

Proposals to streamline and clarify MD&A and AIF requirements for non-investment fund issuers

Among other things, the proposed amendments will:

  • eliminate the MD&A requirement to disclose information regarding critical accounting estimates and the AIF requirement to disclose cash dividends or distributions declared (as well as restrictions on payment of dividends or distributions), since this information is already required to be included in the financial statements under Canadian GAAP;
  • eliminate the MD&A requirement to disclose summary information for the eight most recently completed quarters because this information is available in previous filings;
  • eliminate the AIF requirement to disclose security price ranges and volumes traded on a Canadian marketplace because this information is readily available on those marketplaces;
  • consolidate the AIF requirement to disclose research and development elements with the MD&A requirement to discuss operations;
  • clarify that the discussion of a reporting issuer’s financial condition, financial performance and cash flows in the MD&A must include an analysis of the most recently completed financial year as compared to the prior year; and
  • clarify that a summary from a technical report can satisfy the AIF requirement applicable to reporting issuers with mineral projects and that the entire report does not have to be incorporated by reference into the AIF.

Having a single document that combines an issuer’s financial statements, MD&A and AIF (if any) will also be more intuitive for cross-border investors as they often are already generally familiar with the presentation of the financial statements, MD&A and information similar to that required in an AIF in one reporting document (such as Form 10-K), which issuers must file with the U.S. Securities and Exchange Commission.

The CSA is also addressing a few disclosure gaps, for example by requiring issuers to disclose investments at fair value and requiring venture issuers to describe their business in their MD&A.

The CSA also plans to replace most of the various materiality qualifiers (e.g., “material”, “significant”, “critical”, “major” and “fundamental”) in the existing AIF and MD&A forms with a provision indicating that the disclosure requirements are subject to the qualification that issuers focus on material information as set out in the general instructions to the new ADS and IDS forms. However, distinctive materiality qualifiers will be retained if they are part of a defined term (e.g., “significant acquisition”) or reflect a term used in the prospectus rules.

Under the proposed “access equals delivery” model that the CSA is considering1, providing electronic access to an ADS and publishing a related notice that the ADS is available would constitute delivery.

Risk factor disclosure

The CSA plans to retain the requirement that issuers disclose risks in order of seriousness from the most serious to least serious. It has asked if it would be beneficial to reporting issuers to provide more clarity on what “seriousness” means (beyond the explanation in the instructions to the AIF form that “seriousness” refers to impact/probability). The regulators are also interested in hearing about the potential benefits and costs of adopting requirements similar to the SEC’s recent amendments to Regulation S-K. These amendments require issuers to group similar risks together, disclose generic risks under the heading “general risk” and require a summary of risk factor disclosure if the risk factor disclosure exceeds 15 pages.

Semi-annual filing option for non-SEC venture issuers

The CSA previously sought feedback on a concept proposal for a semi-annual reporting framework for reporting issuers2. Although the CSA is not ready yet to publish proposed rules for such a regime, it is now seeking feedback on an optional framework that will permit non-SEC venture issuers to provide financial statements and MD&A semi-annually rather than quarterly.

For interim periods where financial statements and MD&A aren’t filed, an issuer will have to file alternative disclosure in a news release to provide an update on its operations, including unexpected events and risks that are likely to materially affect operations. The issuer also will have to explain any significant changes from previous disclosures regarding the use of proceeds and disclose material events, including those related to the issue or cancellation of securities, new or modified litigation or liabilities, new or modified financing arrangements, defaults under financing arrangements, changes to its financial condition, the inability to pay debts as they become due, and related party transactions.


With assistance from Emily Stauffer, summer student.

1 For more information, see our January 2020 bulletin “Canadian securities regulators announce consultation on access equals delivery model for public companies” here.

2 For more information, see our April 2017 bulletin “Potential revamp of securities regulation in Canada” here.

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.

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