Lack of transparency in calculations, insufficient context and significant variations by issuer and industry, a “stronger tool was needed to take appropriate regulatory action”, said the Canadian Securities Administrators (CSA) when they first presented their new set of rules to regulate disclosure of non-GAAP financial metrics. That was in 2018.
Many comment letters and three versions later, we now have the final version of the National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (the Instrument).
Unlike the existing guidance on non-GAAP financial measures (Staff Notice 52-306), the new Instrument has the force of law. This means that the “adjusted earnings”, “adjusted EBITDA”, “free cash flow”, “pro forma earnings” and other financial measures of this world will soon be the target of much scrutiny, because the new Instrument, while short, is accompanied by a 20-pages long Companion Policy, which clearly spells out the intention of the legislators. Continue Reading Fill in the Non-GAAP: New Disclosure Requirements to Become Mandatory in August 2021