In May 2021, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 51-102 – Continuous Disclosure Obligations (NI 51-102) and other related changes to securities laws and guidance (collectively, the Proposed Amendments). The Proposed Amendments were intended to streamline annual and interim disclosure requirements for reporting issuers by, among other things, combining management's discussion and analysis (MD&A) and, for annual filings for non-venture issuers, annual information form (AIF) into one reporting document together with the issuer’s financial statements. See our June 2021 insight Securities regulators propose reduced periodic disclosure requirements for Canadian public companies.

The CSA originally indicated that a final version of the Proposed Amendments would be published in September 2023 and would become effective on December 15, 2023, together with applicable transition provisions. On October 3, 2023, the CSA provided an update, delaying the Proposed Amendments’ path to adoption (CSA Update).

Background

On May 20, 2020, the CSA first published for comment the Proposed Amendments, a set of reform proposals aimed at reducing and streamlining the annual and quarterly reporting obligations set out in NI 51-102 and increasing reporting efficiency for reporting issuers, other than investment funds.

The Proposed Amendments follow a 2017 consultation paper, in response to which many capital markets participants supported examining how to reduce the volume of information presented in annual and interim filings.

The Proposed Amendments would change the existing continuous disclosure regime in three main ways:

• Combine the annual financial statements, MD&A and AIF into an “annual disclosure statement,” while quarterly financials and MD&A would be combined into an “interim disclosure statement”;
• Streamline and clarify certain disclosure requirements in financial statements, MD&A and AIF; and
• Introduce new measures to address gaps identified in the current disclosure framework.

Other noteworthy changes

Materiality qualifiers

The Proposed Amendments included the removal of qualifiers, such as material, significant, critical, major and fundamental, in the current MD&A and AIF form requirements. Instead, reporting issuers would be asked to consider all disclosure requirements subject to the general qualification that issuers focus on material information (subject to limited exceptions explicitly noted in the forms). Materiality qualifiers would be retained where it serves as a part of a defined term (such as significant acquisition) or reflect a term used in prospectus rules.

Existing exemptions

The CSA proposed to stay the existing exemption provision in NI 51-102 which allows any reporting issuer that is exempt from preparing, filing or delivering annual or interim filings prior to the effective date of the Proposed Amendments to be also exempt from preparing, filing or delivering an annual disclosure statement or an interim disclosure statement, as applicable.

Delivery requirements

The CSA proposed that reporting issuers would be able to satisfy the requirement to deliver the annual disclosure statement to investors by simply providing electronic access to the document and publishing a related notice that it is available to its investors (Access Equals Delivery Model). The CSA issued a request for comments on the Access Equals Delivery Model in April 2022. The Proposed Amendments provided requirements for reporting issuers to deliver their annual and interim disclosure statements to certain specified investors. Under the Access Equals Delivery Model, providing electronic “access” to an annual or interim disclosure statement and publishing a related notice that such disclosure statement is available would constitute delivery.

CSA Update

The CSA Update provides that the goals of the Proposed Amendments in streamlining disclosure requirements and reducing regulatory burden while maintaining strong investor protection will be “best achieved when combined with a model for electronic access to information.” As a result of comments received on the Access Equals Delivery Model, the CSA “anticipates publishing a revised access model for continuous disclosure in due course” and advised that the Proposed Amendments will not be implemented until an access model is chosen.

Looking ahead

The CSA Update did not specify whether the Proposed Amendments will be subjected to further revisions and publication for additional comments, nor when the Proposed Amendments are proposed to take effect. However, the CSA advised that they “will ensure reporting issuers are provided with sufficient time to transition to any new forms and requirements.”

For more information on this topic, please contact Diana Nakka or any member of the Securities and Corporate Finance key contacts in Canada.